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Paul Weiss faced executive order threatening its business

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Firm will drop diversity policies, provide free legal work

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Some criticize deal as capitulation

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Experts call Trump's actions unprecedented attack on law

firms

(Adds detail on firm in paragraph 5, context paragraphs 8-9,

comments paragraphs 19-20)

By Mike Scarcella, Sara Merken and Karen Sloan

NEW YORK, March 21 (Reuters) - Powerful Wall Street law

firm Paul Weiss faced heavy criticism on Friday over a deal it

struck with the White House to escape an executive order

imperiling its business, even as some lawyers said the firm

faced few other options.

Lawyers at some companies and law firms skewered Paul Weiss

online for appearing to capitulate to U.S. Republican President

Donald Trump by scrapping internal diversity policies and

donating $40 million in free legal work to support his

administration's causes.

Marc Elias, a former Perkins Coie partner and a top lawyer

for Democrats, assailed the Paul Weiss agreement in a social

media post late on Thursday, calling it "a stain on the firm,

every one of its partners, and the entire legal profession."

In an internal email to its lawyers, viewed by Reuters, Paul

Weiss Chairman Brad Karp defended the agreement, saying it was

in line with the firm's principles, including a commitment to

remaining politically independent.

The firm, with more than 1,000 lawyers, major financial and

technology industry clients and longstanding Democratic Party

ties, would be free to focus on its client work now that the

executive order had been rescinded, Karp said.

The order against Paul Weiss had cited its association with

a prosecutor who investigated the president and the firm's

internal diversity policies. The order suspended security

clearances for the firm's lawyers and restricted their access to

government buildings and officials.

Trump has attacked major law firms for weeks over their work

for his Democratic adversaries and their internal diversity

policies, amid broader moves by the president to use funding

cuts and other measures to pressure universities and private

companies to follow his priorities.

A person with knowledge of Paul Weiss' decision said it

considered suing the administration over the executive order

before making the deal, but believed even a successful case

would scare off clients with business or litigation involving

the federal government.

A criminal defendant facing bribery charges fired Paul Weiss

earlier this week because of Trump's order, but the defendant's

new lawyers said in court papers on Friday that he was

reconsidering after the firm's agreement with the president.

Legal experts said Trump's orders against Paul Weiss and

another big firm, Perkins Coie, marked an unprecedented attack

on their ability to do business.

The order against Perkins Coie was "life-threatening" to the

firm, its lawyer said last week in that firm's ongoing lawsuit

against the administration.

Asked for comment, the White House referred to Trump's

social media post on his agreement with Paul Weiss.

Trump in an earlier order suspended security clearances for

two lawyers at Covington & Burling who represent Jack Smith, the

U.S. special counsel who brought criminal charges against Trump

in two cases.

On Monday, the U.S. Equal Employment Opportunity Commission

sent demands to 20 major law firms for detailed information

about their diversity initiatives and racial and gender

demographics, expanding the administration's legal industry

crackdown.

Paul Weiss could face blowback from some of its lawyers and

clients over its truce with Trump, said University of

Connecticut law professor and legal industry expert Leslie

Levin, but she said the firm likely saw a deal as the safest way

forward.

The White House said on Thursday that Trump had met with

Karp, a longtime Democratic fundraiser and top outside lawyer

for financial companies, and worked out the accord.

"Embarrassed to be associated with this firm today," a

lawyer at Amazon Web Services who previously worked at Paul

Weiss, Cindy Chang, wrote in a LinkedIn comment early on Friday

morning that was later deleted.

Chang and Amazon ( AMZN ), a Paul Weiss client, did not

immediately respond to a request for comment.

The firm may be dealt a setback in recruiting young lawyers

because of its apparent retreat from diversity commitments that

have spread through law firms in recent years, and are now under

attack from Trump, some lawyers said.

"This is a generation that expects to see diversity and

inclusion in the workplace," said Nikia Gray, executive director

of the National Association for Law Placement.