I've watched with disgust — but not surprise — as one big law firm after another has caved to Trump's extortion. I spent decades in management in "Big Law", not only helping to run my own multi-billion dollar law firm, but spending lots of time with managers from other major firms, too. So, again, I'm revolted, but not surprised, by what's happening.
About 30 years ago, I heard the head of the Law Firm Division of Citibank's Private Bank give a speech in which he said, "the law firm business is fast separating into two wholly distinct industries: there's the top 20 law firms, which are hugely profitable, growing rapidly, largely impervious to economic trends and able to raise rates almost without limits, because they handle the big deals, the big financings and the big litigations, none of which are particularly price-sensitive to legal fees; and then there's everybody else. And the gap between these two groups is going to grow and widen indefnitely."
The term "Big Law" hadn't been invented then, but he was presciently observing that this privileged group of law firms was indeed in a different business from all other law firms, and that they were real economic juggernauts. I rode that gravy train myself for 30+ years.
These law firms were manic about just one thing: making sure each year was more profitable than the last. That was true 30 years ago, and it's still true today. They had (and have) the luxury of jettisoning smaller clients in favor of major corporations and private equity firms; they turned the concept of "partnership" on its head and got comfortable firing partners who had spent their lives there, but who were not able to run fast enough on the hamster wheel of business production. They admitted proportionately fewer and fewer associates to the partnership, helping the Ponzi scheme to endure forever. And they create a class of faux-partners (usually called "Income Partners" or the more boorish "Contract Partners"). while still keeping the lowest class of senior lawyers, the "Counsel", too.
The profits the Big Law firms made over the last few decades were obscene by any sane comparative measure, and that's more true today than ever. The rest of the legal industry struggles for profitability and endures really intense competition and rate pressure. Not the big boys.
I share all this because Big Law is facing this unexpected assault on its domain — Trump's extortion — through this narrow, hard-wired perspective. One needs to appreciate how sacred they hold the principle that every year's profits must go up, no matter what the social or morale cost. Only then can one understand this pathetic, irresponsible, depressing rush to pay Donald Trump his blood money.
Big Law is in perhaps the best position of any industry to stand up to Donald Trump. His threats to cancel their security clearances is more optics than dangerous: very few Big Law partners have security clearances, and in almost no cases are those clearances necessary for those firms to do their business. Similarly, the threat to ban them from further government work sounds mighty scary, but most of these firms don't represent the federal government. The feds are usually represented by government lawyers within their own agencies and departments, and when they do hire outside counsel, the feds usually won't pay $1,500 an hour for a lawyer's time.
To be sure, Big Law stands to lose some clients whom they represent before federal agencies and tribunals, and that makes them nervous. More seriously, major clients who are themselves worried about maintaining good relationships with Trump no matter how rich they are (Mark Zuckerberg, Jeff Bezos, Elon Musk, Larry Ellison and Patrick Soon-Shiong are notable examples, and there are many more) may find that Big Law firms in Trump's crosshairs could be radioactive, and they will want to run from them. I'm not minimizing the worry that Big Law has about such a dent in their revenues if and when major, multi-miliion dollar clients depart, but really, when you're grossing $2 billion a year on 60% profit margins, you've got a whole lot buffer to get you through.
In short, these firms are the best-protected, best-suited, strongest and most buoyant businesses in the country, and their apoplexy about what Trump can do to them financially is based on cultural fears, not economic ones: they don't want to slip way down on the AmLaw 100 list in profitability, no matter what. So instead of leading the fight against Trump's excesses, they're complicit.
Of course, you'd like to believe that these firms also uniquely embrace their ethical, moral and professional commitments to the rule of law. If lawyers don 't take that seriously, who will? What Skadden, Paul Weiss, Milbank and others are doing in caving to Trump — and giving him $100 million in free legal services to boot — is a wholesale abdication of everything every lawyer should believe about his professional obligations.
In short, I am in no way surprised at their lack of character or courage. I'm only surprised at how short-sighted these firms are: I believe that Trump's extortion will be tossed aside by the courts (including the Supreme Court, if the cases get that far). All that will be left, then, is this indelible stain on the reputation of all these craven wussies, and I don't see that stain washing off very easily. These firms do compete intensely for young talent, and there will be many among our best and brightest law graduates who will choose firms that did not sell their souls in this way. There will be clients, too, who, in choosing a law firm to represent them, may think twice about hiring a firm with so little backbone, when there are many others who did stand tall.
Very well said!
Budd Shenkin