We need more details.

"Client received Form 1099 R,"

From what sort of account or employer plan or lump sum from pension or inherited something? Or insurance policy payout? Or...?

"Taxable amount of distribution is $197K,"

As compared to what sort of pay and/or AGI? Needs perspective.

"Dist. code is 1 Early withdrawl     He is Not 55."

Or 59 1/2? Or still employed or no longer employed at that employer? Different provisions, different ages apply.

"Have checked all exceptions to early distribution and he doesn't qualify for any.  Even though he had $39K federal income withheld,"

Against possible tax owed. Not Tax withheld, but prepayment, the same as payroll withholding and estimates payments 1040-ES are not Tax; they're payments.

"he still owes $26K in taxes because he has employment income"

Because his reported financial picture means that the 1099-R withholding + his payroll withholding didn't meet his tax liability. Let's give this some perspective. It could have, if that was the bulk of his taxable income that tax year. There is a flat 20% by default, but his tax rate is his based on the entire 1040 financial reporting.

"Is there any provision, brake, law or anything to reduce that $ 26K?"

You're asking to reduce his balance owed and not his total tax owed?