Good morning. Andrew here. Back in 1995, Ari Emanuel walked out of International Creative Management in the middle of the night with a stack of client files to build Endeavor, proving even Hollywood’s top agencies weren’t untouchable. Now, Big Law may be having its Ari Emanuel moment. Yesterday, Wachtell, Lipton, Rosen & Katz’s top litigation chief, Bill Savitt, led five partners to Gibson Dunn in a stunning raid. The defections have Wall Street debating whether the legal industry’s historically staid, loyalty-driven partnership model is undergoing a permanent shift. More below. (Was this newsletter forwarded to you? Sign up here.)
HeadwindsRenewed fighting between the U.S. and Iran. A high-drama Fed interest rate vote. A tech stock sell-off. Investors are being whipsawed by the boldfaced headlines. That’s amping up market volatility ahead of earnings reports from artificial intelligence bellwethers Microsoft and Meta later today. Amazon goes tomorrow. The latest:
Investors are in a show-me-the-money mood. SK Hynix, whose memory chips are key to the build-out of A.I. infrastructure (as well as cars, tech gadgets and more), reported a record quarterly operating profit margin today. But it still fell short of calming demanding investors; its shares have halved in the past month. It’s a tough crowd in the U.S., too. The Nasdaq 100 grouping of tech heavyweights is flirting with correction territory, or a drop of 10 percent from its June high. Shares in Microsoft and Meta have fallen even further in the past year as investors grow anxious about when their huge A.I. capital expenditure commitments will pay off. (The outlier: Apple, whose valuation briefly surpassed $5 trillion yesterday.)
Wall Street isn’t just interested in return on investment. Silicon Valley is divided over the open-versus-closed A.I. model debate. Investors will want to know whether this could shake up the economics of A.I., too, and even determine which frontier labs win out. Mark Zuckerberg has made clear where he stands. The Meta C.E.O. is firmly in the “open” camp, and is growing increasingly suspicious of labs like Anthropic and OpenAI that have argued that as the technology grows more powerful it would be safer to keep A.I. models limited to controlled environments like theirs. He told The Times yesterday that such an approach would be bad for innovation and even dangerous. “So much of the discourse from a lot of the other labs that are developing this is overwhelmingly filled with doom,” Zuckerberg said. “There needs to be a voice or several voices that are bringing realism to this debate.” Zuckerberg also told The Financial Times that the U.S. should not seek to block Chinese A.I. models. The Chinese competitive threat is also likely to be a hot topic on Big Tech earnings calls.
Chinese robots join a U.S. blacklist. The Federal Communications Commission released rules that bar the import from China of new humanoid and quadruped robots, along with power inverters, which connect renewable energy sources and batteries to grids and data centers. The administration is worried that such technology could be used to disrupt or steal data from U.S. supply chains. Shein says it’s being investigated by the Federal Trade Commission. The Chinese online fast-fashion company made the admission in a new filing ahead of its planned I.P.O. in Hong Kong. Shein did not specify the reason for the scrutiny, but it adds to questions about its high-profile trading debut. The Senate confirms Jay Clayton as director of national intelligence. The Senate voted for Clayton along party lines, 51 to 47, to oversee U.S. intelligence agencies. Lawmakers have been eager to see Clayton, who served as chairman of the S.E.C. in President Trump’s first term, take over from Bill Pulte, a housing official with no national security experience.
A star Wachtell litigator jumps shipIn a major shake-up of one of Wall Street’s most prestigious law firms, Gibson Dunn has hired Bill Savitt, a co-chair of Wachtell, Lipton, Rosen & Katz, as well as five other partners from its litigation department. Hiring Savitt was “a dream hatched” by Barbara Becker when she became chair of Gibson Dunn five years ago, she told DealBook. Savitt was “No. 1” on her must-hire list, she added. Savitt has led some of the most high-stakes corporate battles:
Wachtell is a longstanding force in M.&A. Its model: run a tightknit, single-office boutique in New York with expertise in takeovers and a major corporate litigation presence in Delaware’s Court of Chancery. It is known for setting record profits. Historically, departures of any kind from Wachtell, let alone by a firm co-chair, would have been unheard of. With the exit of Savitt and the five partners, questions will inevitably arise as to whether Wachtell needs to rethink its model. “It’s a hydrogen bomb in the ecosystem,” said Steven Davidoff Solomon, a professor at the University of California, Berkeley, School of Law. It comes amid big changes in Big Law. The shift away from the more gradual, lock-step salary approach has led to a fierce, and expensive, war for talent. (Law firms are now paying $20 million as a base line for top recruits.) Wachtell remains an M.&A. stalwart. “Wachtell Lipton is performing at its highest level across every metric,” a spokeswoman for the firm said in a statement. “The firm is having a record year, continues at the top of all the league tables and is as strong as it has ever been.” It continues high-profile cases including representing the investment bank Jefferies in litigation surrounding the bankruptcy of the auto parts supplier First Brands. It is the latest big hire for Gibson Dunn, including groups led by Jeff Wall, a former acting U.S. solicitor general, and Barry Berke, the prominent white-collar defense lawyer. The firm has been for “the past five years putting together what I call a dream team or a super team,” said Orin Snyder, co-chair of Gibson Dunn’s trials practice group.
FIFA fightThe World Cup was a bonanza for broadcasters, corporate sponsors and FIFA itself. But a rift between Gianni Infantino, the president of the international soccer governing body, and Europe’s soccer powerhouses continues to grow ahead of a big leadership vote next year. Now two giants of the investment world — JPMorgan Chase and Thrive Capital — are being pulled into the fray as FIFA aims for its first private investment, Sri Muppidi writes. The latest: FIFA yesterday announced a plan to sell a minority stake in a new subsidiary called FIFA Forward Enterprise (FFE) that would manage the commercial side of its main events, such as the World Cup. The aim is to increase the revenue FIFA brings in, capitalizing on the popularity of this year’s supersized World Cup. But members still need to approve the plan. Here’s how it would work:
Not everyone is a supporter. Fan groups and politicians have slammed FIFA for selling out a sport that had been run by nonprofits. Europe’s soccer authority, known as UEFA, reacted with special fury. It said the deal “crosses a line” and offers “zero transparency as to who gains financially.” And it was reportedly considering a boycott of FIFA events. The payouts are causing tension. A drop in the bucket for richer countries, the funds represent a windfall for smaller nations. Critics fear the payments could enable Infantino, a close ally of President Trump, to curry favor with this bloc, giving him an overwhelming edge ahead of FIFA presidential elections in March.
Scoop: New funding for a start-up fighting A.I. slopAs generative artificial intelligence penetrates more of our communication channels, new start-ups are vying to be the best at distinguishing A.I. from human-generated content. One is Pangram, which is announcing today a $9 million fund-raising round along with the launch of two new detection models, including one that analyzes images, Niko Gallogly is first to report. Menlo Ventures is leading the funding round for the New York-based start-up, with participation from ScOp Venture Capital, Haystack Ventures and others. A.I. detection tools have been dismissed as unreliable in some tech circles. But Pangram has helped to reshape that narrative. A 2025 study from the University of Chicago found that Pangram maintained near-perfect accuracy in assessing texts that were roughly 500 words or more, outcompeting its rivals Originality.ai and GPTZero. It’s attracted big customers. More than 50 universities are now paying for the start-up’s services. Last week, Substack unveiled a partnership with Pangram to allow readers to opt out of seeing A.I.-generated content. Pangram’s annual revenue rate has soared in the past year. And the company said that monthly users grew to 120,000 in June, up from 2,700 a year before. A majority of Pangram’s revenue comes from individual subscriptions, which cost $20 per month. The company is also introducing its first A.I.-image detection model, which will help bolster Pangram’s goal of providing users with “cognitive security,” Max Spero, Pangram’s co-founder and C.E.O., told DealBook. One big caveat: It’s not always right. That creates the potential for accusations about A.I.-generated writing that might be wrong. Another question: What is the right way to treat text that Pangram labels as partly written with A.I.? Spero said he thought it was “completely OK” for people to use A.I. as an assistant, but noted that he personally chose not to. How everyone else chooses to treat that messy middle ground remains to be seen. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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