Message from Christopher Hughes and Soyeun Choi, Co-Chairs of the Business Law Section

The American Dream is the aspirational ethos of the unalienable rights enshrined in our Declaration of Independence.  The pursuit of happiness; the right to life and liberty.  These are foundational promises of a society built on the proposition that every person, regardless of origin or station, deserves a fair and just system in which to live, raise a family, establish community, and build a future.

The fundamental principle woven into those foundational promises also establishes the basis for business law, which is the expectation and reliance on the right to conduct business in a free, fair, and stable legal environment.  The rules governing commerce are accessible, consistent, and apply equally to everyone.  We celebrate the right to build a company, enter a contract, attract investment, and compete in a marketplace governed by transparent rules that are intended to apply equally to everyone.  This is the foundational premise of every transaction we help a client complete.  There is no place for arbitrary and capricious enforcement where rules shift with the preferences of those in power.  The engine of the American Dream has always run on the rule of law. 

Every business lawyer in California, regardless of political affiliation, should be concerned when the rule of law is under pressure.  This is beyond mere policy disagreements.  Reasonable people disagree about the appropriate level of tariffs, the scope of antitrust enforcement, or the regulatory environment for emerging industries.  Those debates belong in legislatures and administrative agencies, governed by established process, open to public scrutiny, and subject to judicial review.  The current challenges are categorically different and alarming because they seek to substitute our stable and evolving legal process with the unpredictable, arbitrary, and capricious preferences under a single ruler.

Confidence in the rule of law has historically supported and bolstered businesses.  When a company evaluates a potential merger, it retains counsel, analyzes precedent, engages with regulators through established processes, and makes a business decision based on ascertainable legal standards.  When a foreign company considers investing in the United States, it does so because this country has historically offered the rule of law as a competitive advantage, helping to guarantee that investments are governed by stable rules, not the transient proclivities of momentary political power.  When a US based company seeks investors, partners, and customers, it does so within a stable legal environment where relationships cannot be disrupted by a single bastion of political pressure.

Indeed, James Madison warned us nearly 240 years ago: “What prudent merchant will hazard his fortunes in new commerce when he knows not but that his plans may be rendered unlawful before they can be executed?  What farmer or manufacturer will lay himself out for the encouragement given to any particular cultivation or establishment, when he can have no assurance that his preparatory labors and advances will not render him a victim to an inconstant government?”

Where is the rule of law today?  Merger approvals and rejections have been used as instruments of political leverage rather than the product of neutral antitrust analysis conducted under established legal standards.  The acquisition of major media companies has become subject to governmental pressure that bears no relationship to the communications law framework Congress enacted.  It has been suggested that a private technology company could only continue to operate and do business conditioned on that company’s conformity with the administration’s preferences.  Tariffs have been imposed and withdrawn at the sole discretion of a single executive despite the fact that every court to have considered this question, including the Supreme Court, confirmed that such tariffs require congressional authority under the Constitution.  The Justice Department’s public integrity and tax units and other task forces designed to investigate and prosecute fraud and corruption have been gutted.  Federal contracts, properly awarded and appropriated by Congress, are being cancelled for perceived political noncompliance.  Military action has been undertaken without the congressional authorization the Constitution explicitly requires.  And, our federal government seriously considers taking an equity stake in a private company as an appropriate condition for resolving that company’s dispute.

A king operates this way.  A constitutional republic does not. 

This is not the fair, ascertainable, reliable system our citizens chose. We agreed to leadership which honors, enforces, and abides by the rule of law, not leadership that merely usurps power.  As John Adams wrote, we agreed to “. . . a government of laws, and not of men.”

The rule of law is not a political position.  It is the precondition for everything else.  It is what allows a client to sign a contract today with reasonable confidence about what that contract means tomorrow.  It is what allows a fund to deploy capital into a ten-year investment without worrying whether an executive phone call will rewrite the regulatory landscape overnight.  It is what allows a client to rely on their business attorney to render a legal opinion that means something next month.

The foundational promise of American commercial law appears broken.  No single interest should unilaterally control which companies are permitted to merge, which individuals may acquire a media outlet, which businesses are allowed to do business with whom, what tariffs will apply to what goods on what day, whether to commit the country to prolonged armed conflict, and whether private ownership of a company is conditioned on the owner’s relationship with the executive branch, all without the procedural guardrails our constitutional system was specifically designed to provide.  The natural consequence of this broken promise is for capital to seek more stable jurisdictions, long-term planning becomes an exercise in speculation, and the competitive advantage this country has built over two centuries of legal stability erodes.

As business lawyers, the threat is not only existential.  Our clients ask us whether their deals will close, whether their supply chains will survive the next executive order, whether their foreign partnerships remain viable, and whether our legal opinions from six months ago still hold.  The honest answer is uncertainty, not because the written laws are unclear but because the fair and just application of the law is being bypassed.

These are unprecedented challenges which call for community engagement.  The rule of law is not self-executing.  Lawyers took an oath to uphold the rule of law and must recognize when it is violated.  Business lawyers especially understand what is at stake commercially.  For this reason, the Business Law Section established a new Rule of Law Subcommittee, which serves as a legal community and resource to support communication within firms, to educate clients and the public, and to support our continuous commitment to the law.  We must honor our oath with urgency amidst such great uncertainty.  The rule of law has been a beacon that has immeasurably improved our country and served as an example internationally.  We are committed to developing our constitutional republic, defending our unalienable rights, and preserving the American Dream for future generations.  As attorneys, we must recognize this duty and call upon each other to lend our voices to this cause.

The views expressed herein represent those of the authors and not necessarily those of the authors’ firms or their partners or employees.