Snapchat CEO Evan Spiegel (Photo by JD Lasica)
Nine months after rejecting a $3 billion takeover offer by Facebook, the Silicon Beach-based photo messaging service known as Snapchat has found itself valued at a reported $10 billion following a $20 million investment from storied venture capital firm Kleiner Perkins Caufield & Byers, according to The Wall Street Journal.
A Snapchat spokeswoman declined to comment on the company’s legal advisers for the funding round, and Kleiner Perkins general counsel Paul Vronsky did not return a request for comment on the matter. Snapchat’s controversial CEO Evan Spiegel is the son of two lawyers with Am Law 100 ties, and a handful of large firms are behind the startup’s rapid rise to fame, including Cooley, which does most of Snapchat’s outside legal work.
Other firms that have also represented Snapchat and its founders include Quinn Emanuel Urquhart & Sullivan, Perkins Coie, Delaware’s Morris, Nichols, Arsht & Tunnell and Blank Rome. In May, Snapchat hired former Hogan Lovells appellate litigation partner Christopher Handman in Washington, D.C., as its new general counsel. Handman, named an Am Law Litigator of the Week late last year for his successful representation of Fox News reporter Jana Winter in a dispute over confidential sources she protected in the wake of a mass shooting in Colorado, did not respond to a request for comment about Snapchat’s preferred outside legal advisers.
But court documents and other public filings by Snapchat—founded in 2011 by two former Stanford fraternity brothers—show that a bevy of high-powered lawyers and lobbyists are busy behind the scenes helping the nascent company cope with cyber-security issues, corporate work, litigation matters and IP protection.
The Los Angeles Business Journal reported in July that Snapchat, whose main function is an application that allows for disappearing photo messages, was seeking to join other messaging apps by crafting a peer-to-peer electronic payment service in order to monetize some of its estimated 100 million monthly users. Filings with the U.S. Patent and Trademark Office show that Cooley is handling the patent work on that matter for Snapchat through San Francisco associate Chantal Hwang.
Cooley has been a longtime legal adviser to Snapchat through relationship partner Eric Jensen, a corporate expert in Palo Alto who serves as a member of the firm’s management committee. Jensen did not return a request for comment, and a Cooley spokeswoman said the firm would not discuss its work for Snapchat, which earlier this year hired former Cooley associate Steven Hwang as its director of legal operations. (It was unclear at the time of this story if both Hwangs are related.)
Snapchat’s reliance on Cooley to help it get off the ground emerged last year in a suit filed by Frank Reginald Brown IV, a former Stanford classmate and fraternity brother of company cofounders Bobby Murphy and Evan Spiegel. Brown claims he was cut out of credit for inventing the service by Murphy and Spiegel. Brown’s allegations against Murphy and Spiegel were well covered in the technology and business press—from a naked man interrupting a deposition at Cooley’s Santa Monica office to video deposition clips of Spiegel appearing on BusinessInsider. The latter led Snapchat’s Quinn Emanuel lawyers to seek a temporary restraining order last December against Brown for allegedly leaking the materials. By that time, Snapchat had successfully beaten back a bid by Brown and his legal team from Los Angeles-based Lee Tran & Liang to disqualify Quinn Emanuel from representing Snapchat, Murphy and Spiegel in the litigation. (Cravath, Swaine & Moore also signed on to represent Brown in June.)
Cooley privacy practice chair Michael Rhodes, a well-regarded Silicon Valley litigator honored by The Litigation Daily in March for his role defending against a data-mining class action, had initially taken the lead for Snapchat and its cofounders in the Brown suit. But Cooley’s corporate work for Snapchat led to complications in the case, and Spiegel sought to hire Quinn Emanuel, which had previously handled a similar dispute involving the founders of social networking giant Facebook, to defend his company in the dispute with Brown. Quinn Emanuel founding partner John Quinn and partners B. Dylan Proctor and Bruce Van Dalsem are leading a team from the firm in the litigation, which was remanded to a California state court in Los Angeles earlier this year. None of the trio responded to requests for comment on the case.
Federal court filings show that Blank Rome cybersecurity and data privacy cochair Steven Caponi and Morris Nichols IP partner Jack Blumenfeld, both of whom are based in Wilmington, Del., have handled patent litigation for Venice, Calif.-based Snapchat, which prior to its most recent investment from Kleiner Perkins had raised another $50 million late last year from New York-based hedge fund Coatue Management.
Earlier this month, Snapchat broke off fundraising talks with Chinese e-commerce giant Alibaba Group Holding as it closed in on a deal with Kleiner Perkins. Forbes reports that by sticking with the venture capital and independence route, Snapchat’s cofounders may have made themselves billionaires as the startup joins the ranks of Airbnb and Dropbox in hitting it big with users.
Of course, the young demographics of its user base and broadening platform that have led to Snapchat’s stunning success have also put an increased spotlight on its cofounders. Spiegel—the son of two lawyers with Am Law 100 and Ivy League credentials—in particular has become a lightning rod for criticism of a technology industry elite purportedly out of touch with everyday Americans.
Last year L.A. Weekly delved into Spiegel’s upbringing in tony Pacific Palisades, Calif., as his now divorced parents—Munger, Tolles & Olson litigation partner John Spiegel and Melissa, the youngest woman to ever graduate from Harvard Law School and a former tax partner at a legacy firm of Pillsbury Winthrop Shaw Pittman—battled for his affections. (Munger Tolles’ John Spiegel, a former U.S. Supreme Court clerk and leading entertainment industry lawyer, referred a request for comment to Snapchat.)
Forbes and other publications soon rushed to chronicle Snapchat and Spiegel’s ascendance, although the latter’s reputation took a hit in May when leaked emails emerged from its cofounder’s Stanford days that were belittling to women, leading Spiegel to apologize publicly, claiming he was “mortified” by the disclosures.
Also in May, sibling publication The Recorder reported on Snapchat’s settlement of Federal Trade Commission charges that the company deceived users about its data collection and message-disappearing practices. Snapchat wasn’t fined as part of the deal, although the startup could face financial penalties for future violations.
A settlement document filed by the FTC shows that Perkins Coie litigation partner Rebecca Engrav in Seattle represented the company in the matter. Engrav is currently on maternity leave from Perkins Coie and thus unavailable to discuss her work for Snapchat. A Perkins Coie spokesman was unable to provide the status of the firm’s other assignments for Snapchat at press time.
The resolution of the FTC case came on the heels of a January security breach at Snapchat that saw hackers steal the usernames and phone numbers for 4.6 million customers. The company apologized and promised to push forward with a security update, while also hiring veteran Beltway lawyer and lobbyist Heather Podesta to advise on its mounting regulatory challenges, according to The Recorder.
Podesta, the wife of Democratic lobbyist and strategist Tony Podesta and sister-in-law of former Clinton administration chief of staff John Podesta, runs her own Washington, D.C.-based shop Heather Podesta + Partners. U.S. Senate lobbying records show that the firm has received $60,000 from Snapchat through the second quarter of this year to “educate policymakers regarding the application’s operation and practices.”
Despite its myriad legal and regulatory issues, Spiegel told the BBC late last year that his company’s central founding principle of ephemeral social media—one that doesn’t leave a lasting presence online or elsewhere—had proven increasingly popular with users, and, presumably, investors. Snapchat’s legal advisers can only hope that their relationship with the company isn’t so fleeting.