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How a Major Democratic Law Firm Ended Up Bowing to Trump

Published

2 months ago

March 22, 2025

How a Major Democratic Law Firm Ended Up Bowing to Trump

Since President Trump’s first term, Brad S. Karp, the chairman of the law firm Paul, Weiss, Rifkind, Wharton & Garrison, championed himself as a bulwark against what he saw as an unlawful and unpredictable presidency.

Mr. Karp, who has a long history of fund-raising for Democrats, sought to unite major law firms in “a call to arms” to fight Mr. Trump in court on issues like his administration’s policy of separating migrant children from their parents. He publicly said lawyers were obligated to defend the rule of law.

He hosted a “Lawyers for Biden” fund-raiser in 2023, and one of his top partners prepared Vice President Kamala Harris for her debates with Mr. Trump.

So it was not surprising that Mr. Trump targeted Paul Weiss with an executive order last week that created a potential existential threat for the firm, although the order was legally dubious and undercut fundamental principles of the justice system. In response, Mr. Karp began discussions with another big firm about presenting a unified and bipartisan front and challenging the order in court.

But on Wednesday, Mr. Karp walked into the Oval Office around 8:30 a.m., leaving behind the adversarial approach.

Now, he wanted to make a deal.

A day later, Mr. Trump announced that Mr. Karp had agreed to pledge $40 million in pro bono legal services to issues the president has championed, including a task force being run by the Justice Department aimed at combating antisemitism “and other mutually agreed projects.”

The White House said the firm had committed to stop using diversity, equity and inclusion policies. And Mr. Trump said Mr. Karp had acknowledged to him that a former partner of the firm who had worked as a prosecutor in Manhattan and had pushed for Mr. Trump to be charged criminally had committed “wrongdoing.” These assertions appear inconsistent with a copy of the statement that Mr. Karp shared with his firm.

In deciding to bend to Mr. Trump, Mr. Karp likely saved his law firm, which had $2.63 billion in revenue last year and represents corporate clients like Exxon Mobil and Apollo Global Management, from hemorrhaging clients and lawyers.

But in doing so, Mr. Karp, who had positioned himself as a spokesman and advocate for the legal profession, left other firms even more vulnerable to Mr. Trump’s retribution campaign by demonstrating that his intimidation tactics could lead even a powerhouse like Paul Weiss to make public concessions, according to interviews with lawyers at other firms and legal experts.

In fact, a White House official said on Friday that despite the deal reached with Paul Weiss, Mr. Trump would continue to target law firms with executive orders, including some the president could sign as early as next week.

In the Oval Office on Friday, Mr. Trump asserted that law firms “did bad things” and had attacked him “ruthlessly, violently, illegally.” But now, he said, they “want to make deals.”

Mr. Karp’s decision left many in the legal world, including some in his own firm, reeling, concerned that other firms would now face a choice between bowing to Mr. Trump or abandoning their principles or political beliefs to avoid financial calamity.

Before reaching the deal, Mr. Karp, who has led Paul Weiss for nearly two decades, talked to some of the firm’s 200 partners to weigh their options, according to three people with knowledge of the matter. The group decided to seek a meeting with Mr. Trump to try and reach a deal, rather than engage in what could be a drawn-out legal battle, the people said. Those people and others who spoke for this story did so on the condition of anonymity to talk about discussions that were supposed to remain private.

Some of the firm’s corporate partners were particularly adamant that the firm should not sue the administration, the people said. That put them at odds with other partners who work on high-profile litigation and had been arguing that the firm should fight, some of whom expressed displeasure internally on Friday that Mr. Karp had settled, according to four people familiar with the matter.

The deal, while supported by the vast majority of the firm’s partners, also drew swift condemnation from lawyers outside the firm and critics of Mr. Trump.

And while many of the firm’s clients were relieved by the deal, some senior lawyers at large financial institutions began to privately express dismay, two people with knowledge of the matter said. Some of these lawyers suggested they would consider pulling business from the firm.

Mr. Trump has put law firms at the center of his efforts to seek revenge against enemies real and perceived, especially those linked to any efforts to investigate him or hold him legally accountable.

Before targeting Paul Weiss, Mr. Trump had issued executive orders imposing penalties on two other firms, Covington & Burling and Perkins Coie. Last week a federal judge barred the order against Perkins Coie from going into effect on the grounds that it would likely be found to be illegal.

Many within the legal community had hoped that Mr. Karp, with his firm’s resources, would fight Mr. Trump in court as aggressively as did Perkins Coie, which was targeted by a nearly identical executive order earlier this month.

Paul Weiss employs many prominent Democrats and has expressed pride in its long history at the forefront of the fight for civil rights. It has trumpeted how it was the first major New York City firm to have Jewish and non-Jewish lawyers working alongside each other, to hire a Black associate and to have a female partner.

According to two people briefed on the matter, it initially appeared that Mr. Karp was headed down the path of suing Mr. Trump’s administration.

Last week, a federal judge in Washington temporarily barred enforcement of the executive order Mr. Trump had directed at Perkins Coie, saying, “It sends little chills down my spine” to hear arguments that a president can punish individuals and companies like this.

The judge’s decision relieved many in the legal community by suggesting that the courts would serve as a check against Mr. Trump and that the big firms would not have to confront him directly.

But two days after that decision, Mr. Trump signed a nearly identical executive order against Paul Weiss. That action deeply unnerved the big firms by showing that Mr. Trump would not be deterred by the courts. And it demonstrated that he was willing to try to target firms that had years-old ties to lawyers on his enemies list, like Mark F. Pomerantz, a former Paul Weiss partner. Mr. Pomerantz had tried to build a criminal case against Mr. Trump several years ago while working at the Manhattan district attorney’s office.

The executive order against Paul Weiss barred the firm from dealing with the government and suggested that clients of the firm could lose their government contracts. Those provisions were intended to drive business away from Paul Weiss, which employs more than 1,000 lawyers and has offices around the world.

Last Saturday and Sunday, Mr. Karp began discussions with William Burck, the co-managing partner of the law firm Quinn Emanuel Urquhart & Sullivan, about Mr. Burck joining Paul Weiss in bringing a court challenge against Mr. Trump’s order, people familiar with the talks said.

The discussions with Mr. Burck were notable given that Mr. Burck is one of the few lawyers at a major firm that represents the Trump Organization. He has also helped some of Mr. Trump’s nominees through their confirmation process. And bringing Paul Weiss together with Quinn Emanuel would signal to the industry that firms across the partisan divide were coming together to address what they saw as an all-out assault on their business.

Earlier this month, Mr. Burck declined to represent Perkins Coie, believing that it was not worth taking on Mr. Trump to help that firm. But with Mr. Trump undeterred by the judge’s ruling in the Perkins Coie case and moving against another firm, Mr. Burck agreed to help Paul Weiss and put his firm’s name on the suit against Mr. Trump.

At the same time, Mr. Karp weighed another possibility. With the help of Mr. Burck and other Trump-friendly contacts Mr. Karp had in the business world, Mr. Karp sought to determine whether it would be possible to cut a deal with Mr. Trump to resolve his firm’s problems.

Mr. Karp, whose firm has represented the N.F.L., had the New England Patriots owner Robert Kraft, an ally of Mr. Trump’s, reach out to the president.

Mr. Burck began working the phones to the White House, reaching out to officials to signal that Mr. Karp was open to making a deal. During those conversations, Mr. Burck concluded that one of the White House’s biggest issues with Paul Weiss and other big firms was that they had refused to represent clients like Mr. Trump on the right — especially after the Jan. 6, 2021 assault on the Capitol — whom they viewed as politically unsavory.

Mr. Burck relayed to the White House that Paul Weiss was willing to make some sort of public statement that they would represent clients no matter their political views.

Two days later, Mr. Trump called Mr. Karp and invited him to come to the White House. The following day, Mr. Karp went to visit Mr. Trump, where they met in the Oval Office for three hours. Mr. Trump’s adviser on negotiations, Steve Witkoff, joined the meeting, which was cordial, and both sides believed they had a potential framework for a deal.

At the same time, there was pressure on Mr. Karp. The lawyers at his firm who were preparing to sue Mr. Trump wanted to go to court as soon as possible, concerned that a judge might not give them a temporary restraining order because they waited too long.

In the day that followed, proposed language went back and forth between the White House, Mr. Burck and Mr. Karp.

Pursuing a deal represented a stark shift for Mr. Karp, who until recently was helping to marshal support for Perkins Coie. Mr. Karp was among the prominent lawyers working behind the scenes to persuade other law firms to sign a friend of the court brief on behalf of Perkins Coie, according to four people with knowledge of the matter. It is now unclear whether the brief — which was drafted by Donald B. Verrilli Jr., a solicitor general during the Obama administration and a partner at Munger Tolles & Olson — will be filed.

The ordeal with Mr. Trump came at a personally trying time for Mr. Karp, who had suffered a heart attack just a few months earlier and was still easing his way back into his normally frenetic work schedule of nonstop meetings and client calls.

On Thursday evening, Mr. Karp sent a firm-wide email justifying the decision, writing that he had really just “reaffirmed” the firm’s statement of principles outlined in 1963 by one of Paul Weiss’s original named partners, Judge Simon H. Rifkind.

“Thank you all for your patience during this time,” Mr. Karp told the staff at the firm. “With this behind us, we can devote our complete focus — as we always do — to our clients, our work, our colleagues and our firm.”

But it was a bitter pill for some to swallow as lawyers knew the outside world would view the deal as capitulating to Mr. Trump, especially at a time when other institutions, like universities and media companies, have begun to settle with Mr. Trump rather than fight, infuriating and demoralizing Mr. Trump’s critics.

George Conway, a conservative lawyer and frequent critic of Mr. Trump, posted on social media, “This Paul Weiss capitulation is the most disgraceful action by a major law firm in my lifetime, so appalling that I couldn’t believe it at first.”

By the time Mr. Trump made his announcement on Thursday, there were already signs that Paul Weiss had been burned in making a deal with Mr. Trump.

The copy of the agreement that Mr. Karp shared with Paul Weiss differed in some ways from Mr. Trump’s characterization of the deal in a post on his social media platform, Truth Social.

Although Mr. Trump said the law firm had specifically agreed to not follow any diversity, equity and inclusion policies in its hiring practices, there is no reference to D.E.I. in the agreement that Mr. Karp shared. Mr. Trump has mounted an aggressive campaign against diversity initiatives in the federal government, labeling it as a form of workplace discrimination.

There also was no mention of Mr. Pomerantz, the former Paul Weiss partner, in the copy of the agreement circulated by Mr. Karp. Five people briefed on the matter said Mr. Karp said he did not criticize Mr. Pomerantz with the president, in spite of Mr. Trump’s assertion to the contrary.

In a statement issued on Thursday evening, Mr. Pomerantz denied he had done anything wrong.

Jonah E. Bromwich and William K. Rashbaum and Tyler Pager contributed reporting, and Sheelagh McNeill contributed research.

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Austin Welcomed Elon Musk. Now It’s Weird (in a New Way).

Published

5 hours ago

May 13, 2025

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Austin Welcomed Elon Musk. Now It’s Weird (in a New Way).

Each weekend for the past few months, Mike Ignatowski has gone to one of two Tesla dealerships in Austin, Texas, to protest Elon Musk, Tesla’s chief executive and the most famous transplant to the state’s most left-leaning city.

Not too long ago, Mr. Ignatowski, a 67-year-old computer engineer, was an admirer of Mr. Musk — before Mr. Musk aligned himself with President Trump. Now Mr. Ignatowski waves a “Fire Elon” sign during the protests, even as he conceded he’s not quite mad enough to part with the blue Model 3 Tesla that he bought “before we knew Elon was crazy,” as his bumper sticker attests.

That’s how it goes in Texas’ capital, where Mr. Musk’s sharp rightward shift has been received with a mix of anger and hair-pulling agony. Austin’s conflicted feelings reflect both the billionaire entrepreneur’s economic influence on the city and the city’s broader transformation from a medium-sized college town arranged around the State Capitol to a tech-fueled metropolis with a glass-and-steel skyline and a changing image.

Tie-dyed T-shirts still urge residents to “Keep Austin Weird,” mostly in hotels and tourist shops. But a different kind of counterculture has taken root amid an influx of decidedly right-of-center figures (including Mr. Musk), self-described freethinkers (like the podcasters Joe Rogan and Lex Fridman), and conservative entrepreneurs (like Joe Lonsdale). Already in town was Austin’s resident conspiracy theorist, Alex Jones, and his far-right Infowars. There’s even a new, contrarian institution of higher learning looking to compete with the University of Texas at Austin, the University of Austin.

Weird, perhaps, but not in the way of the old bumper-sticker mantra.

“If you say ‘Keep Austin Weird’ to somebody under the age of 40, they would think of that as an antique-y slogan, like Ye Old Shoppe,” said H.W. Brands, a historian at the University of Texas. “It doesn’t have any resonance for their lived experience of Austin.”

The city’s transformation followed a deliberate, decades-long project to attract technology companies to its rolling hills.

“I’m one who thinks it has changed for the better,” said Gary Farmer, who helped attract new businesses as the founding chairman of Opportunity Texas, an economic development group. “The culinary arts, the performing arts, the visual arts, the music scene — it’s all better.”

At the same time, housing prices have skyrocketed, and the population — already the whitest among big cities in Texas — has shed some of its diversity.

In 2023, more people moved out of Austin’s Travis County than moved in, and the share of Hispanic residents in Austin declined even as across all of Texas, the Hispanic population has grown to become a plurality. Black families have also been leaving Austin, said Lila Valencia, the city’s demographer.

The biggest increase in new residents has been among households making more than $200,000 a year, which grew by 70 percent from 2019 to 2023, Ms. Valencia said. The share of households making below $100,000 a year declined.

Austin now has about 100 accredited private schools, more than double the 39 it had two decades ago. Enrollment in the city’s public schools has been falling.

For years, locals resisted development, to no avail.

“They were building a lot of freeways in Houston and Dallas, and Austin turned away that money,” said Tyson Tuttle, the former chief executive of Silicon Labs, who moved to Austin in 1992. “They were saying, if we don’t build it, they won’t come. And they came anyway.”

Many in Austin’s new elite have chafed at the progressive policies in city and county government over issues such as homelessness and policing. Last year, some of them, including Mr. Musk, backed a primary challenger to the local Democratic district attorney, José Garza. In a companywide email, Mr. Musk encouraged Tesla employees to vote in support of the challenger.

Mr. Garza won the primary by a two-to-one margin.

“If an asteroid fell from the sky and hit a Democratic candidate for office in Travis County and killed that person, that person’s corpse would still beat a live Republican,” said Evan Smith, a former leader of the Texas Tribune, an Austin-based nonprofit news site.

Still, the city’s demographic transformation has led many to lament its fading identity as a place of street buskers and a cross-dressing, homeless mayoral candidate. The Austin Chronicle, an alternative weekly newspaper, even sells a shirt that reads “R.I.P. Old Austin.”

Earlier this year, passers-by stopped to listen to an impromptu street performance on Congress Street, like old times, except the guitarist was the Trump-friendly Ted Nugent, and his appearance had been organized by hard-right Republicans.

Almost as common are complaints about the complainers.

“I’m not one of those naysayers about Austin who say it was all better in the old days,” said Terry Lickona, who for 50 years has produced “Austin City Limits,” a public television showcase for local and national musicians. He added, “Austin has always attracted outsized characters,” including Willie Nelson and Michael Dell, the computer maker.

The struggles at Tesla, where profits have dropped sharply since Mr. Musk began closely aligning himself with Mr. Trump, could directly affect the city. At the same time, Austin is set to be the proving ground for his next big venture: self-driving Tesla taxis, which Mr. Musk promised for June.

Mr. Musk did not respond to an interview request.

“Having Tesla here is a huge benefit to the city,” said Mr. Tuttle, who has recently founded an artificial intelligence startup. “I wish that Elon would come home and focus on his business.”

The arrival of Mr. Musk and Tesla five years ago was a key moment for the city, punctuating a yearslong transformation that was accelerated by the Covid-19 pandemic. Many people, including celebrities and dissatisfied Californians whose politics were shifting amid the lockdowns, sought out the relative openness of Texas.

“It’s, like, most of the good stuff and very little of the bad stuff,” Mr. Rogan said during a 2021 interview with Mr. Adler, months after moving there.

The result has been a slight moderation of the city’s politics and tensions over Mr. Musk between those who hate his actions in Washington and those who love his role as a technology entrepreneur.

The city “attracts people that are on all sides of issues,” said Joshua Baer, the founder of the Capital Factory, which helps finance and nurture technology startups. “My world is generally Elon fans and supporters.”

On a recent evening, more than two dozen Austinites convened in a church meeting room adorned with colorful messages of inclusivity for a gathering of Resist Austin, which organizes protests against Mr. Musk and Mr. Trump at Tesla dealerships.

“Our mission is lawful nonviolent resistance of authoritarians,” Ian Crowl, an organizer, said to the group, which included retirees, tech workers and graduate students. “If you want to throw a rock at a Tesla,” he added, “that’s not what we’re doing here.”

Such tensions have been on the mind of Tesla drivers in Austin as well. Vikki Goodwin, a Democratic state representative, said she tries to be “invisible” when driving around in hers. When a car rammed into her at a stop light recently, she worried it might have been intentional.

“Oh my God,” Ms. Goodwin said she thought, “is it anger that caused him to drive into my car?”

The driver, in fact, was using his wife’s gas-powered car, Ms. Goodwin said he told her, and he assumed it would slow down quickly when he took his foot off the gas pedal — like his Tesla does.

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Surge in Chinese listings drives boom for US small-cap IPO market

Published

8 hours ago

May 13, 2025

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Surge in Chinese listings drives boom for US small-cap IPO market

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The volatile market for small US initial public offerings is “booming” thanks to a surge of Chinese listings on New York’s Nasdaq as companies race to beat a rule change that blocks the smallest deals.

The surge in listings kicked off late last year with 42 small offerings in the last three months of 2024, followed by 41 in the first quarter of this year — the two busiest quarters in records back 15 years, according to equity capital markets group Capital Markets Gateway (CMG). This was up from 20 in the second quarter of 2024 and 29 in the third.

Fifty-three of the past two quarter’s listings were from China and Hong Kong, with only 18 from the US, and all but nine on Nasdaq. CMG’s data excludes special purpose acquisition vehicles, which raise money in order to take over a private business.

“The microcap IPO market is booming,” said Matthew Kennedy, a senior strategist at Renaissance Capital, citing small Chinese companies in sectors from pharmaceuticals to construction. “It’s a highly speculative area,” he said, with many investors losing out because most of the stocks eventually fall far below their initial offer price.

The IPOs came ahead of a raft of policy changes enacted by Nasdaq, effective as of April 11, which include requiring companies listing on its lowest rung under certain standards to raise at least $15mn. The Securities and Exchange Commission said Nasdaq’s new rules would “promote fair and orderly markets” and “protect investors and the public interest”.

Daniel McClory, head of equity capital markets and China at US underwriter Boustead Securities, said he had “30 IPOs in process right now and more than a third are for [companies in] south-east Asia and Greater China”.

The market for large-cap listings has meanwhile disappointed hopes of a revival under Donald Trump. Waves of market volatility around the president’s tariff announcements led bankers to postpone several hotly anticipated tech IPOs while other large listings received a cool reception.

This has not stopped a flurry of sub-$50mn deals since tariffs shook markets in April. Small IPOs have continued despite Nasdaq raising the bar last month — with eight further deals since the rule change.

“Explosive returns” from companies such as Hong Kong-based Diginex, an ESG data group, and Chinese group EPWK Holdings, a crowdsourcing platform, “can fuel interest from traders hoping for quick gains”, said Kennedy.

Line chart of Share price, $ showing Shares in EPWK surged in late April but collapsed in early May

Shares in Diginex have climbed 1,375 per cent since it listed in January. Last Tuesday, it said UAE royal Sheikh Mohammed bin Sultan bin Hamdan Al Nahyan had struck a $300mn deal giving him the right to buy 6.75mn of its shares before the end of the year.

EPWK had risen 470 per cent in the months after its February market debut, but plunged 75 per cent last Monday.

The market for these small offerings is dominated by amateur traders, who are often more willing to jump on perceived bargains in the stock market during times of disruption when big money managers stay away.

The US Financial Industry Regulatory Authority in 2023 warned investors about “unusual price increases on the day of or shortly after the IPOs of certain small-cap issuers, most of which involve issuers with operations outside the US” and “IPOs raising less than $25mn”.

The average value of money raised in the small IPOs tracked by CMG in the six months to March was around $9mn.

Brokers say there could be more small IPOs if market conditions improve. “If the market settled down and co-operated we could do an IPO a week,” McClory said. “As it is, we’re targeting about one a month.”

The two most prolific underwriters in the space — Dominari Securities and RF Lafferty — have each taken seven companies public this year, including Chinese “machine vision” company Lianhe Sowell and Hong Kong hotpot chain MasterBeef.

RF Lafferty is headquartered in the Trump Building in New York’s Financial District. Dominari Securities, which acted as lead underwriter for Diginex’s IPO, is a subsidiary of Dominari Holdings, a fintech group based about four miles north in Trump Tower.

Shares in Dominari Holdings rose 580 per cent in the six weeks before a February 11 filing revealing that the president’s sons Donald Trump Jr and Eric Trump had joined its advisory board, the Financial Times reported last month.

Dominari and RF Lafferty did not respond to requests for comment.

The rush of smaller Chinese IPOs comes as concerns swirl among some investors over whether Trump will delist some Chinese stocks from US exchanges amid trade tensions with Beijing.

One banker at a small US broker said some Chinese companies listing in the US recently had “inverted their corporate structure” to obscure where they carry out the bulk of their business. He said that Chinese companies with an overseas subsidiary were converting their operating company into the parent company “to sanitise the Chinese nature of the listing”.

A bar chart of counts of microcap IPOs by country of headquarters, 2023-25

McClory said he expected that any Trump ban would probably target large state-owned enterprises and sensitive industries rather than small companies. He dismissed concerns that Chinese IPOs in the US were taking investment dollars that would otherwise benefit US entrepreneurs.

“Virtually all of these Asian IPOs were full of investors from Greater China, or Chinese-American investors in the US and outside of China,” he said. “It’s not like they come to the US and take money from American widows and orphans.”

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Chiefs superfan 'ChiefsAholic' sentenced to 32 years in Oklahoma prison

Published

8 hours ago

May 13, 2025

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Chiefs superfan 'ChiefsAholic' sentenced to 32 years in Oklahoma prison

A Kansas City Chiefs fan, ChiefsAholic, poses for photos while walking toward Empower Field at Mile High before an NFL football game between the Denver Broncos and the Chiefs,on Jan. 8, 2022, in Denver.

David Zalubowski/AP

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David Zalubowski/AP

TULSA, Okla. — A Kansas City Chiefs superfan known as “ChiefsAholic” was sentenced Monday in an Oklahoma courtroom to serve 32 years in state prison for robbing a Tulsa-area bank, a sentence that will be carried out after he finishes serving time in federal prison.

Xaviar Babudar, 30, appeared in a Tulsa courtroom and apologized to the court and to the victims of the December 2022 robbery of the Tulsa Teachers Credit Union in Bixby, Oklahoma, said Babudar’s attorney, Jay-Michael Swab.

“He expressed sincere remorse and took full responsibility for his actions,” Swab said.

Babudar already was serving more than 17 years in federal prison for a string of 11 bank robberies across seven states where he stole nearly $850,000 to finance his social media stardom. Swab said the robberies also were the result of a gambling addiction.

Tulsa County District Attorney Steve Kunzweiler had sought life in prison for Babudar.

“He is a serial robber who traumatized these victims and numerous other victims across this country,” Kunzweiler said in a statement.

Tulsa County District Judge Michelle Keely ordered Babudar’s 32-year sentence to run concurrently to his federal sentence, which means after he is released from federal prison he will be transferred to state custody to serve his remaining 14 years.

Babudar developed a following on his @ChiefsAholic account on the social platform X after attending games dressed as a wolf in Chiefs gear. His avid support of the Chiefs became well known on social media.