--:-- [Theme music fades out]
--:-- Host: Welcome to The Journal, our show about money, business, and power. I'm Kate Leinbaugh.
--:-- Kate Leinbaugh: It's Wednesday, March 26th. Coming up on the show, Trump's attack on big law.
--:-- Kate Leinbaugh: Earlier this month on Fox News, President Donald Trump announced a new plan. We have a lot of law firms that we're going to be going after because they were very dishonest people. They were very, very dishonest. His plan is to go after big law firms.
--:-- Kate Leinbaugh: The president signed a memo suspending the active security clearances of lawyers from a firm called Covington & Burling. In the latest chapter of Donald Trump's promised retribution he has signed an executive order against a law firm called Perkins Coie.
--:-- Kate Leinbaugh: President Trump issued another executive order purporting to punish yet another law firm this one Paul Weiss. President Donald Trump has signed an executive order targeting Chicago-based law firm Jenner & Block.
--:-- Kate Leinbaugh: These executive orders could have massive detrimental consequences for some of the nation's biggest law firms.
--:-- Kate Leinbaugh: Here's our colleague Erin Mulvaney, who covers legal affairs.
--:-- Erin Mulvaney: It could just make you bleed clients pretty much right away, almost immediately. And as these executive orders were coming out, what was the response from lawyers in those firms? Shock and fear, for sure, within those firms.
--:-- Erin Mulvaney: It was a pretty dramatic move that could really destroy these businesses. So law firms have a lot of reason to be afraid for their business if they are targeted with an order.
--:-- Erin Mulvaney: These law firms are now having to decide how to respond. And none of the options are good.
--:-- Kate Leinbaugh: Welcome to The Journal, our show about money, business, and power. I'm Kate Leinbaugh.
--:-- Kate Leinbaugh: Why shop at Burlington? Maybe it's the deals that are new each time you drop by. Maybe it's the brand names you'll be shocked Burlington has in store. Or maybe it's the quality of the items, the amazing selection, and the newest trends.
--:-- Kate Leinbaugh: If you like to save but also like to stay in style, Burlington is your answer. And the question you'll be asking yourself is, why go anywhere else? Burlington. Deals. Brands. Wow.
--:-- Kate Leinbaugh: Tuesday on NBC, Jimmy Fallon and Bozema St. John host a highly anticipated new competition show.
--:-- Kate Leinbaugh: I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars.
--:-- Kate Leinbaugh: I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.
--:-- Kate Leinbaugh: Trump is taking aim at some big law firms because of things that happened years ago, going all the way back to his first term.
--:-- Kate Leinbaugh: It's pretty fair to say it's a way to come after people that had brought legal challenges against him before or done research and opposition work for people that were his opponents in the past.
--:-- Kate Leinbaugh: The first firm Trump went after provided some legal services around the investigation of Trump's role in the January 6th riot.
--:-- Kate Leinbaugh: One law firm that provided pro bono legal services to the special counsel's office under Jack Smith's leadership was Covington and Burling.
--:-- Kate Leinbaugh: Trump issued an executive order against Covington and Burling that suspended the firm's security clearances and placed its government contracts under review.
--:-- Kate Leinbaugh: If a lawyer handles a case, say, for a government official and there are sensitive materials involved in that investigation, in order to represent that client adequately, he or she would need some kind of security clearance and access to that material.
--:-- Kate Leinbaugh: Trump said his order was in response to, quote, the weaponization of our system by law firms.
--:-- Kate Leinbaugh: Covington said it had a long history of representing clients facing government investigations that is quote consistent with the best traditions of the legal profession.
--:-- Kate Leinbaugh: About a week later Trump issued another executive order against another prominent firm Perkins Coie The Washington law firm has, among many clients, represented Hillary Clinton and the DNC during the 2016 presidential race.
--:-- Kate Leinbaugh: This executive order went further than the first one. It limited the firm's access to federal buildings.
--:-- Kate Leinbaugh: So many things are federal buildings. Obviously, if you can't go to a federal court to represent your client, it would make it pretty limiting to represent that client.
--:-- Kate Leinbaugh: And probably most significantly, it directed agencies to investigate any federal contracts that the firm or its clients have and remove them.
--:-- Kate Leinbaugh: So why is that the most significant part of the order?
--:-- Kate Leinbaugh: So many of the big companies that they represent have very lucrative federal contracts.
--:-- Kate Leinbaugh: And if they work with that firm, they will lose it.
--:-- Kate Leinbaugh: So what you're saying is if their clients want to keep their federal contracts, they'd have to go to a different law firm.
--:-- Kate Leinbaugh: That seems like it would be a big deal for Perkins Coie.
--:-- Kate Leinbaugh: It would be very meaningful to lose their clients.
--:-- Kate Leinbaugh: These law firms do make relationships with clients over a long period of time.
--:-- Kate Leinbaugh: So that's why it was pretty existential and could potentially destroy a firm.
--:-- Kate Leinbaugh: Losing their clients, that's kind of their main currency.
--:-- Kate Leinbaugh: Perkins Coie decided to fight back.
--:-- Kate Leinbaugh: The firm said the order was a, quote, irrational abuse of power that shocks the conscience.
--:-- Kate Leinbaugh: The firm alleged the order was illegal in at least nine different ways, including violating a client's right to legal counsel.
--:-- Kate Leinbaugh: So Perkins Coie took the case to court and immediately got an emergency injunction that blocked the order from taking effect.
--:-- Kate Leinbaugh: A federal judge has ordered the Trump administration to temporarily halt some of the penalties it levied on a law firm linked to Democratic causes that are unpopular with the president.
--:-- Kate Leinbaugh: How has Trump responded to that suit?
--:-- Kate Leinbaugh: They've pushed back in court.
--:-- Kate Leinbaugh: I listened to the hearing, and since they have also called for the judge to be removed, the upshot of what the Justice Department lawyer was arguing is that the president should have the power to say who or what institution creates a national security risk and should have that discretion.
--:-- Kate Leinbaugh: That's the main legal argument that they have on their side.
--:-- Kate Leinbaugh: Just days later, Trump signed a third executive order that would take his fight against big law in a different direction.
--:-- Kate Leinbaugh: This order was against a major law firm called Paul Weiss.
--:-- Kate Leinbaugh: The law firm is one of the nation's top firms.
--:-- Kate Leinbaugh: It has 1,200 lawyers.
--:-- Kate Leinbaugh: It has some of the biggest clients that you could think of on Wall Street, Goldman, Blackstone, Apollo.
--:-- Kate Leinbaugh: So they're often in the conversation of some of the biggest players in the legal industry.
--:-- Kate Leinbaugh: And like the other firms Trump has gone after, Paul Weiss has done some work for people and organizations that oppose Trump.
--:-- Kate Leinbaugh: Their chair, Brad Karp, is a pretty prominent Democratic donor.
--:-- Kate Leinbaugh: And in the past, especially during Trump's last administration, did assist the ACLU with fighting some of Trump's policies, particularly the policy that separated children and their parents at the border.
--:-- Kate Leinbaugh: Did Trump say anything in particular about why he was taking aim at Paul Weiss?
--:-- Kate Leinbaugh: In the order, it cited some pro bono work that Paul Weiss did for the attorney general in Washington, D.C. when they provided some legal help against the January 6th rioters who were accused of storming the Capitol.
--:-- Kate Leinbaugh: one, and then mentioning an affiliation with a former partner there, Mark Pomerantz.
--:-- Kate Leinbaugh: Pomerantz is someone who used to work at Paul Weiss.
--:-- Kate Leinbaugh: He was affiliated with the firm for about two decades.
--:-- Kate Leinbaugh: In 2021, Pomerantz worked at the Manhattan DA's office on an investigation that resulted in an indictment against the Trump Organization for alleged fraudulent business practices
--:-- Kate Leinbaugh: The indictment eventually fell apart
--:-- Kate Leinbaugh: Trump's executive action against Paul Weiss was basically identical to the one against Perkins Coie.
--:-- Kate Leinbaugh: And immediately, it started to impact Paul Weiss's business.
--:-- Kate Leinbaugh: Other big law firms started to approach Paul Weiss's clients, hoping to poach them.
--:-- Kate Leinbaugh: At least one client decided to drop the firm.
--:-- Kate Leinbaugh: Our reporting indicates that the other big firms did take advantage of some of this, the misfortunes of the other firms.
--:-- Kate Leinbaugh: And in fact, this client that we were just talking about, they went to another big firm, but they had to go somewhere.
--:-- Kate Leinbaugh: We've had reporting that there was some circling around.
--:-- Kate Leinbaugh: The sharks are going to shark. The sharks are circling.
--:-- Kate Leinbaugh: What options did Paul Weiss have?
--:-- Kate Leinbaugh: Paul Weiss had the option to sue to block the executive order.
--:-- Kate Leinbaugh: And then what they did was a little different than that.
--:-- Kate Leinbaugh: I would say a lot of people wouldn't have imagined the option they took was going to be possible.
--:-- Kate Leinbaugh: After the break, what Paul Weiss did and why it was so surprising.
--:-- Kate Leinbaugh: This episode is brought to you by State Farm.
--:-- Kate Leinbaugh: Checking off the boxes on your to-do list is a great feeling.
--:-- Kate Leinbaugh: And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you.
--:-- Kate Leinbaugh: Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs.
--:-- Kate Leinbaugh: Like a good neighbor, State Farm is there.
--:-- Kate Leinbaugh: Lowe's knows how to help make your home holiday ready for less.
--:-- Kate Leinbaugh: Get Select Style Selections Vinyl Flooring for just $1.99 per square foot and have it installed before the festivities begin.
--:-- Kate Leinbaugh: Our team can help you every step of the way.
--:-- Kate Leinbaugh: See a Lowe's Red Vest Associate or visit lowes.com slash holiday install to get started.
--:-- Kate Leinbaugh: Lowe's. We help you save.
--:-- Kate Leinbaugh: Basic install only.
--:-- Kate Leinbaugh: Date restrictions apply.
--:-- Kate Leinbaugh: Subject to availability.
--:-- Kate Leinbaugh: Install by independent contractors.
--:-- Kate Leinbaugh: See associate for details.
--:-- Kate Leinbaugh: Contiguous U.S. only.
--:-- Kate Leinbaugh: Once Trump signed the executive order against Paul Weiss on Friday, March 14th, it set off a scramble.
--:-- Kate Leinbaugh: Already over the weekend, all the partners at Paul Weiss were hearing from clients, talking to each other, what are we going to do?
--:-- Kate Leinbaugh: They hired a lawyer.
--:-- Kate Leinbaugh: They were preparing to sue.
--:-- Kate Leinbaugh: They were ready to take it to court to try to get an emergency order, an emergency ruling blocking the order from taking effect.
--:-- Kate Leinbaugh: And the lawyer for Brad Karp, the chair of the firm, had another suggestion to possibly talk to the president himself to talk to him about how to get rid of the order.
--:-- Kate Leinbaugh: Diffuse the bomb. Diffuse the bomb.
--:-- Kate Leinbaugh: As a reporter on it, I was very surprised that they didn't sue that Monday first thing because, like I said, this could be detrimental to a firm.
--:-- Kate Leinbaugh: In the background, Brad Karp found a way to Trump.
--:-- Kate Leinbaugh: He tapped a powerful acquaintance, Robert Kraft, the owner of the New England Patriots.
--:-- Kate Leinbaugh: Kraft connected Karp with the president, and a meeting was set up.
--:-- Kate Leinbaugh: They met in the Oval Office on a Wednesday.
--:-- Kate Leinbaugh: They talked for three hours.
--:-- Kate Leinbaugh: And by the end of the meeting, a deal had been reached.
--:-- Kate Leinbaugh: What was in the deal?
--:-- Kate Leinbaugh: Paul Weiss agreed to several things, the first of which was to give $40 million to certain pro bono legal services that the president approves of.
--:-- Kate Leinbaugh: They include veterans, things that are against anti-Semitism, and a few other things.
--:-- Kate Leinbaugh: They agreed to some sweeping language about merit-based hiring practices, which I think in Brad Karp's view lined up with the requirements of federal civil rights laws.
--:-- Kate Leinbaugh: The firm also agreed to not take clients based on any political ties or partisanship.
--:-- Kate Leinbaugh: That's actually kind of a normal thing for firms to say.
--:-- Kate Leinbaugh: They're not necessarily trying to take clients because of a political, you know, that's the whole point.
--:-- Kate Leinbaugh: They trying to be neutral anyway
--:-- Kate Leinbaugh: So that was the agreement
--:-- Kate Leinbaugh: And then Trump had a message on Truth Social on Thursday evening
--:-- Kate Leinbaugh: President Trump yesterday rescinded an executive order targeting prominent law firm Paul Weiss
--:-- Kate Leinbaugh: How big of a deal is this, given that Perkins had gotten a temporary injunction and that people in the legal community thought Paul Weiss had a pretty good case?
--:-- Kate Leinbaugh: I think it was pretty shocking because if Paul Weiss took this to court, they'd probably win.
--:-- Kate Leinbaugh: And I think in the legal community, there's a sense of upholding what they call like the rule of law, just respecting that an executive wouldn't be able to take an action.
--:-- Kate Leinbaugh: So sweeping to target a firm like that.
--:-- Kate Leinbaugh: And the capitulation of such a major, powerful figure maybe rattled people even more.
--:-- Kate Leinbaugh: in the legal industry, that the president could have such power over the law firm.
--:-- Kate Leinbaugh: A lot of people in the legal industry were very upset by what happened.
--:-- Kate Leinbaugh: What has Paul Weiss said about why they went this route of striking a deal instead of getting litigious?
--:-- Kate Leinbaugh: Actually, Brad Karp did send a note over this weekend to his partnership explaining that the business was likely to be destroyed if the executive order were to stand, was happening very fast, that competitors were swooping in.
--:-- Kate Leinbaugh: And he also said it was easy to complain from the sidelines when you're not faced with this existential crisis of your business being destroyed by an executive order.
--:-- Kate Leinbaugh: President Trump is pushing ahead.
--:-- Kate Leinbaugh: He said he's looking into executive orders against more law firms.
--:-- Kate Leinbaugh: Yesterday, he signed one against the firm Jenner & Block.
--:-- Kate Leinbaugh: Jenner said the executive order was similar to the one that had already been declared unconstitutional by a federal court and said it would pursue, quote, all appropriate remedies.
--:-- Kate Leinbaugh: Are you seeing any other sort of changes in the industry among firms trying to get ahead of a conflict with Trump or dodge a conflict with Trump?
--:-- Kate Leinbaugh: I think the silence and the chill that you're hearing from them is probably one answer.
--:-- Kate Leinbaugh: I should also say getting a deal is not necessarily doable either.
--:-- Kate Leinbaugh: It's not clear if there can be a meeting with every single firm that Paul Weiss got.
--:-- Kate Leinbaugh: So I think they also are trying to stay out of the way of Trump in many ways.
--:-- Kate Leinbaugh: What are the implications of, like, all of this on the legal system?
--:-- Kate Leinbaugh: I think that the implications are that if you are a lawyer, your job is to represent clients.
--:-- Kate Leinbaugh: Yes, you choose your clients, but there's always been kind of a layer of protection for unpopular clients.
--:-- Kate Leinbaugh: You know, people represent—people are accused of murder and things like that.
--:-- Kate Leinbaugh: Obviously, that's not what we're talking about here, but there's pretty sweeping understanding that the role of a lawyer in the legal system is to have a vigorous defense of their client.
--:-- Kate Leinbaugh: So if you go after a law firm for taking on a client, it hits at the root of what this industry is all about.
--:-- Kate Leinbaugh: Trump has, I think we're tracking, you know, more than 120 lawsuits against his administration currently.
--:-- Kate Leinbaugh: and so far the courts have been one pretty significant check on what has happened so far in this administration.
--:-- Kate Leinbaugh: And in the past, the legal industry has felt, at least big law, these big firms have felt very insulated from the political fray, from attacks by executive orders, the administration.
--:-- Kate Leinbaugh: And so this is a clear shift from that narrative.
--:-- Kate Leinbaugh: that's all for today Wednesday March 26th the journal is a co-production of Spotify and the Wall Street Journal.
--:-- Kate Leinbaugh: Additional reporting in this episode by Josh Dossie and Ryan Barber.
--:-- Kate Leinbaugh: Thanks for listening see you tomorrow
