The comparison between City partners’ attitudes to the UK general election in July and US partners’ attitudes to next Tuesday’s elections could not be starker. Then, not one partner interviewed doubted that Labour would emerge the winner. Now, it’s a coinflip – with even more uncertainty around what either candidate would do in office.
LB checked in with partners at leading US firms to learn how lawyers and clients are navigating this uncertainty.
‘It’s hard to tell how much would be implemented’
‘This election presents more uncertainty than any other recent election’, says Jonathan Becker, a partner in Mayer Brown‘s public policy, regulatory and government affairs and antitrust and competition groups.
First there is uncertainty over the outcome. As of 1 November the New York Times has Democratic candidate Vice President Kamala Harris slightly ahead in national polls, with an average of 49% to Republican candidate former President Donald Trump’s 48%.
But even a stronger national lead would not necessarily give cause for confidence in a Harris victory: the memory of 2016, when Democratic candidate Hillary Clinton lost to Trump despite winning 48% of the popular vote to his 46%, looms large.
To win, either candidate will need to secure at least 270 votes in the Electoral College, which overweights less populous states.
Here the uncertainty is even more pronounced. Seven states are considered battlegrounds this year: Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin. As of 1 November the NYT has leads of less than one point for Trump in Nevada and Pennsylvania and for Harris in Wisconsin and Michigan, with Trump ahead by one, two, and three points in North Carolina, Georgia, and Arizona respectively. Each of these results is within the historic margin of error.
But uncertainty runs deeper still. ‘Harris doesn’t have a record of her own beyond a few years as a senator’, says Becker. ‘And Trump speaks in this hyperbolic way, but has previously had a hard time fulfilling his statements.’
Baker Botts New York corporate partner Neil Torpey concurs: ‘Both sides have been throwing out ideas on an almost daily basis. It’s hard to say how many of the things that either is talking about would be implemented in a new administration.’
This is in part because Congress is also up for grabs, with every seat in the House and 34 of the 100 seats in the Senate also contested. The Republicans currently hold a slim majority of eight seats in the House, while the Democrats hold the Senate by just one seat. Congressional polls are again tight, though the Senate map is considered especially unfavourable to Democrats.
‘Whoever they are, the next president is likely to face a divided Congress’, says Becker. ‘That’s very different than when Joe Biden became president in 2021, when Democrats controlled both the House and the Senate, or when Trump became president in 2017, when Republicans controlled both houses, or even when Obama became president in 2009, when again the Democrats controlled both houses.
‘A divided Congress will make it harder for either candidate to do the big-ticket things they’ve said they’ll do.’
Virgil Miller, a Washington DC-based senior policy advisor at Akin, makes a similar point: ‘If Vice President Harris is elected and the Republicans take over the Senate, this will be the first time since the George H.W. Bush administration that a president has faced a Senate controlled by the other party.’
‘This could be the first time since the H.W. Bush administration that a president has faced a Senate controlled by the other party’
Virgil Miller, Akin
‘Personnel is policy’
With divided government likely, the federal bureaucracy is all the more important.
The Biden administration has taken a far more activist stance on regulation than previous administrations from either party. ‘We’ve had really aggressive antitrust enforcers in the last three and a half years in Lina Khan at the Federal Trade Commission (FTC) and Jonathan Kanter at the Department of Justice (DOJ) antitrust division’, says Becker. ‘They’ve challenged a lot of mergers that antitrust regulators in the past wouldn’t have challenged, whether they were Democrats or Republicans.’
Again, neither candidate has offered much in the way of specific policy. But Miller argues that the key question is ‘Who are those individuals who are going to be tasked with carrying out policy?’
Becker concurs: ‘We like to say in Washington that personnel is policy. So what happens to Lina Khan is top of everyone’s mind. Some big Harris supporters have urged her to get rid of Khan should she win, but my view is that that’s a surefire way to ensure that she can’t get rid of her! Otherwise she’ll appear as if she’s kowtowing to big donors.’
If we can expect a Harris administration to be substantially ‘more of the same’, in one partner’s words, we should expect a second Trump administration to take a lighter touch. ‘If Trump were to win, it seems likely that a number of the people who would populate his administration would be proponents of elements of what’s in Project 2025’, says Torpey, referencing an initiative produced by Trump-aligned think tank The Heritage Foundation. ‘That suggests that there would be a serious effort to shrink the administrative state in a Trump administration.’
‘Markets like gridlock’
‘Congressional elections are important over time’, says Jones Day business and tort litigation co-lead John Majoras , ‘as they determine the statutes. But that’s a longer-term outlook. By contrast, the executive agencies can move very quickly.’
But recent court decisions have left the regulators ‘somewhat defanged’, in one partner’s words. In particular, this June’s Loper Bright Enterprises v. Raimondo, which struck down the 1984 Chevron v. Natural Resources Defense Council ruling that required courts to defer to federal agencies’ interpretations of ambiguous statutes.
‘The decision really takes the thumb off the scale for the agencies’, says Majoras. ‘If an agency takes enforcement action, it will have to consider more carefully what a court might say. Businesses may also be more willing to challenge things in litigation.’
Becker argues that the decision could also make it more difficult to enshrine regulations in law: ‘It may force Congress to legislate with greater specificity. That’s hard for Congress to do, one, because it’s hard for Congress to pass anything, and two, because Congress doesn’t have the necessary expertise or staff.’
This may be a positive from the point of view of dealmaking. ‘Markets like gridlock’, says Mayer Brown chair Jon Van Gorp. ‘Dynamic political changes can be difficult for businesses to adjust to. Clients are hoping for some gridlock to slow the pace of change in either direction.’
Many predict a revival of activity as we move into 2025. ‘There’s pent-up demand for M&A’, says Becker. ‘The economy’s better, interest rates are lower, and the market is ready for deals to get done.’
But even with a more relaxed regulatory environment, firms will not likely shrink the antitrust benches that they have built. ‘Antitrust will remain an area of high demand’, says Becker. ‘If we see more M&A, we’ll need more from lawyers. That will only continue.’
‘The Loper Bright decision really takes the thumb off the scale for the executive agencies’
John Majoras, Jones Day
‘Where the parties align is on big tech’
However, regulatory loosening only goes so far – in one sector in particular. ‘Where the parties align is on big tech’, says Becker. ‘It will likely be in regulators’ crosshairs regardless of who becomes the next president.’
Torpey concurs: ‘A Trump administration may be less likely to hire people who are going to be out there blocking proposed mergers – except in the tech sphere, where conservatives have targeted certain prominent companies over political issues.’
Indeed, increased regulatory activity in the tech sector predates the Biden administration. ‘There was a period from 2005 to around 2015 when in both the Bush and Obama administrations regulators approved deals that allowed major tech platforms to get bigger and bigger’, says Becker. ‘There’s now a consensus that these companies got too big and something needs to be done.
‘Neither a Republican nor a Democratic antitrust enforcer is going to make what they view as the mistakes of earlier regulators, in allowing these companies to become so big and powerful, to handle so much data, and to have so much control over Americans’ and other users’ lives.’
The future of emerging technologies is less certain. ‘Tech issues like AI and quantum computing will be hugely relevant to whoever wins’, says Miller. ‘We should expect a Harris administration to be something like a Biden administration 2.0 on these fronts. There’s not much we can point to that says that the vice president diverges from President Biden on those areas.’
Cryptocurrency, too, will likely be a priority regardless of the outcome. But here again it is hard to tell which way an administration from either party would move. Trump has been pro-crypto, and has pledged to remove Securities and Exchange Commission (SEC) chair and crypto sceptic Gary Gensler. By contrast, Harris has both called for more regulation and pledged greater investment.
‘Neither a Republican nor a Democratic antitrust enforcer is going to make what they view as the mistakes of earlier regulators’
Jonathan Becker, Mayer Brown
‘We’re going to need to generate power from every source we can’
Miller argues a Harris administration will invest across the board: ‘She will continue to support the Inflation Reduction Act and infrastructure investment, where Trump will likely seek to roll that back.’
For Torpey, though, while a second Trump administration would be less focused on clean energy than the Biden administration has been, it would be no less likely to pump money into energy and infrastructure. ‘The US is the largest oil producer in the history of the world’, he says. ‘Trump isn’t likely to restrain that – I suspect quite the opposite. A lot of the Biden administration’s spending has been focused on traditional infrastructure, too, and there’s every reason to expect that to continue in a Harris presidency.’
The fundamental reason for this is that energy needs will continue to increase. ‘The data centre needs generated by the explosion of AI and the overall need for energy are increasing in a way that’s going to require us to generate power from every source that we can’, says Torpey.
China is another area of overlap – and not an unconnected one. ‘There’s a dotted line from industrial policy and investment to competition with China’, says Miller. ‘That was a feature of both the Trump and Biden presidencies. Can we expect the same concerns in a second Trump administration or a Harris administration? Our advice to clients is, absolutely. There’s bipartisan consensus that the competition between the US and China is not over – we can’t take our foot off the pedal here.’
Torpey concurs: ‘China’s not going to be popular in either administration.’ However, he also argues that we should not expect a serious plummet in US-China trade. ‘We still do $800bn of business with China. There are lots of points of contention in the relationship, but it will continue nonetheless – it has to.’
‘China’s not going to be popular in either administration’
Neil Torpey, Baker Botts
‘Tax policy is top of mind’
‘The 2017 tax package expires at the end of next year’, says Miller. ‘Whoever is president will have to confront that.’ But Congress has enormous power over the budget. And Torpey argues that it may have more reason than partisanship or ideological disagreement to exercise that power to constrain spending: ‘Deficit reduction is talked about more and more by economists and business commentators. The interest cost on the national debt is really starting to get on people’s radar screens.’
‘Tax policy is top of mind for the Harris campaign’, says Miller. ‘But how she’ll raise the money is secondary to what she’ll use it to pay for. It’s about what she dubs the care economy – how does she get the money that she would need for a child tax credit extension or for her proposals on pre-K, childcare, and housing?’
Becker similarly identifies the care economy as core to Harris’s pitch to voters: ‘To the extent that the Harris campaign has articulated a clear economic agenda, it’s one of cost of living – it’s less about industrial policy and jobs and more about what you’d traditionally call pocketbook issues.’
This agenda may give clues to a Harris administration’s regulatory priorities. ‘We could see antitrust regulators focus on pharma and biotech as well as groceries and agriculture’, he continues. ‘The vice president has made a lot of public statements about policing what she views as price gouging in the food space. There’s a lot of concerns that grocery prices are too high. What the reasons for that are has not really come into play. But antitrust enforcement is one way to show you recognize the concerns.’
‘Dependent on who wins, this may be the most significant election of my lifetime’
Jon Van Gorp, Mayer Brown
‘One of the most significant elections’
It is striking that amidst all this uncertainty partners do not predict any major changes to deal activity or to the level of legal support clients will need. M&A will likely pick up on the back of what one partner calls ‘strong market fundamentals’.
And regulators will be more aggressive than they were in the Bush and Obama years regardless of who wins. This will require firms to continue to field top teams in antitrust and, with no end in sight to competition with China, foreign investment.
Still, partners are far from relaxed about the outcome of the election, with issues less close to the core of big law particularly fraught. One expressed discomfort at Trump’s statements on immigrant deportation. Another pointed to abortion rights as a key issue. Several raised concerns around foreign policy, in particular around the conflicts in Ukraine and the Middle East.
‘This is one of the most significant elections in my 55 years walking this earth’, says Van Gorp. ‘Dependent on who wins, it may be the most significant.’