BREAKINGVIEWS-Paul Weiss rewrites art of the deal under duress

By Stephen Gandel and Jeffrey Goldfarb

NEW YORK, March 21 (Reuters Breakingviews) - A good law firm knows how to close a deal. By that measure alone, the venerable corporate legal adviser Paul, Weiss has availed itself admirably in a clash with U.S. President Donald Trump. Attorneys caving into a vindictive government would typically be a bad look, but clients fearful of facing retribution of their own will probably be more impressed than outraged.

Paul, Weiss Chair Brad Karp found himself in an awkward and uncomfortable position a week ago when the president aired his grievances and punished the firm. Citing a former partner who helped investigate Trump’s hush-money payments to a porn star and diversity hiring practices, the White House in an executive order rescinded Paul, Weiss security clearances and access to government buildings. At least one client dropped the firm as a result.

Big firms have experience with political quandaries, including over diversity policies. Many were put on hold in the late 1990s during an affirmative action backlash. Paul, Weiss represented Guantanamo Bay detainees and conducted a probe for Fox News into then-boss Roger Ailes. Given the history, it’s natural to think a shop as powerful as Paul, Weiss, which has more than 1,000 lawyers, worked on $359 billion worth of announced M&A deals in the last year and generated some $2.6 billion in fees would stand up to Washington bluster.

Karp had other ideas, diverging with larger peer Perkins Coie, which sued the Trump administration after being targeted in a similar executive order. He scurried to the White House and settled matters swiftly. According to a social media post by the president, Paul, Weiss “acknowledged the wrongdoing” of its former partner, agreed not to pursue DEI initiatives and will provide the equivalent of $40 million in pro bono work for some of his pet projects. Under the circumstances, the concessions might be considered bearable.

The strategy comes with risks. For one thing, Paul, Weiss could lose business from anyone dismayed by the acquiescence to such strong-arm tactics. It also threatens to legitimize the unseemly way Trump does business, making all sorts of negotiations tougher across the legal industry and Corporate America alike. Of course, others have already bowed to presidential pressure, too. And if nothing else, Karp has made clear that his firm stands ready to haggle decisively with even the toughest of customers.

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CONTEXT NEWS

U.S. President Donald Trump said on March 20 that he is withdrawing an executive order that targeted law firm Paul, Weiss, Rifkind, Wharton & Garrison, posting on Truth Social that the firm “acknowledged the wrongdoing” of a former partner who was involved with a New York prosecutor’s investigation into Trump’s hush-money payments to a porn star.

The president said Paul, Weiss would dedicate the equivalent of $40 million in pro bono legal services to support his administration’s initiatives, including with veterans and combating antisemitism. He added that the law firm committed to not pursuing any diversity, equity and inclusion employment policies.

A March 14 executive order suspended security clearances for Paul, Weiss attorneys and restricted their access to government buildings and officials, citing the firm’s DEI policies and its association with Mark Pomerantz, who left the firm in 2021 to join the Manhattan District Attorney’s office and then rejoined it the following year.