To What Did the Law Firms Agree When They Settled and What Have They Done?

Oftentimes, with the current President, there are announcements of dramatic initiatives that seem pretty significant. And then there are more announcements of completely unrelated dramatic initiatives and then still others. It is easy to get caught up in the news of the moment, and one can forget to follow up and see what became of the first dramatic initiative. Sometimes, it’s pretty obvious that some of the things that the President says . . . aren’t true.

Did we really “completely destroy: Iran’s nuclear sites? If so, why are we at war? The President demanded “unconditional surrender” and claimed that the war has been won. But then why did he contemplate sending his crack negotiating team of his son-in-law and a real-estate mogul to Pakistan to negotiate with Iran? If it’s an unconditional surrender, there shouldn’t be anything to negotiate. This guy knows.

What exactly did we achieve in Venezuela? Did we liberate the Venezuelan people from an oppressive government? No. Except for the guy at the top, it’s still the same government. The President claimed that the U.S. would market Venezuelan oil and that the proceeds would be deposited in U.S. accounts. The truth is far more complicated. Moreover, we have seized Venezuelan tankers that we have to maintain, whether or not they actually have valuable cargo. Those costs run in the tens of millions of dollars. The costs of the naval blockade in connection with U.S. operations in Venezuela now likely exceed $1 billion.

I could go on, but you get the idea. This is the ContractsProf Blog, so let’s talk about a contract.

The Paul Weiss law firm, it seems, is still reeling from its decision to settle with the federal government. Last week, Jessica Silver-Greenberg and Michael S. Schmidt reported in The New York Times that two litigation partners were leaving the firm. The firm had also lost other litigation partners, as well as its chairman, whose leadership became precarious due to the capitulation to the government and then became untenable when his name turned up in the Trump-Epstein files.

What exactly did that settlement accomplish for the government and for Paul Weiss and the other firms that entered into similar settlements? I suspect that the firms settled because the actual cost of the settlements was quite low when compared to the threat of lost income from regulatory compliance and other business opportunities that necessitated interaction with federal agencies.

According to the White House, Paul Weiss agreed to

• adopt a policy of political neutrality with respect to client selection and attorney hiring;
• take on a wide range of pro bono matters representing the full political spectrum;
• commit to merit-based hiring, promotion, and retention, instead of “diversity, equity, and inclusion” policies;
• dedicate the equivalent of $40 million in pro bono legal services in office to support causes including assisting our Nation’s veterans, fairness in the justice system, and combating anti-Semitism; and other similar initiatives.

From the firm’s perspective, this is a pretty sweet deal. Firms likely already are politically neutral, so far as they know, in their practices of client selection and hiring. They also promote based on merit. From the firms’ perspective, no partner at any BigLaw firm is a “DEI” hire. One can hire with diversity (however defined) in mind without using catch-phrases like DEI or affirmative action. Pro bono representations may not represent the full political perspective, but that can be managed, and the range of causes that align with the administration’s objectives are broad enough that one doesn’t even have to venture outside of progressivism to comply.

But I can’t find much reporting on whether the firms are really being required to follow through on their commitments. All told, Mahira Dayal reports for Bloomberg, the firms that settled pledged to devote nearly $1 billion to pro bono work for causes aligned with the administration. But some of those firms have continued to take on representations in which they represent clients whose interests are adverse to the administration. I can find no evidence that the government is monitoring the firms’ compliance with their obligations, and I’m not sure what that would look like, because the publicly-available documents provide no timeline for compliance.

What’s really striking is that the government could obviously use some help with legal matters. The American Bar Association reports that thousands of attorneys have left the Department of Justice, and the government has had a hard time replacing them. As Tim Cushing put it in, “DOJ Has Lost So Many Lawyers It Might Not Have Enough Left To Help Trump Destroy America.” Justin Jouvenal reports in The Washington Post that the administration has defied more that 1/3 of the judges who rule against it. This may be a political strategy, but there is also evidence that the government simply does not have the resources to address the demands that courts are making.

It would make sense, given this situation for the government, to cash in on its deals with the firms and make the firms lend a hand to fill on for the government’s current shortage of lawyers. But the firms did not promise to do so, and perhaps the government does not really want them to do so. The DoJ seems to be having a hard time finding lawyers willing to bring the kinds of political indictments it wants to bring, and associates of BigLaw firms are unlikely to be any more willing to do so.

Moreover, Democratic Members of Congress are pushing back, arguing that some government representations that the firms might undertake do not qualify as pro bono work as the firms define that term. Moreover, the Members raise concerns that the work might violate the Anti-Deficiency Act, which “prohibits the Government from accepting voluntary services and has limited exceptions in order to ensure the Government is not on the hook for financial obligations Congress has not explicitly appropriated.”

The firms likely settled because they were making no firm commitments, and the administration was more interested in flashy headlines than in really forcing the firms to provide services to the government for free. The government succeeded in its objective; the firms did not really succeed in theirs, because the optics were catastrophic for the firms, especially for Paul Weiss.

For firms like Paul Weiss that do significant regulatory work and need to work with government agencies, it is a no-win scenario. Perhaps now, based on all of the precedents (here, here, here, and here) establishing that the President’s Executive Orders targeting specific law firms are unlawful, the firms could run to court and get an immediate injunction of any government-imposed impediments to the firms’ work. However, at the time of the settlements, they could not afford to do so, and even now, there is a risk that federal agencies will throw up roadblocks or slow-walk the firms’ work on behalf of their clients. Nor can they crow about how the settlements that they entered into with the government actually change nothing about how the firms work, even if that is true. The government would retaliate. They just have to take the hit, look like cringing cowards, and risk losing clients to firms that stand up to unconstitutional and authoritarian measures.