Over on the homepage today, Kevin Williamson skewers Elizabeth Warren for criticizing Scott Brown’s Wall Street–sourced donations, when she has no compunctions about campaign donations and her endowed salary coming from huge corporate-law firms, which make a solid chunk of their profits from, well, working on Wall Street.
But Warren’s close ties to the legal industry are vaguely hypocritical in another way, too: the degree to which large corporate-law firms increasingly resemble the Wall Street banks which Warren demonizes. Finding actual litigation and legal representation not quite profitable enough, many large law firms are now expanding their services to other areas, including wealth management and consulting. Two of Warren’s top donor firms have done so: Mintz Levin (her fifth largest donor) and Bingham McCutchen.
Bingham McCutchen provides mergers and acquisitions and debt restructuring advice, that is, essentially one form of investment-banking services, via its subsidiary Bingham Strategic Advisors, and some lobbying-cum-consulting under the auspices of Bingham Consulting.
Mintz Levin, on the other hand, has charged into another sector of the financial industry, wealth management. They opened their practice in 1998, and as of the summer of 2010, managed more than $1 billion in assets. A Boston Globe story cited the firm’s president explaining that “the firm’s diversified strategy — it invests in riskier products like hedge funds that some law firms avoid — helped clients recover quickly from stock market falls in 2008.”
It’d be interesting to see what Warren thinks of the financialization of the legal industry. On the one hand, she’s a strident supporter of regulation, including, presumably, laws preventing conflict of interest — it hardly seems like responsible behavior or consumer-friendly for law firms to be jumping into risky investments or transactions. In general, it seems, she would want our financial system to be safer by having banks and firms stick to what they know, rather than trying to get into every profitable line of work (Dodd-Frank, for instance, seriously restricts banks’ ability to operate hedge funds and proprietary-trading desks).
But on the other hand, it’s interesting to note that one of the reasons law firms have been successful in offering financial services is, as the Globe explained, in the wake of the 2008 financial crisis, wealthy clients regard these legal houses as intrinsically more trustworthy and respectable than traditional Wall Street banks. As Kevin’s piece documented, despite the close connections between lawyers and bankers, Elizabeth Warren apparently shares that inclination.