Wachtell, Sullivan & Cromwell, MoFo Get AI Giants’ Deal Work (1)

Three Big Law firms, in securing key advisory roles with OpenAI and Elon Musk’s xAI, have emerged as frontrunners in the arms race to win lucrative legal business from generative artificial intelligence companies.

Wachtell, Lipton, Rosen & Katz and Morrison & Foerster represented OpenAI and SoftBank Group Corp., respectively, on a deal announced this week in which SoftBank pledged to invest $40 billion into the company behind ChatGPT. Sullivan & Cromwell, meanwhile, advised Musk, xAI, and X—the social media company formerly known as Twitter—on their $100 billion merger.

Although all three law firms have positioned themselves at the forefront of go-to legal advisers for the AI boom—Wachtell and Sullivan & Cromwell were among Big Law’s top dealmakers for the first quarter of this year—first-movers don’t always have the advantage in the technology sector.

“Which one will become the de facto platform and why? I don’t want to be Netscape, I want to be Google,” said Seth Weissman, a veteran general counsel in Big Tech who now has his own legal coaching and consulting practice.

Whether it’s electric cars, rockets, or railroads, the first step in any industry is often more expensive than subsequent iterations, with costs coming down over time, Weissman said. And with Chinese upstarts led by DeepSeek looking to make inroads on their AI counterparts in the US, the relationship between law department leaders and their outside counsel will be important.

Jobe Danganan, a former general counsel-turned-AI entrepreneur, said Big Law and AI are already at an inflection point.

“Every major firm now has an AI committee—not just out of curiosity, but because their clients are asking explicitly: ‘How exactly are you using AI?’” said Danganan, now a founder and CEO of legal technology platform LexText AI. “Legal work is notoriously expensive, and clients want to realize the cost savings and efficiencies AI can offer.”

Weissman was an associate at Wilson Sonsini Goodrich & Rosati during the early days of that firm’s longtime relationship with Google, now called Alphabet Inc., and saw firsthand how a company can maintain an edge over upstarts if it beats them on innovation, performance, and execution.

“Companies hire lawyers, not law firms,” Weissman said. He cited four qualities that successful in-house lawyers should seek in their outside counsel: credibility and knowledge of the law, reliability and responsiveness on work product, engagement and expertise in soft skills, and lastly, self-interest, or caring more about service to the client than their own billings or reputation.

Looking Ahead

The sweet spot for law firms serving privately held startup clients is usually two years before they go public, said Weissman, who during his three decades working in Silicon Valley oversaw initial public offerings as legal chief for fintech outfit Marqeta Inc. and solar panel maker SolarCity Corp.

OpenAI’s general counsel Che Chang leads a rapidly expanding law department at the company, while Musk’s xAI hired Robert Keele last year as its head of legal. Weissman said those in private practice must cultivate relationships not just with in-house legal leaders, but also a company’s CEO, CFO, and beyond the C-suite with board members if they want to remain on speed-dial.

“There’s a lot of politics and personal relationships,” Weissman said. “You have to be a trusted adviser to them all.”

Wachtell corporate partners Andrew Nussbaum—who co-chairs the firm with litigator William Savitt—and Mark Veblen took the lead for San Francisco-based OpenAI on its deal with SoftBank. Kenneth Siegel, the managing partner of MoFo’s Tokyo office, and its global chairman Eric McCrath led a team from the firm advising the Japanese technology giant. MoFo has close ties to SoftBank in addition to its relationship with OpenAI.

MoFo and Wachtell’s Savitt have represented OpenAI in ongoing litigation filed against it by Musk over its plan to shed its nonprofit status. That case, set for trial later this year, saw Musk’s xAI make a $97.4 billion bid to buy OpenAI in February that was quickly rejected. Wachtell, which was once sued by Musk, has watched one of its New York rivals move closer to the world’s richest man.

Sullivan & Cromwell M&A partners Michael Ringler and Peter Jones worked with the firm’s capital and finance practice co-head Ari Blaut on a deal between Musk-owned portfolio companies that creates XAI Holdings Inc. Ringler and Jones were recruited to Sullivan & Cromwell last year from Skadden, Arps, Slate, Meagher & Flom, where they advised Musk on his $44 billion buyout of Twitter Inc. Ringler and Blaut also helped Musk’s X shed nearly $5 billion in debt this year.

The growing popularity of generative AI creates a boon for legal work in more ways than one, said Jiaying Jiang, an assistant professor at the University of Florida Levin College of Law.

Companies will need lawyers to help with AI compliance amid new regulations in the space, along with liability and governance issues, she said.

“Let AI do what it’s good at, such as tasks involving pattern recognition,” Jiang said. “Human lawyers should focus on what AI cannot do, including contextual judgment, persuasion, and negotiation.”