Silicon Valley law firm Cooley has fired more than 100 attorneys and other employees after a dramatic slowdown in its tech practice — just weeks after Elon Musk’s Twitter shut down the company.
The Palo Alto-headquartered company said an “unexpected economic downturn” has forced it to reduce its workforce to “better align with current and anticipated demand” from its customers, which include Facebook owners Meta, Netflix, and Apple Venture capital groups belong.
The move comes after big tech giants began shedding jobs due to higher interest rates, sluggish consumer spending and a deteriorating economic outlook. U.S. tech IPOs have fallen this year to their lowest since the 2008 global financial crisis.
Earlier this month, legal industry analysts at the Institute warned that a sharp slowdown in business deals “would potentially put firms under tremendous pressure to control spending through downsizing, similar to 2008-09.”
Twitter fired Cooley after Musk acquired him in late October, according to two people familiar with the matter. The law firm has worked for the social network since at least 2016, when it defended the company in a lawsuit over its IPO.
A person close to Cooley said that prior to Twitter’s decision, there were discussions about potential job cuts. However, a second person close to the firm said the loss of the platform’s account, which they were informed about about two weeks ago, likely led to deeper cuts.
Cooley had a public falling out with Musk earlier this year — he’d threatened to cut the law firm from working for his electric-car maker Tesla.
Musk wanted Cooley to fire an attorney who previously worked for the Securities and Exchange Commission, which had fined him $20 million for his tweets about a possible Tesla privatization. Cooley refused to comply with the request.
In a memo to employees on Wednesday, provided to the Financial Times, Cooley chairman Joseph Conroy admitted the company had hired too many workers as demand had increased over the past two years.
“Basically, in an effort to meet unprecedented demand and help ease unsustainable workloads in 2020 and 2021, we have implemented an aggressive and highly successful talent acquisition strategy,” he wrote.
“Put simply, we have hired more talent than we can adequately develop, train and deploy based on current and anticipated customer demand.”
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The job cuts at Cooley come after another Silicon Valley-based firm, Gunderson Dettmer, which specializes in helping tech companies go public, delayed start dates for new hires.
Prior to the downsizing, Cooley had grown to 1,500 attorneys in 18 offices and had a total of 3,300 associates worldwide. Its equity partners each earned an average of $4 million in 2021, up 28 percent year-on-year, according to American Law.
Conroy insisted that despite the “painful but necessary steps [the firm has] to compensate for our overcapacities”, the group is “well positioned for long-term success”.