This past month, President Donald Trump issued executive orders targeting the business of several big law firms and launched investigations into the human resource practices of many more. Some have rushed to condemn the law firms that were the victims of the President’s recent threats for giving in to his demands. However, not enough focus has been placed on the real actor behind this vindictive act: Trump.
[time-brightcove not-tgx=”true”]
Three of the targeted firms—Jenner & Block, WilmerHale, and Perkins Coie—challenged the President in court and won, obtaining restraining orders against their respective executive orders. Another firm, Covington & Burling, took no action in response to a more limited executive order, while two others, Paul, Weiss and Skadden Arps, reached cosmetic settlements with the President, allowing Trump to back down from his threats. As Paul Weiss chairman Brad Karp outlined to his colleagues, the firm’s deal resolved an existential threat to the firm without compromising its policies or cultural principles. This letter also revealed that Paul Weiss became a target after Brad Karp had tried to rally the other major firms to support the early targeted peer firms. In fact, some rival firms responded just the opposite way trying to poach Paul Weiss attorneys and clients sensing vulnerability.
Paul Weiss’ and Skadden Arps’ agreements with the President have included offers of substantial pro bono legal work on causes such as veterans’ rights, anti-Semitism, and promoting fairness in the legal system. These are causes the firms have long supported and in dollar amounts that are a fraction of what the firms already dedicate to pro bono work. Plus, Karp maintains that Paul Weiss’ settlements did not include condemnation of previous firm engagements or HR practices, nor does it impose any formal limits on future representations, including representations against the Trump Administration. Such a deal seems like a great way to calm anxious major clients and potentially poached top attorneys.
In our legal system, conflict resolution balances protracted, expensive litigation against faster negotiated settlements. The choice depends on the strategic positions of each party. The President is unlikely to prevail in litigation challenging his executive orders. Thus, he is motivated to settle with face-saving ways of backing down, which Paul, Weiss and Skadden Arps realized. Plus, as my Yale colleague John Morley wrote in the Wall Street Journal, the firms that quickly settled had much larger corporate transaction practices, with a higher propensity of flight risk, than those firms that have larger litigation practices. It is understandable that law firms with different business models would approach this same crisis differently. With the perishable quality of law-firm assets and firms’ fiduciary duties to their clients and employees, firms can make different business choices while still securing their futures with honor.
The continuing complex situation at Wilmer Hale shows further why the settlements of Paul Weiss and Skadden Arps are attractive. Wilmer Hale was granted partial relief, but the judge expressly denied relief on seeing security clearance block seeing that discretion of the purview of President Trump’s executive authority requiring ongoing litigation. Clients who require their lawyers to have security clearances may not be comfortable if there is some urgency in representation.
Attacks on the actions of Paul Weiss and Skadden Arps have missed the real story. The President’s motive was to attack virtually every leading law firm that has represented or hired those who challenged the President’s actions in court. It is noteworthy that not among the firms he attacked were such Trump-friendly firms as Jones Day, Quinn Emanuel, and Sullivan & Cromwell. In fact, one of the most disturbing aspects of this saga was that the President sought advice from the co-chairman of Paul Weiss rival, Sullivan & Cromwell, Trump’s personal attorney in his appeal of his conviction on 34 counts for falsifying business records, as he was negotiating with Karp, the Wall Street Journal and others reported. It is extraordinary that this involvement has not been the subject of greater scrutiny and criticism.
The leaders in the legal profession could take a page from their peers in other fields. After financial firms were devastated by the loss of their colleagues in the attacks of Sept. 11, 2001, their competitors rushed to offer assistance. Clients were not stolen and talent was not poached from the firms most affected by the attacks.
Similarly, during the 2008 financial collapse, leaders of top financial firms worked together to develop support for the TARP program, even though those firms were in competitively healthy positions to take advantage of their fallen rivals. Rivals such as UPS or FedEx routinely do not try to benefit from each other’s misfortunes but instead offer assistance to one another in the face of operational failures, labor strife, and other interruptions.
When in 2021, Delta Airlines expressed concern for the restrictive new voting laws, the President called for a boycott of Delta. I called the chief executives of American and United, who instantly expressed public support for Delta and joined a virtual forum of 100 CEOs hastily called for that purpose.
Collective action by chief executives in the business world has had a profound impact on blunting unchallenged authoritarian erosion of American democratic institutions. The legal industry stands apart—and the resulting spotlight is not flattering. The hypocritical chest pounding of attorneys condemning those law firms who settled is noteworthy, because many of those same attorneys previously failed to join the efforts to support those firms from the President’s attacks. Instead, they blame the victim here.
Hopefully, the leaders in the legal world can learn from bolder leaders in other fields. Already 80 deans of law schools have spoken out in unison in denouncing the President’s attack on law firms, while smaller firms such as Munger, Tolles & Olson and Keker, Van Nest & Peters have spoken out in defense of their larger rivals, suggesting “friend of the court” briefs.
Monday, the American College of Trial Lawyers joined the condemnation of President Trump’s coercive partisan executive orders attacking these law firms, while the American Bar Association has condemned this attack on the rule of law. Perhaps the big firms can join with the scrappy little firms out of enlightened self-interest. It wouldn’t hurt to hear from their clients now, either. It is not too late for the legal industry to redeem itself in this perilous moment.