Friedman graduated from Cornell University in 1959, where he was a member of the Quill and Dagger society. He received his law degree from Columbia Law School in 1962. He worked for much of his career with investment bank Goldman Sachs, holding numerous executive roles. He served as the company's co-chief operating officer from 1987 to 1990, was the company's co-chairman from 1990 to 1992, and the sole chairman from 1992 to 1994; he still serves on the company board.
From 1998 to 2002, he served as a senior principal of Marsh & McLennan Capital Corp. He was from 2002 to 2005 United States Assistant to the President for Economic Policy and director of the National Economic Council. Among other public service activities, Friedman is the Chairman Emeritus of the Board of Columbia University, Chairman Emeritus of the Executive Committee of the Brookings Institution, and a member of the Council on Foreign Relations.