The revolving door between the private and public sectors—lawyers, accountants, consultants, and bankers bouncing back and forth between their corporate jobs and the government—is by now a well-known phenomenon. There are certain benefits to the system. The government gets people who possess real-world experience and are acquainted with the ways in which well-intentioned regulations can have unexpected consequences. Private law (and accounting and consulting and Wall Street) firms, meanwhile, glean expertise about the inner workings of the government, which they can use to help themselves and their clients comply with complex laws and regulations.
But the downsides are insidious. There is a pronounced pattern of industry insiders arriving in Washington and continuing to advance their clients’ interests—and then returning to the private sector, where they are rewarded with promotions and hefty pay raises.1 “Lawyers who come from the private sector need to learn who their new client is, and it’s not their former clients. It’s the American public,” Stephen Shay, a retired partner at Ropes & Gray who served in the Reagan and Obama administrations, told the New York Times in 2021. “A certain percentage of people never make that switch. It’s really hard to make that switch when you know where you are going back in two years, and it’s to your old clients. The incentives are bad.”
The incentives are similarly bad for public servants who hope one day to land a lucrative job with a major law or accounting firm. What better way to win favor with would-be employers than to make decisions that benefit them or their clients? And even if that calculus never enters officials’ mind, even if there is no trace of a quid pro quo, the fast-spinning revolving door can erode fragile public confidence that government officials are acting in the best interests of taxpayers. In some ways, the perception of a tilted playing field is just as bad as the reality.
On October 13, 2017, four Jones Day lawyers signed their names to an important agreement they had spent months negotiating with the U.S. government.2 More than a year had passed since the Supreme Court punted on Zubik v. Burwell, the case in which Jones Day, representing dozens of Catholic organizations, had sued to invalidate the Affordable Care Act’s requirement that employer health plans cover workers’ contraception. The deadlocked court had urged Jones Day, the Catholic groups, and the government to hash out a compromise.
That had proved impossible with Obama in the White House. But the Trump administration—staffed with Jones Day lawyers like Noel Francisco, who had brought the cases in the first place—was a much more conciliatory negotiating partner.
Early on, Trump signaled that he would abandon the contraception fight. “For too long, the federal government has used the power of the state as a weapon against people of faith, bullying and even punishing Americans for following their religious beliefs,” he had said in a Rose Garden ceremony in May.3 In early October, the administration formally caved. The Department of Health and Human Services issued a rule saying that employers with religious objections to birth control could exclude contraceptive coverage from their health plans.4 The litigation—having meandered through the courts for five years—was moot.
The wrinkle was that something still needed to be done with the lawsuits. They had to be disposed of, closed out in the federal court system. And so the parties agreed on a simple settlement: The litigation would be terminated, and the government would promise not to force the plaintiffs to provide contraceptive coverage. Jones Day lawyers handled the talks.5 While the firm had said it was donating its services to the Catholic groups, the settlement included a provision to pay Jones Day $3 million to cover costs it incurred during the litigation6.
The settlement was formally signed on a mild, foggy fall Friday in Washington. In addition to the four Jones Day attorneys, the signature of a single representative of the U.S. government was affixed to the settlement. His name was Brett Shumate. He was a deputy assistant attorney general in the Justice Department’s civil division. Chad Readler—until recently a Jones Day partner—was his boss. Less than two years later, Shumate would leave the Justice Department and be hired as a partner in the Washington offices of . . . Jones Day.*7
This would become a pattern.
In January 2019, Shamoil Shipchandler resigned from the Securities and Exchange Commission. A former federal prosecutor, he had spent the past three-plus years as the head of the agency’s office in Fort Worth, Texas. While there, Shipchandler had made a name for himself as a leader in the regulation of cryptocurrencies. He was young and bright and had an active social media presence. Praise rolled in when he announced he was stepping down. “Shamoil was an energetic leader who wasn’t afraid to try the unconventional,” said the previous head of the SEC’s Forth Worth office, a lawyer named David Woodcock.8 “He was well-liked in the office, and they will no doubt miss him.”
Woodcock now worked in Jones Day’s Dallas office, where his practice involved helping companies deal with the agency he had recently left. It wasn’t public yet, but Shipchandler was preparing to make the exact same leap. He was in talks to become a partner with Jones Day in Dallas.
This might not have been noteworthy except for one thing. Toward the end of the Obama administration, the SEC had opened an investigation into ExxonMobil. The agency was looking into whether the company had accurately disclosed the value of its assets in light of climate change, which posed an existential threat to, among many others, enormous energy companies like Exxon. Was the company downplaying the risks of climate change and sugarcoating its financial condition to investors?
In addition to the SEC, state prosecutors in Massachusetts and New York were conducting similar investigations. Exxon had been trying to derail those state inquiries by asserting that the SEC was the only authority with jurisdiction over the matter.9 It was an odd argument for Exxon to make; what gave the company such confidence that the SEC case would be resolved more favorably than the state ones? As it turned out, though, the bet proved prescient.
The SEC investigation was being handled out of Shipchandler’s Fort Worth office. In August 2018, the investigation was declared over. Shipchandler wrote a four-sentence letter delivering the good news to Exxon’s lawyer: none other than David Woodcock at Jones Day. “We have concluded the investigation,” Shipchandler wrote, and “we do not intend to recommend an enforcement action by the Commission against Exxon.”10 This was a relief for Exxon. The company trumpeted the letter to the media, noting that the SEC was moving on “after a thorough investigation,” which included a review of more than four million pages of documents that Exxon had graciously provided.11
Now, months after Jones Day’s client had notched a big win, Shipchandler was leaving the SEC, and Jones Day was quietly in the process of bringing him on as its newest recruit.
As one Jones Day lawyer acknowledged to me, the optics of this were not great. A person familiar with Shipchandler’s version of events told me that everything was aboveboard. He hadn’t started talking to Jones Day about a job until two months after the Exxon investigation was closed. There was no quid pro quo. Yes, Woodcock (aka Exxon’s lawyer at Jones Day) was one of two people who had recruited him to the firm, but the other was someone whom Shipchandler had known for years. What’s more, this person said, Shipchandler had disclosed his job discussions with Jones Day and other law firms to SEC officials.
Take all of that at face value. Shipchandler’s hiring—on the heels of him overseeing an investigation that ended as favorably as could be for a key Jones Day client—was nothing more than a bizarre coincidence.* It reminded me of the time, nearly thirty years earlier, that Jones Day was getting raked over the coals for its work for fraudulent savings and loans. In the midst of the federal investigations into the firm’s actions, Jones Day had hired a senior official at a federal agency that was conducting one of the investigations. That, too, had been innocuous, Steve Brogan asserted at the time. (“This type of thing happens all the time in Washington.”)
After the S&L debacle, Jones Day had grown shyer about overtly wielding political influence. Now the firm was coming full circle—and an idealistic Texas lawyer named Josh Russ was about to experience it firsthand.