Some of the UK's top corporate law firms are fostering "an undertone of homophobia", according to report.
Big City law firms are still encouraging a culture of heavy drinking and visits to strip bars, which could drive away gay men and discourage women from joining them, research by the Law Society found.
The "constant trips to Spearmint Rhino, rugby matches and drinking sessions" meant many were afraid to come out as they thought it would hinder their career.
"Gay male interviewees working in large cities commented on the heightened sense of heterosexual machismo that they found in the larger, and particularly corporate, firms," the report said.
Law Society president, Fiona Woolf, called on employers to "ensure a climate of acceptance and inclusivity".
The report recommended firms recognise same-sex relationships for the purposes of staff benefits and the Law Society said it would establish a confidential helpline for gay and lesbian employees.