Cooley's Layoffs Reveal Danger for Other Firms: The Morning Minute

RISKY INVESTMENTS – Cooley became the first major law firm this year to admit to laying off employees in anticipation of a prolonged work slowdown well into 2023. But, as Law.com’s Justin Henry and Jessie Yount report, the firm will likely be one of many to see a big impact from putting too many eggs in the tech basket. In recent years, revenue and profit growth at tech-centric law firms have outpaced many of their competitors in the Am Law 200. But the recent downturn in the tech sector, coupled with a short-term attitude toward talent management, reveals vulnerabilities in the model that made rapid growth possible. “The legal market is becoming a market of specialization,” said David Nicol, head of the U.S. recruiting practice at Marsden. “Every client wants their firm to be a specialist. And Cooley’s focus on startups is a natural weakness of the business cycle.” But other tech industry law firms and firms focused on specific sectors face similar dangers. “A range of consistently robust practices like PE and depth in countercyclical practices such as restructuring and litigation is important, rather than leaning into a few practices that are all similarly affected by a downturn,” said Sabina Lippman, a legal recruiter at Lippman Jungers Bala.

SEARCHING FOR STABILITY – When the economy starts to get rickety, sometimes your dream job is just the one you’re more likely to hold on to. Top in-house lawyers in the job market are ratcheting down their appetite for risk, favoring stable, less flashy companies as economic headwinds buffet the tech industry and venture-backed startups, Law.com’s Hugo Guzman reports. Recruiters say candidates also are seeking more of their compensation in cash instead of stock options. Options can soar if a company hits it big. But many recent grants have slid underwater, amid falling tech stock prices and declining valuations at startups. “Those fly-by-night, Series A companies people would quit their law firm jobs for—no one is quitting for them now,” said Sean Burke, founding partner of the boutique legal recruiting firm Whistler Partners. “There’s definitely right now a huge shift toward prioritizing security and maybe going with a resume builder that has a higher base salary or stock at an actual public company, and not options,” he said.

ON THE RADAR – Match Group, a dating application provider, was slapped with a biometric privacy class action Friday in New York Eastern District Court. The court action accuses Match Group of wrongfully collecting, storing and sharing the personal identifying information and biometric data of dating app users. The suit was brought by Israel David LLC on behalf of users of Tinder and other dating apps who were required to upload an identity verification photo. Counsel have not yet appeared for the defendant. The case is 2:22-cv-07319, Berger v. Match Group LLC. Stay up on the latest deals and litigation with the new Law.com Radar.