It’s a reasonable to wonder just how bankruptcy attorneys make a living if their clients are broke. The answer is bankruptcy attorneys are first in line to get paid out of the bankruptcy estate. So even if other creditors and shareholders get wiped out by a corporate bankruptcy, the bankruptcy lawyers get paid.
The Trump campaign reminds me of a bankruptcy. When I started as a lawyer in 2001 there were a spate of huge corporate bankruptcies: most famously those of Enron, WorldCom, Adelphia, and Tyco. And as a young corporate associate I spent a lot of time filing creditor claims in bankruptcy court, and if truth be told, being on the receiving end of claims filed in bankruptcy court against some of my clients.
That’s probably why, ever since the inauguration, I’ve kept an eye on where the Trump re-election campaign is spending its money. In August, I wrote that a nice chunk of the campaign’s money was going to Trump’s business. That’s still the case, although the spending is not quite at the clip it was in the first half of 2017. From August 1 through the beginning of March, $67,000 went to various Trump businesses and $54,000 went to “The Trump Corporation” for “legal consulting.”
It’s unclear what this “legal consulting” is for. However, if it is for costs stemming from Robert Mueller’s probe relating to the 2016 campaign, or in Trump’s capacity as president, the expenditures are legal, according to campaign finance law.
But the biggest winner among the lawyers is Jones Day, with $2.4 million in legal fees for the Trump reelection campaign. The law offices of Alan S. Futerfas, (who represent Donald Trump Jr,) have been paid $288,000; Belkin Burden Wenig & Goldman, LLP (a New York real estate firm) have been paid $33,000; Larocca Hornik Rosen Greenberg & Blaha (whose offices are in the Trump’s building on Wall St.) have been paid $33,000; and D.C.’s Wiley Rein have been paid $10,000.
The other way the Trump reelection campaign looks like a bankruptcy estate is that there are literally more expenditures going out the door than normal donations from individuals coming in. According to campaign finance reports on file with the FEC, the Trump reelection campaign’s contributions are $9.9 million and their operating expenditures are $17.2 million (The reason the campaign is not in the red is transfers of large chunks of money from other PACs to the campaign.)
Of course, just because an entity is bankrupt doesn’t mean that value can’t be extracted from it by its vendors. This is likely a lesson the Trumps learned from their six corporate bankruptcies. In the 1990s, three of Trump’s casinos including the Taj Mahal went bankrupt as did the Plaza Hotel. Then he had two more bankruptcies in the 2000s: Trump Hotels and Casinos Resorts in 2004 and Trump Entertainment Resorts in 2009. Even after all of these bankruptcies, Mr. Trump still claimed to be a billionaire on multiple occasions.
And even though the real presidential election is not until 2020, the reelection campaign is still spending millions. The big sucking sound from the Trump reelection campaign is the sound of money going to Brad Parscale, Parscale-Giles and Parscale Strategy LLC to the tune of $5.6 million. Brad Parscale was just named campaign manager in February 2018 – which makes official a role he’s been playing de facto.
Just like in a corporate bankruptcy, where the little people get wiped out while the lawyers and the businessmen trot off into the sunset with full bank accounts, the Trump reelection campaign looks like only the white collar guys near the top will make a buck. Maybe it’s just the former corporate lawyer in me, but I’ve seen this movie before.