When Even Trump-Friendly Companies Won’t Work With Law Firms That Caved To Trump
If asked, do you think corporate America would prefer to hire (1) lawyers who fight, or (2) lawyers who immediately surrender, I think you’d know the answer.
And now we have some fairly unambiguous empirical data to support what the answer is.
Oracle’s Larry Ellison loves Trump. Morgan Stanley contributed one of their top execs to the Trump administration. But even they won’t work with law firms that capitulated to Trump’s bogus executive orders targeting lawyers who dared to challenge him in court.
The WSJ reports that at least 11 major companies are dumping law firms that struck deals with Trump’s obviously bogus executive orders targeting lawyers. Meanwhile, the firms that fought back keep winning in court and picking up the fleeing clients.
The message from corporate America shouldn’t require an expert at $1,000+ per hour to decipher: if you won’t fight for yourself against an obviously frivolous legal threat, why would anyone pay you to fight for them?
Support for the law firms that didn’t make deals has been growing inside the offices of corporate executives. At least 11 big companies are moving work away from law firms that settled with the administration or are giving—or intend to give—more business to firms that have been targeted but refused to strike deals, according to general counsels at those companies and other people familiar with those decisions.
Among them are technology giant Oracle, investment bank Morgan Stanley, an airline and a pharmaceutical company. Microsoft expressed reservations about working with a firm that struck a deal, and another such firm stopped representing McDonald’s in a case a few months before a scheduled trial.
In interviews, general counsels expressed concern about whether they could trust law firms that struck deals to fight for them in court and in negotiating big deals if they weren’t willing to stand up for themselves against Trump. The general counsel of a manufacturer of medical supplies said that if firms facing White House pressure “don’t have a hard line,” they don’t have any line at all.
When these law firm executive orders first came down, plenty of legal commentators called it a “no win situation.” Some argued that if you didn’t cave, clients would leave, because the firm would have a target on its back from the executive orders (and if those EOs were upheld, it would limit the ability of the law firms to do any business at all). But it looks like the reverse is true. The EOs are being tossed out easily, and the firms that fought them look like fighters.
The economics here are pretty straightforward. If you’re a general counsel, you have two main concerns about your outside lawyers: (1) Can they win? and (2) Can I trust them to fight for me when it matters? The firms that caved just answered both questions with a resounding “no.”
The firms that caved look just as weak and bad at their jobs as many of us expected.
Not long after Latham struck a deal in April, the firm’s chair, Richard Trobman, met with Morgan Stanley’s chief legal officer, Eric Grossman, people familiar with the meeting said. Grossman heard him out about the firm’s reasoning for striking a deal and acknowledged that companies have to do what is best for themselves.
Soon after that meeting, Grossman and other Morgan Stanley lawyers communicated to law firms targeted by the White House that hadn’t signed deals that they were looking to give them new business, the people familiar with the meeting said.
[….]
The day after Paul Weiss struck its deal, female general counsels gathered for a conference in Washington. During a panel at the Women’s General Counsel Network event, a lawyer stood up and said her company had taken steps that morning to pull its business from Paul Weiss. The lawyer received thunderous applause.
[….]
In April, the general counsel of Microsoft, Jon Palmer, discussed with leaders of Latham his concerns about the deal the firm had struck, including how it could affect Latham’s ability to represent Microsoft, especially before the government, according to people familiar with the discussion.
On April 17, Microsoft put its concerns in writing, removing Latham from a list of about a dozen preferred firms that it has vetted to handle outside legal work, according to a document described to the Journal.
Here’s the thing about the biggest law firms: they’re essentially selling confidence. When you hire BigLaw at $1,000+ per hour, you’re not just buying legal expertise — you can often get that much cheaper. You’re buying the confidence that when things get really ugly, your lawyers will be the last people standing in the room.
These firms spectacularly failed that test. They faced a legal threat that was so obviously bogus that conservative judges keep laughing it out of court, and their response was immediate capitulation, with bizarre justifications about how this bending of the knee would somehow work. It’s like hiring a bodyguard who runs away at the first sign of trouble.
The market’s response makes perfect sense. If you’re Oracle or Microsoft, you have lawyers on speed dial because someday you’re going to face an existential legal threat — maybe antitrust, maybe a massive lawsuit, maybe regulatory overreach. When that day comes, do you want lawyers who fold under pressure, or lawyers who fight?
The firms that caved have answered that question for everyone to see. They’ve essentially put up a giant billboard saying “We Will Fold Under Pressure” and then acted surprised when clients started shopping elsewhere.