Welcome to the Wall Street Week newsletter, bringing you stories of capitalism about things you need to know, but even more things you need to think about. I'm David Westin, and this week we held a roundtable discussion with Larry Summers of Harvard and Niall Ferguson of the Hoover Institution about the future of China and explored the developing world of investing in law firms. If you're not yet a subscriber, sign up here for this newsletter.

US and China's ‘hostile codependence’

President Donald Trump held his long-awaited phone call with President Xi Jinping of China this week, trying to find a way forward for the relationship between their two countries. Though things may be moving forward, there is a long way to go to address what the president says is "hundreds of billions of dollars a year we lose with China.” US Treasury Secretary Scott Bessent says "we have a plan, we have a process," and that "over the next 90 days we can accomplish a lot."

But whatever these trade negotiations may yield, they're unlikely to resolve the longer-term issues surrounding the second-largest economy in the world seeking to overtake the largest. Niall Ferguson of the Hoover Institution says an economic "Cold War" can coexist with "an enormous amount of imports" to the US from China; Special Contributor Larry Summers of Harvard calls it "hostile co-dependence."

Turning Legal Fees into a Silk Purse of Investment

When I left my law firm in 1991, the idea of "big" law was approaching 200 lawyers and even we partners made six figures and felt well-paid. Those days are long gone. The cases now are much bigger, the stakes are much higher, and big law firms have turned into big businesses. The overall business of law in the US is now measured in the hundreds of billions of dollars, and Lisa Smith, who advises lawyers on their businesses, reports that "there are 48 firms that have more than $1 billion" in revenues.

As you might expect, partners are being compensated in ways that would have been unimaginable and the firms' need for capital has grown accordingly, leading to the possibility of outside investment, not only in the cases being handled, but in the firms themselves.

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