Five Factors GCs Must Weigh in Firing Trump Big Law Targets

As President Donald Trump targets major law firms through executive orders, companies should evaluate the risks and the benefits of hiring these firms and others who are willing to stand up to the administration.

Trump has issued orders against several law firms and threatened them against others. On their face, the orders seek to exact retribution against Trump’s adversaries by taking away security clearances, demanding government contractors disclose their work with the firms, and denying access to government buildings to the firms’ lawyers. But the long-term goal is more dangerous. The orders seek to deter Big Law’s interest in taking on clients or causes that are adverse to the administration and its allies.

The firms’ responses to the orders have varied. Covington & Burling took no action, likely because the order against it was extremely narrow. Paul, Weiss, Rifkind, Wharton & Garrison reached a deal with the administration. Perkins Coie, Jenner & Block, and WilmerHale all filed suit to enjoin the orders.

Federal judges quickly entered temporary restraining orders against the orders’ key provisions, citing serious constitutional concerns. Once those courts issue final rulings, there will be an appeal, creating uncertainty for months to come.

Perhaps even more ominously, three firms (Willkie Farr, Skadden, and Milbank) negotiated a preemptive deal with Trump even though he hadn’t issued an order against them.

Given this, companies must balance several factors when evaluating what law firms to hire or retain.

First, companies must consider whether working with these law firms threatens revenue. If a substantial portion of a company’s revenue derives from government contracts, then working with targeted firms could be problematic.

The government can terminate federal contracts “for convenience,” without any showing of fault. So maintaining a relationship with a targeted law firm could imperil a company’s bottom line if the orders are kept in place and the administration follows through on its implied threat to punish clients of the disfavored law firms.

Second, companies should evaluate whether they are subject to federal regulations that require regular coordination or negotiation with federal agencies. Public companies, financial institutions, manufacturing firms, and life sciences companies would fit in this category.

Companies planning a merger that may pique the interest of antitrust regulators may fear that working with a targeted firm could put a deal on ice or invite unwanted regulatory scrutiny. If regulators won’t work with your lawyers, then your company could face serious operational or strategic challenges.

Third, change isn’t easy. Terminating a company’s relationship with a law firm that is under an order is costly. On the financial front, bringing a new firm up to speed on litigation or complex regulatory matters isn’t cheap. More problematic is losing overnight the guidance of a company’s longtime “trusted advisor.” Plus, changing firms in response to an order is no guarantee; the time and money spent getting a second firm up to speed might be wasted if the new firm finds itself on the wrong side of the administration.

Fourth, a company should always seek counsel who will zealously defend them. Indeed, lawyers are ethically bound to do so. One could reasonably question whether law firms that acquiesce to the administration on an order will lean toward advising their clients to buckle to agency demands too.

Outside counsel can’t represent a client if the law firm’s financial interests materially limit (or adversely affect) its representation. Firms that have already made a deal may be vulnerable to administration pressure for a second deal down the road.

Company counsel should evaluate whether their outside law firm will feel the need to “pull punches” in negotiations with the federal government to ensure that the law firm isn’t subjected to a future order.

Finally, some matters necessarily require an unflinching confrontation with the federal government. This includes criminal investigations, challenges to regulatory action, and other civil litigation. If a company anticipates that a matter will result in adversarial proceedings against the government, then its best bet is to work with a firm that has either challenged an order or one that has made clear that it won’t acquiesce to the administration’s demands. The company’s reward for retaining these firms will be zealous advocacy in difficult matters and fewer conflicts of interest.

If companies want to know which firms are ready for the fight, they can turn to the firms (and their counsel) who are already challenging the orders and the law firms that have signed on to the amicus brief in support of Perkins Coie’s legal challenge. Those firms have made clear they are willing to take a public stand against the orders, even if that stand could result in repercussions to the firm.

Imagine a future order against your company. Who would you want to represent your interests in that battle?

Companies can also support law firms in pushing back against the orders by telling their current law firms that the company wants the firm to push back against administration efforts to shut down big law firms’ power and by discussing how they can continue to work together even if an order comes to pass. Companies, not just law firms, can make public statements in support of the rule of law.

It will be a disheartening state of affairs if law firms self-divide into those that are willing to challenge the federal government and those that aren’t. While companies can’t ignore the possible financial risks of working with a firm subject to an order, they also shouldn’t ignore the reward of working with firms that are willing to fight. Beyond the security of knowing a company’s law firm won’t back down from defending its client’s interests, companies should recognize that preserving the rule of law, protecting the right to counsel, and ensuring the independence and stability of our legal system are key to America’s economic success.

Companies and law firms must resist the temptation to stay quiet at this moment and instead stand tall together.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Sara Kropf is a trial lawyer and co-founder of Kropf Moseley Schmitt, and defends people under criminal investigation and companies in complex civil litigation.

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