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A dozen gone from Cooley Godward’s Reston, Va., office in one fell swoop. Across all of the Palo Alto, Calif., firm’s offices, a total of 85 associates and special counsel lost their jobs on Aug. 23 — approximately 20 percent of the nonpartner work force. While the likelihood of law firm layoffs has kept chat boards alive for months, the scope of Cooley’s move took many by surprise. But then again, few firms bet as heavily on the new economy or the Dulles Corridor’s tech community as Cooley and its Reston outpost, which opened just two years ago. In the aftermath of the layoffs, the question for the tech-heavy firm that hit profits per partner just shy of $1 million last year is where to go next. Cooley’s rivals — whether in Washington, D.C., or Northern California — have yet to follow its lead, with many moving swiftly after Cooley’s announcement to inform associates and staff that layoffs are not part of the plans. Dickstein Shapiro Morin & Oshinsky; Wilmer, Cutler & Pickering; Brobeck, Phleger & Harrison; Morrison & Foerster; and Pillsbury Winthrop all responded to the news by issuing internal bulletins, some within hours, saying layoffs were not imminent. But Joseph Conroy, Cooley’s managing partner in Reston and one of those who delivered the news to the 12 Northern Virginia lawyers on Aug. 23, knows that other firms with tech practices may be hard-pressed to avoid layoffs if the market does not pick up soon. The bottom line will demand it. “We had staffed up for continued growth,” Conroy said on the day of the layoffs. “We’re just not going to see that level of growth.” “The reductions we implemented were designed to ensure that the firm was right-sized,” he added later, “so that future years will continue to be good.” BIG PLANS Undoubtedly, being the first national firm to lay off lawyers en masse since Latham & Watkins’ reduction in the early 1990s will color Cooley’s future. Cooley arrived in Northern Virginia in 1999 and rapidly established itself as one of the largest offices in the region, equaling homegrown residents such as Oblon, Spivak, McClelland; Maier & Neustadt; and Burns, Doane, Swecker & Mathis. Now, any talk of fast growth has been tempered. “You can bet that we will grow as an office and a firm more conservatively,” says Conroy, who sits on Cooley’s management committee. “The firm is still evolving and will undoubtedly learn lessons.” Cooley was not nearly as cautious just a short time ago. The Reston office hit the ground running, stealing talent from Morgan, Lewis & Bockius; Piper Marbury Rudnick & Wolfe; Burns, Doane; and Hunton & Williams — Conroy’s old stomping grounds. “This is an opportunity to get a big slice of a big pie,” Conroy said in April 1999, when Cooley opened its office. With its aggressive hiring and focus on the Dulles Corridor’s tech mavens, it quickly made its mark. Just one year after its opening, the Reston office counted 52 lawyers, a number that grew to around 85 at the outpost’s peak. Meanwhile, Wilson Sonsini Goodrich & Rosati’s D.C. office, opened after Cooley’s, hovers at around two dozen attorneys. Brobeck arrived in the region just before Cooley and has about 30 attorneys between its D.C. and Reston offices. But Cooley’s business-heavy focus, with an emphasis on emerging companies, has now stung the firm. In the downswing, litigation and bankruptcy have become hot again, while corporate work, especially for emerging companies, has cooled significantly. Earlier this year, attorneys in Cooley’s Reston office began to feel the pinch. “Personally, my workload did diminish. Not substantially, but it did diminish,” says former special counsel Charles Martel. An employment lawyer, Martel left before the layoffs to co-chair the legal committee for Mark Warner’s gubernatorial campaign. Finally, when the souring economy showed no improvement by late summer, Cooley made the reduction announcement. In a memo addressed to all firm employees, CEO Stephen Neal wrote, “We had hoped and expected for many months that a combination of normal attrition and resurgence in the economy would bring the demand for our services and our personnel resources back into balance. Unfortunately, that has not happened. … We now have a number of talented people who have been significantly underutilized for too long.” Out of a dozen associates let go in Reston, men and women got notices in equal numbers, bringing the number of women lawyers in the office to approximately eight, according to current and former Cooley attorneys. Women hold partnership and leadership positions throughout Cooley. But there are no female partners in Reston, an imbalance that may be due to the office’s large percentage of part-time female attorneys. The firm has not released the names of people let go or the exact number of departures in each office. Attorneys were directed to forward inquiries to Neal or Conroy. The bulk of the layoffs were in the corporate department, says Conroy, who adds that the layoffs were “proportionate” across the firm’s offices. Cooley has only begun to remove lawyers’ names from its Web site. Many are still with the firm and may remain for a few months. The layoffs in Reston almost match the office’s incoming class, which Conroy says holds about nine first-years. Under the firm’s revamped start dates, the newbies can begin in October or November. In prior years, associates had three start dates to choose from: September, October, or November. Though the firm contemplated rescinding offers to the incoming class, which would have had a similar effect on the body count, Cooley decided to reduce its current ranks. “That’s an extremely difficult decision, between letting go of existing people who you know … and choosing not to bring into the firm new people from good schools who are the lifeblood” of law firms, says Conroy. The choice was made not only “to prevent problems with law schools” and recruiting, he says, but to “continue to add new talent.” Even if the economy doesn’t pick up soon, it will be easier for the Reston office to accommodate next year’s class. Only five law students summered in Reston this year, with three focused on litigation. The office has not yet made offers, but plans to do so soon. “We are giving offers to everybody we would have given offers to last year,” says Conroy. Like the incoming associates, partners found themselves clear of the fallout. “The management of the firm didn’t contemplate involving partners in the reduction,” says Conroy, who adds that to his knowledge the firm did not consider trimming the ranks of equity partners. The message that associates are the most vulnerable is exactly what spurred other firms into action. A week after the announcement, Dickstein Shapiro managing partner Angelo Arcadipane sent out an e-mail to reassure the ranks. “We may pass over some fads that are momentarily enticing and even profitable,” he wrote. “Our approach is the more traditional one of building a sound and diversified professional and business base.” Wilmer Cutler associates also received a message assuring that no layoffs were planned. Chairman William Perlstein says, “We’re busier now than six months ago.” He attributes Wilmer’s upswing in work to its litigation, securities, and bankruptcy practices. Similar messages went out elsewhere, including a Brobeck memo released within 24 hours of Cooley’s reduction. Shaw Pittman managing partner Paul Mickey Jr. and Akin, Gump, Strauss, Hauer & Feld chair R. Bruce McLean say they don’t plan to follow Cooley’s lead. Distancing their firms from Cooley, many speak of their diversified practices and the perceived error of focusing heavily on emerging businesses and dot-coms. “It’s true that more than half our lawyers are in the tech space, but a large majority of them are in the telecom practice, the IP practice, our well-known outsourcing practice, and other areas that continue to be strong,” says Shaw Pittman’s Mickey. “We are diversified, and the Tysons office is itself diversified.” STILL IN THE GAME But the grim news last month belies Cooley’s long-term strength, says Conroy and others. Across the country, the firm still has more than 400 associates, a number that will be buoyed when the first-year class enters this fall. Reston associate Jeffrey Lehrer, who is still on board, notes that the firm won an associate survey conducted by Vault for two years running, and that, despite the lag in the economy, many remain busy. “Even with what happened last week,” says ex-Cooley attorney Martel, “they’re a pretty sizable office.” Conroy says the layoffs may prompt a shift from Cooley’s tech-heavy focus “more towards the middle.” But even now, he says, “We anticipate that 2001 will be a decent year for the firm, profitability wise.” Reflecting on the layoffs, he says, “While it’s extraordinarily painful … at the end of the day, particularly with the addition of our large entering class, we’re still a viable firm.”

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