By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as scribbles occasional travel pieces for The National.
It will not surprise regular readers to hear some of the latest news concerning the revolving door between government “service” and private sector employment. I post this short piece not because I think there’s any chance that anything will be done anytime soon to stop such “swinging” from occurring– but because I think it’s worth noting that it continues to occur.
One thing that’s important to note: the door swings both ways. Although Trump promised to “drain the swamp”– and slammed Hillary Clinton during the campaign for her Goldman Sachs connections– he lost no time in turning to vampire squid denizens in staffing his administration (as has indeed, been widely reported. See, for example, these Naked Capitalism posts: Trump Picks Ex-Goldman Banker, Steve Mnuchin, Known as ‘King of Foreclosures’ to Head Treasury and Trump Selects Jay Clayton, S & C Partner, to chair the SEC.)
Nonetheless, my interest was piqued by a recent New York Time Dealbook piece discussing the revolving door phenomenon, Ex-Obama Officials Find There’s No Place Like Their Old Law Firms. Now, as those who pay occasional attention to Dealbook well know, one key indicator of whether a phenomenon has jumped the shark is whether it’s attracted Dealbook’s attention. So while bearing that caveat in mind, allow me to quote from that source;
When a new administration comes to Washington, top government regulators flock to the exits to find new jobs, but they seldom have to look very far.
A few parlay their experience into corporate counsel jobs or trade up to a more rarefied law firm than the one they had left earlier.
Please note that I’m not immune to arguments that those who spend years studying law– and usually, accruing substantial student loan debts, which, incidentally was even true when I attended law school– class of ’91– should get some return on their investments of time, energy, and toil. Sadly, the US fails to well compensate lawyers (and other professionals) who elect to take public service jobs. Contrast that with Singapore– where there is a clear, well-compensated career path available to those who choose government service. Such a system stops any revolving door from swinging. But that’s certainly not the case in the USA. And the failure to compensate government lawyers, means that the lure of private practice always looms large. But I can and do lament that this is the case.
The Big Dogs Go Back to Their Very Comfortable Kennels
Let’s start with one of the biggest administration dogs who actually practised any law before his latest round of federal government service, former attorney-general Eric Holder. He’s the progenitor of the eponymous “Holder doctrine”, under which the Department of Justice (DoJ) eschewed pursuing criminal charges against companies and executives for their crimes and misdeeds and instead opted for negotiated settlements that included minimis, slap-on-the wrist penalties. I’ve written about this issue at greater length in The Obamamometer’s Toxic Legacy: The Rule of Lawlessness and elsewhere. In return for these and other services rendered, after his DoJ stint, Holder returned to his cushy partnership at Washington, D.C. firm Covingtom and Burling.
I’ve also written before about Mary Jo White’s lackluster performance as SEC chair, and described how her actions left a weakened SEC primed for Trump appointees to weaken further, Mary Jo White Leaves Behind a Weakened SEC for Trump to Weaken Further. She certainly didn’t take any actions during her tenure that would ruffle any feathers and prevent her from easily gliding back to her partnership at white shoe law firm Debevoise & Plimption.
The Revolving Door Continues to Spin
The Holder and White loop de loops are not just the only such examples, with the Wall Street Journal reporting last week, Former SEC Director Higgins Rejoins Ropes & Gray:
Keith Higgins, the former director of the Securities and Exchange Commission’s Division of Corporation Finance, rejoined law firm Ropes & Gray LLP, the firm said on Thursday.
Mr. Higgins will serve as chair of the firm’s securities and governance practice in Boston. In this capacity, he will serve as a special advisor on governance and disclosure matters, and will be a resource to Ropes & Gray’s government enforcement and business and securities litigation practices, the firm said.
Mr. Higgins led the SEC’s Division of Corporation Finance, which reviews financial filings and ensures companies hew closer to regulations, from May 2013 to December 2016. Mr. Higgins resigned a little more than a month before former SEC Chairman Mary Jo White left the agency.
Allow me to note for the record some other examples of how the door revolves, as per the Dealbook article cited above:
In the latest high-profile transition, the law firm Zuckerman Spaeder has welcomed back Aitan D. Goelman, who was enforcement director at the Commodity Futures Trading Commission [CFTC] until February. In his regulatory role, Mr. Goelman oversaw cases using new enforcement powers authorized by the Dodd-Frank Act and other legislation that grew out of the 2008 economic crisis.
Goelmann won’t need to spend much time boning up on the issues he’ll address in his new role, as they’ll be the same types of matters that crossed his desk at the CFTC, e.g. “the securities, commodities and derivatives industries, internal investigations and defense of cross-jurisdictional regulatory and criminal matters.”
And Dealbook lists other examples as well:
As the Obama administration wound down, major firms stepped up their efforts to grab other star lawyers — the kind who have gone toe-to-toe with corporate attorneys and won.
Some corporations reach into government ranks and hire directly. PepsiCo hired Tony West, who was the associate attorney general in the Justice Department, as its general counsel in November 2014.
More routinely, top-tier firms embrace departing regulators, especially those with experience in securities and foreign corrupt practices law.
Cybersecurity is the latest hot commodity, said Jeffrey A. Lowe, the partner practice group leader at the legal search firm Major, Lindsey & Africa.
The Bottom Line
I’m not trying to suggest there’s anything unique here– nor particularly out of bounds nor ethically challenged. To quote Michael Kinsley (IIRC), “the scandal isn’t what’s illegal, the scandal is what’s legal.” But it’s just to remind readers that the Trump administration didn’t invent conflicted, problematic behaviour, such as the revolving door.
Allow me to conclude with more of the obvious, as again, per Dealbook:
The revolving door between government and law firms is decades old, as the newest political overseers arriving in Washington recruit their own legal hands for savvy counsel to prevent — or rescue them from — misdeeds or mistakes. And, as white-collar practices at major law firms have been booming in the wake of the regulatory overhauls that followed the economy’s 2008 crisis, that swinging door typically means a big payday for most lawyers.
Payday for them, sure. But at whose expense?