Amidst uncertain market conditions, Rachel Proffitt will assume the mantle as the CEO of Cooley in January, facing a difficult decision between growing the firm to prepare for a potential rebound in business, or keeping the headcount in check due to a potentially protracted slump in the market. Data presented by Bloomberg indicates that we have seen less than 15,000 merger and acquisition deals in each of the past four quarters. Also, initial public offerings, which numbered 933 in 2021, have significantly reduced in volume this year, clocking in at a mere 75 thus far.
Eric Talley, Corporate Law Professor at Columbia Law School, notes that turmoil in the financial markets is far from settling, due in part to interest rate volatility and Federal Trade Commission pressures. Cooley, with a client list boasting formidable names like Apple Inc., Meta Platforms Inc., and Nvidia Corp., finds itself in a vulnerable position.
Cooley had indeed ramped up recruitment during more prosperous times, with over 300 associates joining between 2020 and 2021. However, the bleak November of last year resulted in the layoffs of approximately 150 attorneys and staff at Cooley’s US offices, demonstrating the firm’s sensibility towards market shifts. An incoming cohort of new associates also saw their start date pushed to the following year.
This up-and-down cycle of workforce adjustments wasn’t limited to Cooley alone. Other notable law firms like Goodwin Procter, Gunderson Dettmer, Kirkland & Ellis, and Orrick Herrington & Sutcliffe also had to resort to layoffs. Such adjustments in headcount proves to be a critical task for management, as they navigate these fluctuating cycles.
In an interview last month, Proffitt remarked of Cooley’s readiness to encounter any kind market condition. Proffitt helped lead the Cooley team that advised on one of the year’s biggest IPOs, that of Instacart, which raised a sizable $4.2 million in legal fees and expenses, according to a securities filing. Cooley also ushered in the $621 million IPO of biopharma company Acelyrin Inc. in May.
The quandary of moving companies toward more proactive transaction activities is a challenge that Cooley shares with all other law firms. Small sparks might catalyse shifts in deal flow, but venture capital investors are getting nervous, according to Talley.
Cooley, despite the conservative market sentiment prevalent in Silicon Valley, has still managed to bring on board some strategic hires. Despite the questionable market outlook, Nick Goseland, San Francisco-based legal recruiter at Macrae, insists that preparations for the opening of the market ‘window’ should be actioned six months in advance, making a case for more imminently required lateral hires – particularly those in capital markets.
Thrust against deep-pocketed rivals trying to stake their claim in the Northern California market, Cooley has yet another hurdle to clear. Notably, Debevoise & Plimpton that opened its San Francisco office in 2021 and New York’s Sullivan & Cromwell that recently doubled its physical space in Palo Alto, California. Yet, Ralph Baxter, former leader of San Francisco-founded Orrick, is optimistic that entrenched Silicon Valley firms such as Cooley have an advantage against these newer arrivals.