When big law firms attacked by President Trump decided to make a deal with him rather than fight, many did so because their leaders feared that clients would abandon a firm caught on the administration’s bad side.
Now that logic may be getting less compelling. A major company, Microsoft, has dropped a law firm that settled with the administration in favor of one that is fighting it.
Large companies like Microsoft often farm out legal work to dozens or even hundreds of firms and may move business depending on circumstances, like pricing, expertise or potential conflicts. Microsoft declined to comment on why it changed law firms in a significant case last week, but the switch suggests that a firm that chose to fight the Trump administration could still attract an important client.
On April 22, several attorneys at the law firm Simpson Thacher & Bartlett informed the Delaware Court of Chancery that they would no longer be representing Microsoft in a case related to the company’s 2023 acquisition of the video game giant Activision Blizzard, according to court filings.
Simpson Thacher reached a deal with the White House last month in which the firm committed to perform $125 million in free legal work for causes acceptable to the Trump administration. In a joint statement with other firms making similar agreements, Simpson Thacher said the pro bono work would be on behalf of “a wide range of underserved populations.”
On the same day that the Simpson Thacher lawyers filed paperwork withdrawing from the Microsoft case, at least three partners at the firm Jenner & Block informed the court that they would be representing Microsoft in the case. Jenner is fighting in court to permanently block a Trump administration executive order targeting its business.
Jenner declined to comment on the change, and Simpson Thacher did not respond to a request for comment.
Since the Trump administration started pressuring big law firms with executive orders and inquiries into their hiring and diversity practices, law firm leaders have cited the risk of losing clients in their decisions to seek deals. They worried that fighting the White House would scare off clients even if the fights were ultimately successful.
Many lawyers have argued that Mr. Trump’s executive orders, which have restricted the law firms’ contact with federal agencies and officials, are unconstitutional, and courts appear to be receptive to that argument so far.
The Microsoft case in Delaware is an early indication that there may be a risk in the opposite direction.
In some cases, a client may worry that a law firm that has reached a deal with the White House has a conflict of interest that prevents it from aggressively representing the client. For example, the client may be a defendant in a lawsuit brought by the federal government and worry that a settling law firm would be reluctant to stand up to the administration.
Other clients may have broader concerns. A senior partner at another firm that does not have an agreement with the White House said his firm was beginning to attract clients from firms that had settled with the administration. The partner, who was not authorized to discuss client matters publicly, said prospective clients had indicated that they had lost confidence in settling firms for not standing up to an attack on the rule of law.
Some firms challenging the administration have sought to capitalize on this frustration, suggesting that their pushback reflects a commitment to fight on behalf of their clients as well.
On a website set up to publicize its case against the president’s executive order, Jenner wrote that making a deal with the administration “would mean compromising our ability to zealously advocate for all of our clients.”
Other firms challenging executive orders, like WilmerHale and Susman Godfrey, have set up websites or web pages communicating similar messages.
The Microsoft case, which does not directly involve the federal government, arose from a lawsuit by an institutional shareholder of Activision that objected to how the company’s board had approved the merger. The shareholder argued that the merger approval process had broken the law, and a Delaware court largely denied the company’s efforts to dismiss the lawsuit in a ruling last year.
Over the past few decades, Microsoft has built strong relationships with government officials of both parties, and the company has generally avoided overt partisan allegiances or overtly political statements. While Microsoft donated $1 million to Mr. Trump’s inaugural fund, like some of its tech peers, its chief executive, Satya Nadella, did not attend the swearing-in and has generally kept a low profile in his interactions with the Trump administration. The company also donated to President Joseph R. Biden Jr.’s inaugural committee.
Karen wise and Michael S. Schmidt contributed reporting. Susan C. Beachy contributed research.