Episode Transcript
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Dave Ris (00:00):
Dave, regular
listeners and viewers of Steve's
(00:06):
rules are hearing a new voice.
This is Dave Riss I am aprincipal at the McCormick group
with a specialty in legal andgovernment relations. I am
subbing for Murray Coffey, whohas a scheduling conflict. The
subject of this edition ofSteve's rules is the impact of
President Trump's executiveorders on lateral hiring and law
(00:28):
firm strategy. Steve, I'm gladto be here. Yeah, welcome.
Steve (00:39):
Welcome to the podcast
one to start with. So
Dave Ris (00:44):
go ahead, yeah,
unfortunately, you have the
harder part here, because I getto ask the questions. So
certainly there's been a lot ofchatter in mainstream media, the
firms that have decided tocomply with some of the
President's demands, may see alarge number of departures over
(01:07):
the next few months. What areyour thoughts on that? Right?
Steve (01:11):
My sense, after talking
to partners and associates at
law firms as well as peoplecurrently in the government, is
that the impact, at leastimmediately will be pretty
minimal. Yes, we're seeing someassociates resign. There'll be
some departures. There's alwaysdepartures of associates anyway.
So you never know. You never canreally attribute things to this
(01:34):
issue or not. I do thinkthere'll be an impact at the law
school level and on campusrecruiting. I think that that
those law firms that settle willhave more trouble attracting
people because those studentsare going to they're much more
focused on this issue than thanlaw firm partners are at the
partner level. I think that atleast right away, not a lot of
(01:55):
impact. I think that even thepartners at the firms that
disagreed with their firm'sapproach. They understood that
this, in many cases, this wassomething a firm had to do.
There was just too much moneyinvolved. There were too many
existing clients that needed toget their deals done. So they
felt both the duty to theirclients and make sure that they
(02:19):
were representing them fully andhopefully for them to succeed.
And then also, the lawyers werealso the part rainmaking
partners. They were concernedthat those partners, if given
that chance, might leave theirfirms, if, if they took a hard
stance against theadministration. So I don't I
think that the the general viewis that this was something we
(02:42):
had to do, or not like it.
Didn't like it, but that's whatwe had to do. I do think,
though, that in time, there maybe situation, there will be
situations where partners at thebig firms may make a change, or
consider making a change,because if it's in litigation,
and it's litigation against thegovernment, that those lawyers
may feel like there'll be aperception among their clients
(03:06):
that they're not going to fightall the way with regard to
particular issues. And we'vealready seen sort of evidence of
this, the case, and we'll putthe links in the show notes, the
case involving Simpson Thatcher,where Microsoft has changed law
firms in the middle of ashareholder lawsuit Delaware,
and they changed from SimpsonThatcher to, ironically, general
(03:27):
block, which, of course, is oneof the firms that are fighting
the executive order. So clearly,even though they haven't said
anything, clearly, Microsoftfelt like we need it. We need
somebody who's known as afighter here, as opposed to a
firm that has been more on thesettlement side of things. So I
think we may see that. The otherpoint I will make is that you've
(03:49):
got certain issues that areparticularly regulatory issues
where there are lawyers,particularly in Washington, that
represent certain types ofcompanies that will often sue
the government. Look at thehealthcare space. You know,
there's a lot of suits involvingreimbursement. Now you're
looking at the food industry.
There's going to be changes madewith this current HHS Secretary
(04:13):
with regard to food dyes andfood products and so forth.
There's going to be litigation.
And again, I think that thepartners may feel like their
stance with clients andprospective clients may not be
great if they stay one of thesefirms that have settled mostly,
as we say, mostly New Yorkfirms, but also Kirkland and
(04:33):
Latham, Hawaii. So I think thosethose partners may may make a
change, or may certainlyconsider making change.
Dave Ris (04:45):
Yeah, so the three
industries that that I've heard
where if compliance withpolitical demands creates risk,
you mentioned tech in the inMicrosoft, obviously there are
more, and also healthcare andthen. The third sector would be
finance, and so perhaps you'llsee partners in those sectors
(05:06):
exit to preserve thoserelationships, right,
Steve (05:09):
right? I would say on the
one hand, the finance side was
probably the industry that wason their minds of the settling
firms, because those firms wereinvolved in all these deals,
whether private equity or thebig banks or whatever. So
there's that side of thingswhere there was pressure, really
(05:30):
on the firms to settle on theother hand. As you point out,
they often sue the sue thegovernment as well. And so
therefore there may be backthere. And so that's one of the
things that we may see as afurther sort of division between
transactional firms andlitigation. There'll be more of
a distinction, I think, and Ithink that it'll be a challenge,
(05:53):
I think, for the bigtransactional firms to continue
to hold on to to litigators,particularly if those litigators
are often opposed to thegovernment in their litigation,
that includes white collar aswell. I mean, certainly there
are white collar situationswhere the lawyers are
(06:13):
aggressively pursuing defendingtheir clients with regard to
sort of governmentinvestigations. And therefore
there may be a feeling like wecan't be perceived as being
compromised in any way becauseof what we've done with the with
these administration orders.
Dave Ris (06:35):
So given that we're
only 100 days plus into the
Trump administration, mightother factors, such as internal
dissent, begin to play a play arole here, right?
Steve (06:49):
I think that's a
contributing factor. I don't
think it's I mean, I think wealready know that there's a lot
of sort of disagreement amongthe lawyers at these firms who
do different who have differenttypes of practices. But I don't
think the dissent alone willcarry the day. I think that law
firm partners primarily arefocused on the impact to their
(07:11):
practice. If it's going toimpact their practice, they'll
consider making a change. It'salways been the case with
lateral movement. It'll continueto be case now it's just this is
a new wrinkle in that wholestratosphere of different things
that you're thinking about.
Dave Ris (07:29):
Do you think that
there are a number of firms who
are not under this pressure?
Might they be in a positionwhere they believe they can
poach top tier talent?
Steve (07:40):
Yes, but the one thing I
would caution everyone to think
about is we're talking about thefirms that have been affected by
the executive orders, andparticularly the ones that have
settled are elite Wall Streettype firms with high rates and
really sophisticated practices,I think the lawyers who are
(08:02):
currently there are going to arethey will think about peer firms
that are not in this sort ofgroup of firms that have set,
we're talking about the bigWashington firms, 14 Covington,
Wilmer, Hogan, those kinds offor Arnold Porter. So those
kinds of firms definitely. Andthen there'll be other sort of
national type firms that have,have really not been involved in
(08:27):
these executive orders. Soyou're really talking about sort
of the the top end of the marketbeing an impact more than, I
don't think it's a greatadvantage for a firm in the
second 100 or even beyond that,maybe, maybe again, really good
litigation boutiques Could,could definitely take advantage
of this, but your generalpractice firm in a non major
(08:49):
city, probably not a lot. Theyprobably don't get that kind of
opportunity, because those andthose partners will want to go
somewhere else.
Dave Ris (08:59):
So you mentioned that
Washington DC firms, which
typically have big regulatorypractices, but over the last 15
years, really, since the oheight financial crisis, the Wall
Street firms have madesignificant inverts into to the
Washington market. Do you seethat changing?
Steve (09:23):
Well, I do see that
changing, maybe not, not
dramatically, but I do see itchanging that I think that you
go back to 2008 and 2009 andlook at what happened. I mean,
the firms, New York firms, hadto go in because of of the
legislation and enforcementactivity that was occurring to
(09:44):
their big clients thatWashington affected, and to deal
clearance as part of this and soforth, so that they grew. They
they expanded their washingoffices with really good
attorneys who could handletheir. Clients needs,
particularly because there wasnet more of a Washington impact.
(10:04):
So I think that that expansionwas pretty dramatic. There were
a lot of firms like Cravath thatdidn't even have a Washington
respect, 2008 2009 and the otherones grew, grew substantial. So
I think that there will be someof those lawyers, as I indicated
earlier, in the sort oflitigation enforcement
(10:25):
practices, I think there'll beless of an incentive for those,
for those lawyers to stay, andlawyers coming out of the
government or recent government,they will, for both political
reasons and for sort of practicereasons, are unlikely to go to
those firms. Are less likely togo to those firms than they have
(10:46):
in the past. So I think there'llbe an impact. I think the growth
will slow, but I don't thinkthey're going to pull in their
tents and leave the city. Thatwon't.
Dave Ris (10:55):
So let's switch just
to top to the other aspect is a
lot of the law firms who have asignificant presence in
Washington, DC, in an area thatthat I'm very interested in, in
government relations. All of thetop players were talking about
firms such as Aiken Gump Hollandand Knight Brownstein, Hyatt s
(11:19):
Murray, Patton Boggs, forexample, they've taken a
strongly bipartisan approach,and have for years. Given the
changes, do you see that thinghappening there? Is that? Is
that going to evolve?
Steve (11:32):
I don't think it'll be a
substantial change there. I
think that there's a lot ofadvantages to bipartisanship,
and that's particularly true, Ithink, when you're dealing with
Capitol Hill, the issues ofinterest to bear clients
business clients are often tendto be the ones that aren't, that
aren't the hot button issuesthat get covered by the
(11:53):
mainstream media. So there'salways legislation that impacts
the industry, healthcare,insurance, technology, et
cetera. There's a lot going onthat that, that the hill can
accomplish, and to get that, toget their result for the
clients, they're going to needrepresentation on both sides. So
(12:14):
I think that dynamic should notchange. The only thing I would
say is that there may be somehot button issues that this
administration feels so stronglyabout that some of these firms
will shy away from certainrepresentations because they
(12:34):
feel like they don't want tooffend the administration. So I
think we're already seeing thisalready, where if you can avoid
offending the government, if youcan avoid it, you'll do it. So I
think that may be an impact. Butbeyond that, I'm not so sure.
What are you seeing out there?
Dave Ris (12:54):
Well, I think that the
firms understand, and especially
those where their clients are inregulated industries, you know,
those firms, thoseorganizations, prefer firms that
maintain that politicalneutrality, at least broad
access that's really critical tothem. And if, if, if the firm is
(13:19):
perceived as being too close toa polarizing figure such as
President Trump, they feel thatthey may lose clients who fear
our reputation lost ordiminished to effectiveness. I
think that that's that's goingto be a real thing and and also,
(13:43):
I think those firms are going tobe concerned about brain talent
drain, because they believe thattheir effectiveness is
compromised. And so top talentmay often understand that they
don't risk one or risk byassociation. Now, on the other
(14:06):
hand, one of the things that isreal in Washington is we do have
a number of independent lobbyshops, and they may be able to,
you know, play one side or theother with great effectiveness,
and they're not going to change.
Steve (14:24):
Yeah, I would say the one
thing that's a little different
with this administration isgiven their view of executive
power and authority, that rightnow, there is more of an
emphasis in the governmentrelations world, an executive
branch lobby versuscongressional one. There's a lot
going very true hell right now.
So that's an opening for firm,for firms that have that clear
(14:47):
Republican leaning, andRepublican professionals, many
of which might even have Trumpadministration first, Trump
administration credential. Sothere's an advantage. Advantage
there, which I think we'll seeat least for the next year or
so. But as we all know, there'san election coming up, a midterm
election, and of course,there'll be another presidential
(15:09):
election in 2028 so this couldall be a relatively short term
for now.
Dave Ris (15:18):
So that's all my
questions. Steve. Have any
closing thoughts?
Steve (15:24):
This situation reminds me
of the 1940s movie. It Happened
One Night, and the sort of themost famous line in that movie
was Eddie Davis say, be careful.
It's going to be a bumpy ride.
So I think that's what we'redoing. I think things are going
to change. There'll be newthings happening. I think this
(15:45):
is the biggest legal issue thathas hit the legal community in
my lifetime, and it'll certainlymy professional career, which
goes back to the late 70s. So Ithink that things will change.
There'll be new developments.
It's really hard to predictwhat's going to happen so things
will change, but hopefully I'veprovided at least some things to
look at as we move on to Thefuture.
Dave Ris (16:10):
Very good. Steve,
Thank you. Thank you. Applause.