Sometimes, a client isn’t worth the billable hours it brings to the firm. But long ago, Upton Sinclair revealed why some big law firm partners don’t accept that truism: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Except when a court appoints an attorney for a defendant who can’t afford one, lawyers choose their clients. In most firms, partners “eat-what-they-kill.” The resulting culture creates short-term incentives that cause business development efforts to focus on a single question: How much revenue will the prospective client generate?
Sheri Dillon, William Nelson, and their firm, Morgan, Lewis & Bockius, are teaching the profession an important lesson: such myopia is a mistake.
Sliding Down Trump’s Slippery Slope
In 2016, candidate Trump was pushing a flimsy “under audit” excuse for not releasing tax his returns. On March 7, 2016, Dillon and Nelson signed a letter confirming that, in fact, Trump’s tax returns for 2002 through 2008 were no longer under audit. However, the letter explained, his returns for 2009 forward “are continuations of prior, closed examinations.” Needless to say, Americans will never see those returns—at least, not because Trump releases them voluntarily. But Trump used Morgan Lewis to suit his immediate public relations needs.
In a Jan. 11, 2017 press conference, Dillon, Nelson and their firm took a more prominent role in Trump’s circus. They unveiled a plan to deal with Trump’s business conflicts of interest made a mockery of American presidential ethics. Attorneys were quick to condemn it. Subsequent events have demonstrated that the plan remains useless in preserving the integrity of the presidency.
By April, even reliable stalwart Trump defender Rep. Jason Chaffetz (R-UT) wanted to know what Trump was doing to implement his attorneys’ earlier public promises. On May 24, The New York Times reported the Trump Organization’s response: a slick brochure explaining why it was impractical to comply “fully and completely” with Sheri Dillon’s earlier assurance that Trump would donate to the US Treasury all profits from Trump hotels and similar businesses derived from foreign governments.
Recently, The Washington Post summarized just one of small slice of the ongoing scandal: “This is nothing Washington has ever seen. For the first time in presidential history, a profit-making venture [the Trump International Hotel in DC] touts the name of a U.S. president in its gold signage. And every cup of coffee served, every fundraiser scheduled, every filet mignon ordered feeds the revenue of the Trump family’s private business.”
“I Put Out a Letter”… (from somebody)
The most recent hit to the reputations of Sheri Dillon, William Nelson, and their firm came during Trump’s now infamous July 19, 2017 interview with The New York Times. Reporters asked him what would happen if special counsel Robert Mueller’s investigation included Trump and Trump family finances unrelated to Russia. Would that be would a breach of Mueller’s charge?
“I would say yeah,” Trump answered. “I would say yes. By the way, I would say, I don’t — I don’t — I mean, it’s possible there’s a condo or something, so, you know, I sell a lot of condo units, and somebody from Russia buys a condo, who knows? I don’t make money from Russia. In fact, I put out a letter saying that I don’t make — from one of the most highly respected law firms, accounting firms.”
Trump’s last remark referred to the March 8, 2017 letter that Dillon and Nelson had signed. But he couldn’t even remember whether Morgan Lewis was a firm of attorneys or accountants.
Substantively, the March 8 letter had actually raised far more questions than it answered. It even seemed to rebut Trump’s prior denials of income from Russia. Dillon and Nelson stated that “with a few exceptions”—totaling about $100 million—Trump’s tax returns for the past 10 years “do not reflect” any “income from Russian sources,” “debt owed by you or [The Trump Organization] to Russian lenders,” “equity investments by Russian persons or entities,” or “equity or debt investments by you or [The Trump Organization] in Russian entities.”
Among notable omissions were: the definition of “Russian”; whether Russian funds flowed into Trump projects more than 10 years ago; whether money from other former Soviet-bloc countries made its way into Trump projects; and what, if anything, Morgan Lewis had done to determine whether individuals or entities from Russia, Ukraine, or other former Soviet-bloc countries used shell corporations for transactions involving Trump businesses.
And Then There’s This
Investigative reporters—who aren’t Trump’s lawyers—have discovered that, since the 1990’s, tens of millions of dollars from former Soviet-bloc countries have found their way into Trump projects as investments, construction financing, and condominium purchases. No one outside Trump’s immediate orbit—except, perhaps, Vladimir Putin—knows the full extent to which that money contributed to his current fortune.
But there are clues. In September 2008, Donald Trump Jr. told a real estate conference: “In terms of high-end product influx into the US, Russians make up a pretty disproportionate cross-section of a lot of our assets; say in Dubai, and certainly with our project in SoHo and anywhere in New York. We see a lot of money pouring in from Russia. There’s indeed a lot of money coming for new-builds and resale reflecting a trend in the Russian economy and, of course, the weak dollar versus the ruble.”
The fact that Trump couldn’t recall whether Sheri Dillon, William Nelson, and their firm practiced law or accounting is the least of their problems now. Trump has elevated the Dillon/Nelson/Morgan Lewis letter to a new status: evidence that the Russia investigation is a hoax. Depending on how special counsel Robert Mueller proceeds, those involved in preparing and signing that letter may need lawyers, too.
Other prominent law firms appear to have learned from the Morgan Lewis experience. In June 2017, Michael Isikoff reported that when Trump sought to bolster his legal team, four of the nation’s leading firms refused:
“The concerns were, ‘The guy won’t pay and he won’t listen,’ said one lawyer close to the White House who is familiar with some of the discussions between the firms and the administration, as well as deliberations within the firms themselves.”
Even if Dillon, Nelson, and Morgan Lewis have hedged the “won’t pay” problem by requiring a big retainer from their famous client, it won’t compensate for the potential impact on their professional reputations. And like all nightmare clients, Trump couldn’t care less about that.