TRUMP’S DANGEROUS NORMALIZATION EFFORT AND THE ROLE OF THE LEGAL PROFESSION

Norman Eisen and Richard W. Painter were, respectively, chief White House ethics lawyers for Presidents Barack Obama and George W. Bush. For months before the election, they wrote and spoke frequently about the dangers associated with Donald Trump’s disdain for the established norm of releasing presidential candidates’ tax returns. They warned about unprecedented business conflicts of interest that Trump would face as president. Since the election, they’ve urged divestiture, liquidation, and a blind trust as the only effective ways to resolve those conflicts.

The editorial boards of The New York Times and The Wall Street Journal agree with Eisen and Painter. But on December 10, Edwin D. Williamson at Sullivan & Cromwell penned an op-ed for the Journal that tries to let Trump off the conflicts hook.

“If I were advising Trump,” Williamson writes, “I would strongly urge him to pledge that as president he will make no decision for the primary purpose of benefiting any family financial interest, and any decision involving an entity that has a Trump business relationship will be transparent so questions of favoritism can be scrutinized.”

That’s Williamson’s proposed remedy: a pledge of fidelity, coupled with a promise of transparency from a serial liar who still refuses to release his tax returns. Would he accept that undertaking from opposing counsel to settle a case that Williamson’s client was sure to win? Seasoned litigant Trump sure wouldn’t.

But here’s Williamson’s most dangerous line: “I do not see how he can effectively promise more, and I do not believe more is needed.” He then spins frivolous false equivalence arguments that give all attorneys a bad name.

Excuses, Excuses, Excuses

Williamson’s first hypothetical scenario is the sale of Trump’s interests through an initial public offering. Because the president can appoint a majority of the SEC commissioners, Williamson believes that Trump would be trading one conflict (his business interests) for another (his influence over the SEC as it supervised Trump’ IPO).

Williamson’s second liquidation scenario is a leveraged buyout. Because it would require lending by Trump-regulated banks, that would create a new conflict, too, he writes.

Such sophistry is suffocating. Neither option creates a conflict of interest approaching the magnitude of those that will accompany Trump’s continued ownership of his businesses after Inauguration Day. In fact, Williamson final argument proves it.

Self-Refuting

“[T]he biggest problem of divestiture is that the value of Trump businesses is significantly dependent on, and inextricably tied to, the Trump name,” Williamson writes.

Precisely. The prospect of enriching Trump and his family personally is what entices others — foreign and domestic — to patronize Trump businesses in an effort to curry the President’s favor. It’s already happening at Trump’s new Washington, D.C. hotel.

In a joint letter to The New York Times, Harvard Law School Professor Laurence Tribe and Mark Green, New York City’s first public advocate, explain:

“The Constitution’s Emoluments Clause is unambiguous. It forbids an American president from accepting anything of value from a foreign entity, without congressional consent, because that would open the door to bribery or extortion.”

Tribe and Green continue, “The only way for President-elect Donald Trump to cure this problem would be an arms-length sale by a public trustee, not piecemeal judgments after Jan. 20 about the thousands of possible winks and nods between foreign leaders and the new administration.”

Professional Responsibility in the Age of Trump

Lawyers understand the relationship between preserving vital democratic norms and protecting democracy. Zealous advocacy is one thing. But attorneys err when they offer feeble justifications that aid and abet Trump’s insidious effort to normalize behavior that is not only abnormal, but also wrong. The bad news is that the effort is having an impact. Consider the number of commentators who now start from the false premise, “Well, he can’t sell his businesses….”

Why not?

As Tribe and Green observe, “Mr. Trump chose to put himself in this situation and cannot now act aggrieved, nor is there a too-big-to-sell exemption in the Constitution; if anything, the larger the potential for conflict, the more urgent a sell-off.”

“There’s no precedent,” proclaim Trump’s conflict of interest apologists.

Actually, plenty of analogous precedent resides in the conflict of interest rules applicable to all practicing attorneys. No lawyer can serve two conflicting masters simultaneously, regardless of good faith efforts to be fair and honest to both. And the appearance of conflict is equally debilitating.

Williamson dismisses such appearances as “impossible to avoid” because “almost any decision Mr. Trump makes as president will have an effect — good or bad — on his business interests.” But that argument demonstrates again why Trump must sell those interests, as Eisen, Painter, Tribe, Green, and other attorneys across the political spectrum urge.

Donald Trump isn’t a lawyer, but he will have fiduciary duties to the most important client in the world: the United States of America. At a minimum, all attorneys should hold him to the standard that the country deserves.

Don’t Give Up

Columnist Charles M. Blow offers this creed that’s worth remembering every day:

“To have a president for whom we don’t know the extent of his financial entanglements with other countries — in part because he has refused to release his tax returns — is not normal.

“To have a president with massive, inherent conflicts of interest between continued ownership of his company and the running of our country is not normal.

“Presidents may be exempt from conflict of interest provisions in the law, but exemption from legal jeopardy is not an exemption from fact or defilement of the primacy of a president’s fiduciary duty to empire above enterprise…

“[H]istory will judge kindly those who continued to shout, from the rooftops, through their own weariness and against the corrosive drift of conformity: This is not normal!”

Lawyers should be leading the charge to those rooftops, not blocking the path.

BONUS TIME — AND ANOTHER UNFORTUNATE COMMENT AWARD

Above the Law’s David Lat wins my Unfortunate Comment Award with this assessment of Cravath, Swaine & Moore’s recent 2011 bonus announcement:

“My own take: these amounts — which are the same as the 2010 and 2009 bonus scales at CSM, except for the most-senior associates — are fair. The past three years — 2009, 2010, and 2011 — have been fine for Biglaw, but not amazing. To the extent that firms are treading water a bit, it’s reasonable for them to keep associate compensation at the same levels.”

“Treading water a bit”?

Let’s start with the suggestion that “the past three years have been fine for Biglaw, but not amazing.” According to The American Lawyer, Cravath’s 2008 average equity partner profits were $2.5 million — admittedly a sharp decline from 2007. But it’s still pretty good and, since then, equity partner profit trees have resumed their growth to the sky.

As the economy struggled, Cravath’s average partner profits increased to $2.7 million in 2009 and to $3.17 million in 2010, according to the Am Law 100 surveys. That’s not “treading water.” It’s returning to 2007 profit levels — the height of “amazing” boom years that most observers had declared gone forever. Watch for 2011 profits to be even higher.

It’s fair [and] reasonable to keep associate compensation at the same levels as 2009 and 2010″

If Lat’s comparative baseline is the American labor force generally, his view of fairness has superficial appeal. To most people, Cravath’s bonuses atop base salaries starting at $160,000 are impressive — ranging from $7,500 (first-year associates) to $37,500 (seventh-year associates). Couple those numbers with big firm partner complaints that law schools fail to train lawyers for tasks in the big law world and perhaps associates should consider themselves fortunate that they’re not being asked to rebate a portion of their pay for the privilege billing long hours.

(There are problems with current legal education in America, but the critique that graduates aren’t prepared for big law practice misses several key points, including: Eighty-five percent of lawyers will never have big firm jobs, the vast majority of those who do won’t keep them for more than a few years, and most of the remaining survivors will find their careers surprisingly unsatisfying. For more, take a look at “A New Law School Mission.”)

But I digress. For now, the question is fairness. In law firms, it’s a relative concept — a point that causes Lat’s analysis to miss the mark badly.

As Cravath’s 2010 average equity partner profits have been returning to their 2007 high-water mark, compare them to associate bonuses, which haven’t:

Associate bonus after first full year

2007: $35,000, special $10,000

2011: $7,500

Second-year

2007: $40,000, special $15,000

2011: $10,000

Third-year

2007: $45,000, special $20,000

2011: $15,000

Fourth-year

2007: $50,000, special $30,000

2011: $20,000

Fifth-year

2007: $55,000, special $40,000

2011: $25,000

Sixth-year

2007: $60,000, special $50,000

2011: $30,000

Seventh-year

2007: $60,000, special $50,000

2011: $37,500

Earlier this year, Sullivan & Cromwell offered spring associate bonuses for 2010 ranging from $2,500 (first-year) to $20,000 (seventh-year). Cravath and others then followed suit. Even if that happens again this year, recent classes will still be far worse off than their 2007-era predecessors.

Meanwhile, law school tuition has continued to rise, so the newest associates have the biggest educational loans to repay. In the current buyer’s market for young attorneys, that’s more good news for big firms. Their associates — whose average billables are back over 2,000 hours again — won’t be going anywhere. Unless, of course, the staggering attrition rates needed to sustain the leveraged big law pyramid push them out the door. Viewed as an integrated system, the prevailing model functions effectively to produce and exploit an oversupply of lawyers.

Most big firms will follow Cravath’s lead. But they can afford to do better — a lot better — and they should. As associate bonuses have stagnated, the overall average equity partner profits for the Am Law 100 have returned to pre-recession levels — reaching almost $1.4 million in 2010.

How much is enough? More, apparently. According to the latest survey of Am Law 200 firm leaders currently appearing in the The American Lawyer, managing partners expect the upward profits trend to continue. Keeping the lid on associate compensation is a key to that strategy. It hasn’t been a great ride for the non-lawyer support staff, either.

Now you know why my next post will be titled, “Occupy Big Law.” I’m not kidding.