As a result of a dramatic slowdown in the technology practice at Silicon Valley law firm Cooley, more than 100 lawyers and other staff have been laid off just weeks after Elon Musk’s Twitter dropped the firm.
According to the Palo Alto-headquartered firm, there has been an “unexpected economic downturn,” which forced it to reduce its US workforce in order to “better align with current and anticipated demands” from its clients, including Facebook founder Meta, Netflix, Apple, and venture capital firms.
The move comes after large tech groups have started implementing job cuts because of higher interest rates, sluggish consumer spending, and a worsening economic outlook. US tech companies’ initial public offerings this year have fallen to their lowest level since the global financial crisis in 2008.
Earlier this month, Thomson Reuters Institute legal analysts warned the slowdown in dealmaking would “potentially put firms under immense pressure to cut headcount to bring expenses under control”.
Twitter fired Cooley after Musk took over at the end of October, said two people familiar with the matter. Defending the company in a lawsuit over its IPO in 2016 was the firm’s first relationship with the social network.
A person close to Cooley said discussions about potential job cuts were taking place before Twitter’s decision. However, a second person close to the firm said losing the platform’s account, which it was notified of about two weeks ago, had probably resulted in deeper cuts.
Cooley had a public spat with Musk earlier this year — he had threatened to cut off the law firm from its work for his electric carmaker Tesla.
Musk wanted Cooley to dismiss a lawyer who had previously worked at the Securities and Exchange Commission, which had fined him $20mn over his tweets about potentially taking Tesla private. Cooley refused to comply with the demand.
Joseph Conroy, Cooley’s chair, told employees in a memo seen by the Financial Times on Wednesday that the firm had hired too many people as demand grew.
“Essentially, to service unprecedented demand and to help ease unsustainable workloads throughout 2020 and 2021, we launched an aggressive and highly successful talent recruitment strategy,” he wrote.
“Simply put, we hired more talent than we can reasonably develop, train and deploy against current and anticipated client demand.”
Before the job cuts, Cooley had grown to 1,500 lawyers across 18 offices and boasted a total workforce of 3,300 worldwide. Its equity partners took home a record $4mn each on average in 2021, according to American Law data, up 28 percent on the previous year.
In spite of “painful but necessary” steps [the firm has] taken to adjust its overcapacity, Conroy maintains that the group is “well-positioned for long-term success”.
