Chartbook 366: "Servants of the Damned" or how Trump has put a bit of stick about with BigLaw.

Jenner & Block

WilmerHale

Skadden, Arps, Slate, Meagher & Flom

Paul, Weiss, Rifkind, Wharton & Garrison,

The names of America’s big law firms, trip off the tongue. Names made up of lists of names. As if to parade the network quality of power: “him and him, and him and him”.

And yet, since March 14 this illustrious group of insiders find themselves under attack. Trump’s Executive Order targeting law firm Paul Weiss of March 14, is worth quoting more or less in full:

Section 1. Background. Global law firms have for years played an outsized role in undermining the judicial process and in the destruction of bedrock American principles. Many have engaged in activities that make our communities less safe, increase burdens on local businesses, limit constitutional freedoms, and degrade the quality of American elections. Additionally, they have sometimes done so on behalf of clients, pro bono, or ostensibly “for the public good” — potentially depriving those who cannot otherwise afford the benefit of top legal talent the access to justice deserved by all. My Administration will no longer support taxpayer funds sponsoring such harm.
My Administration has already taken action to address some of the significant risks and egregious conduct associated with law firms, and I have determined that similar action is necessary to end Government sponsorship of harmful activity by an additional law firm: Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul Weiss). In 2021, a Paul Weiss partner and former leading prosecutor in the office of Special Counsel Robert Mueller brought a pro bono suit against individuals alleged to have participated in the events that occurred at or near the United States Capitol on January 6, 2021, on behalf of the District of Columbia Attorney General.
In 2022, Paul Weiss hired unethical attorney Mark Pomerantz, who had previously left Paul Weiss to join the Manhattan District Attorney’s office solely to manufacture a prosecution against me and who, according to his co-workers, unethically led witnesses in ways designed to implicate me. After being unable to convince even Manhattan District Attorney Alvin Bragg that a fraud case was feasible, Pomerantz engaged in a media campaign to gin up support for this unwarranted prosecution.
Additionally, Paul Weiss discriminates against its own employees on the basis of race and other categories prohibited by civil rights laws. Paul Weiss, along with nearly every other large, influential, or industry leading law firm, makes decisions around “targets” based on race and sex. My Administration is committed to ending such unlawful discrimination perpetrated in the name of “diversity, equity, and inclusion” policies and ensuring that Federal benefits support the laws and policies of the United States, including those laws and policies promoting our national security and respecting the democratic process. Those who engage in blatant discrimination and other activities inconsistent with the interests of the United States should not have access to our Nation’s secrets nor be deemed responsible stewards of any Federal funds.

Sec. 2. Security Clearance Review. (a) The Attorney General, the Director of National Intelligence, and all other relevant heads of executive departments and agencies (agencies) shall immediately take steps consistent with applicable law to suspend any active security clearances held by individuals at Paul Weiss and Mark Pomerantz, pending a review of whether such clearances are consistent with the national interest.
(b) The Office of Management and Budget shall identify all Government goods, property, material, and services, including Sensitive Compartmented Information Facilities, provided for the benefit of Paul Weiss. The heads of all agencies providing such material or services shall, to the extent permitted by law, expeditiously cease such provision.

Sec. 3. Contracting. (a) To prevent the transfer of taxpayer dollars to Federal contractors whose earnings subsidize, among other things, activities that are not aligned with American interests, including racial discrimination, Government contracting agencies shall, to the extent permissible by law, require Government contractors to disclose any business they do with Paul Weiss and whether that business is related to the subject of the Government contract.
(b) The heads of all agencies shall review all contracts with Paul Weiss or with entities that disclose doing business with Paul Weiss under subsection (a) of this section. To the extent permitted by law, the heads of agencies shall:
(i) take appropriate steps to terminate any contract, to the maximum extent permitted by applicable law, including the Federal Acquisition Regulation, for which Paul Weiss has been hired to perform any service;
(ii) otherwise align their agency funding decisions with the interests of the citizens of the United States; with the goals and priorities of my Administration as expressed in executive actions, especially Executive Order 14147 of January 20, 2025 (Ending the Weaponization of the Federal Government); and as heads of agencies deem appropriate. Within 30 days of the date of this order, all agencies shall submit to the Director of the Office of Management and Budget an assessment of contracts with Paul Weiss or with entities that do business with Paul Weiss effective as of the date of this order and any actions taken with respect to those contracts in accordance with this order.

…

Sec. 5. Personnel. (a) The heads of all agencies shall, to the extent permitted by law, provide guidance limiting official access from Federal Government buildings to employees of Paul Weiss when such access would threaten the national security of or otherwise be inconsistent with the interests of the United States. …
(b) Agency officials shall, to the extent permitted by law, refrain from hiring employees of Paul Weiss, absent a waiver from the head of the agency, made in consultation with the Director of the Office of Personnel Management, that such hire will not threaten the national security of the United States.

Clearly for a firm, any firm, to be targeted in this way is alarming. This passage from the New York Times sums up the atmosphere:

Panic was already roiling through Paul, Weiss over the potentially catastrophic effect of the (Trump’s) executive order. The order restricted the firm’s lawyers from dealing with the government, including entering federal buildings, and said companies doing business with Paul, Weiss could lose their government contracts. Even if the firm successfully fought the order in court, it was feared it would be labeled an enemy of Trump. The threat of losing the firm’s top lawyers compounded those worries.

These firms were, one imagined, at the heart of power. So presumably beyond reach. And yet, here they are, in the cross hairs of the Trump administration and running scared of predation by others in the Big Law pack.

That made Cam and I curious to do an episode of OnesandTooze about the phenomenon of “Big Law”.

I gather the inspiration came in part from Cam listening to the podcast by McLean and Zingales at Chicago Booth in which they talk to journalist David Enrich about his rather luridly titled book, Servants of the Damned.

Lurid or not, it made for a fascinating slice of America’s political economy.

To start with a brief history:

Legal education in America’s early post-colonial history was rarely formal, with most lawyers entering the sector by apprenticing to established legal professionals. The founding of Harvard Law School’s training program in 1817 providing a mould that would come to define legal education in the US, at the same time paving the way for the formation of so-called ‘white shoe’ firms in the northeastern US and the rise in professionalism that ensued. The first entities that would come to be recognised as ‘law firms’ emerged in the late eighteenth and early nineteenth centuries and generally comprised three or fewer lawyers. These grew larger by the decade, with 15 firms recognised in the US with four or more lawyers in 1872 and 210 in 1903. The number had grown to more than 1,000 by 1924, and the intervening years had seen the establishment of the so-called ‘Cravath System’ that defined the broad organisational structure that many law firms sport to this day.

Source: Fodor

As laid out in Marc Galanter and Thomas Palay’s seminal book Tournament of Lawyers (1999), the Cravath System refers to a loosely pyramid-shaped hierarchy of advancement where partners are served by several partnership-track associates below them to ensure profit maximisation. The term ‘BigLaw’ itself was coined by professional advisory firm Beaton Capital in 2013 to refer to large law firms that used this pyramid structure.

It is no coincidence that the rise of larger law firms coincided with the turn of the century and the ensuing boom period of US commerce, wherein names like Rockefeller, Carnegie and Vanderbilt emerged as pioneers and monopolists. This period marked the transition of lawyers from pure courtroom advocates to business advisors, with a corresponding focus on professionalism and speed of service. Formalised partnership agreements became more common during this period, along with larger premises as firms strove to keep up with supply-side demand for legal advice, taking on more staff than could operate out of the formerly common two-man offices. The evolution of BigLaw in this manner can be seen in organisations like Shearman & Sterling. Founded in New York City in 1873 with only five legal staff and a focus on litigation, the firm’s reputation for strong transactional work came to define its practice, cultivating relationships with financiers and industrialists like Jay Gould and Henry Ford that would propel it to enduring international success following the Second World War. Similar cases can be seen in the meteoric rise of White & Case and Kirkland & Ellis, both of which launched in NYC with a founding partnership of only two lawyers and rode a wave of growth to become two of the largest firms in the US and the world. It is worth noting that, despite the name, BigLaw today comprises only a minority of lawyers. A 2020 study by the American Bar Association found that around 22% of lawyers work at firms of 100 or more attorneys, whereas 30% work at firms of two to nine, 17% at firms of 10-49 and 5% at firms of 50-99. A full 26% identify as solo practitioners.

Source: Lawyer Monthly

I quite enjoyed this boomer-centric of the explosion of the American legal profession from the 1970s onwards by Jordan Furlong.

From 1970 to 1984, the number of lawyers in the US grew by 98%. From 1980 to 1990, the number of US firms with more than 50 lawyers tripled; the number of lawyers in those firms rose 119%. From 1960 to 1980, the average US lawyer age dropped from 46 to 39. In 1967, businesses bought 39% of US legal services and individuals bought 55%; by 1992, those shares had switched to 51% and 40%. The legal profession in the US (and in other countries that experienced similar demographic trends) became much more populous, more business-oriented, and much younger in a very short period of time. It also became more cutthroat. “Within the large-firm sector, the 1970s saw the dissolution of the world of assured tenure, infrequent lateral movement, and enduring retainer relationships with loyal, long-term clients,” wrote Marc Galanter in 1999. “In its place rose a world of rapid growth, mergers and breakups, overt competition, aggressive marketing, attorney movement from firm to firm, fears of defection, and pervasive insecurity.” This was how Boomers’ values — hard work, individualism, growth, consumerism — began to replace those of their Silent Generation elders. It’s during this period that mandatory retirement policies are first introduced, allowing law firms to push partners out at the (now-astonishing) age of 55. Money shifts from a taboo topic to seemingly the only topic worth talking about (it’s the ‘80s, after all). In 1979, Steven Brill launches The American Lawyer; in 1987, the magazine debuts the AmLaw 100 and introduces the legal profession to Profits Per Partner. “Lawyers find themselves competing not just with lawyers in other firms, but with their own partners and even the associates coming up the ladder,” Galanter writes. “Lawyers complain of the decline of collegiality. The bonds of fraternity are frayed.” Silent Generation lawyers, proprietors of the small, dignified, exclusionary law firms of the mid-century, were overwhelmed by this massive wave of optimistic, determined, sky’s-the-limit lawyers flooding into the profession, remaking the practice of law and the business of law firms to reflect and ride the expansive post-War high. Older lawyers’ values — loyalty, elitism, stability, frugality born from childhoods in the Depression and WWII — were pushed aside.

So who are the big firms?

How should we rank the names on Trump’s hit list?

One useful compilation is put together by Law.com. The list for 2023 is freely available at wikipedia. For your delectation, I’ve datawrapped it below. This is definitely one to “cut out and keep” for future reference.

Source: Wikipedia based on Law.com

The numbers of that list are telling. But How much do lawyers, on average, earn?

The BLS classes 850,000 people as employed as lawyers. “The median annual wage for lawyers was $145,760 in May 2023. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $69,760, and the highest 10 percent earned more than $239,200. In May 2023, the median annual wages for lawyers in the top industries in which they worked were as follows:

In a significant qualification they add: “These wage data do not cover self-employed workers or owners and partners of unincorporated businesses. Most lawyers work full time, and some work more than 40 hours per week. Lawyers who are self-employed may have flexibility in setting their own schedules.”

Source: BLS

Partners in big firms are in a different league. Law.com also publishes a listing of the big law firms organized in terms of the number of partners and the profit per partner in 2021/22. Once again I’ve been amusing myself by playing with datawrapper. You can see how tightly packed are the firms at the top.

In terms of political donations, lawyers are relatively evenly split btw Democrats and Republicans. These figures give just an indication of the balance.

Source: Open Secrets

In general it is clearly true that strong adherence to the rule of law, or even rigorous reasoning, makes you an enemy of the Trump clique. That is PMC stuff. But then a lot of what Big Law actually does has a rather different flavor, anyway.

This passage from the New York Times surely sums it up:

Panic was already roiling through Paul, Weiss over the potentially catastrophic effect of the (Trump’s) executive order. The order restricted the firm’s lawyers from dealing with the government, including entering federal buildings, and said companies doing business with Paul, Weiss could lose their government contracts. Even if the firm successfully fought the order in court, it was feared it would be labeled an enemy of Trump. The threat of losing the firm’s top lawyers compounded those worries. Some partners were particularly concerned that Scott Barshay, the head of the corporate practice, might leave and prompt others to follow him. (Top lawyers, including Barshay, assured Brad Karp, the firm’s chairman, and others that they had no plans to leave.) Then things got more awkward. When Karp went to the Oval Office to negotiate a deal with Trump, he was surprised at one person the president wanted to dial into the meeting: Robert Giuffra, a co-chair of Sullivan & Cromwell. That was awkward given the competitiveness between his firm and Paul, Weiss. … Giuffra, who has known Trump for many years, recently agreed to handle the appeal of Trump’s conviction on charges that he covered up a hush-money deal with the porn star Stormy Daniels in a New York State court. Initially the conversation among the president and the two legal rivals focused on golf. Then it turned to Trump’s concerns about Paul, Weiss’s long association with Democratic politics. Eventually, the meeting resulted in a deal. So far, Paul, Weiss appears not to have lost any partners or big clients.

Trump barks about a broken reality, as in the executive order: “Global law firms have for years played an outsized role in undermining the judicial process and in the destruction of bedrock American principles.” But his grievance is personal: “In 2022, Paul Weiss hired unethical attorney Mark Pomerantz, who had previously left Paul Weiss to join the Manhattan District Attorney’s office solely to manufacture a prosecution against me … “. How many Presidential Executive Orders are there, that feature the word “me”?

And the remedy too is not systemic, but personal: “My Administration will no longer support taxpayer funds sponsoring such harm.” A threat which is then resolved into a conversation about golf, and a deal.

Trump is the long-suffering exemplary victim and the avenging boss who sees to it that the problem is sorted out and the world will be put to fights. Meanwhile, if this could happen to Paul Weiss, the rest are put on notice.

---

I love writing Chartbook. I am delighted that it goes out for free to tens of thousands of readers around the world. What supports this activity are the generous donations of active subscribers. Click the button below to see the standard subscription rates.