Snapchat APP on a phone. (Shutterstock)
Shares of Snap Inc., the parent company of photo-sharing and ephemeral messaging service Snapchat, surged in their market debut Thursday. Cooley has taken the lead for Snap on its initial public offering, one that values the company at $33 billion.
According to a securities filing this week by Snap, Cooley stands to reap at least $1.8 million in legal fees and expenses from the Venice, California-based media and technology startup as a result of its transition to a publicly traded company. Cooley also owns a sizeable slice of Snap stock.
The Recorder reported last month on the firm’s lead role for Snap, which shortly after its inception in 2011 has been a client of Cooley and corporate and securities partner Eric Jensen in Palo Alto, California. Jensen did not return a request for comment about the firm’s work on behalf of Snap, nor did Cooley’s global capital markets co-head David Peinsipp, who is also working on the float with partner Seth Gottlieb and associate Alex Kassai.
Cooley’s early involvement for Snap was revealed in a 2013 suit filed by former Stanford University student Frank “Reggie” Brown IV, who claimed that Spiegel and fellow Snap co-founder Bobby Murphy had cut him out of Snapchat, which shortened its name last year. Brown alleged in court filings that the duo sent him a “threatening” letter from Cooley’s Jensen.
The dispute settled confidentially in 2014, but in securities filings last month Snap revealed that it paid $158 million to Brown. (Quinn Emanuel Urquhart & Sullivan, which once advised plaintiffs bringing similar claims against the founder of Facebook Inc., represented Snap in the litigation, while Cravath, Swaine & Moore and Lee Tran & Liang took the lead for Brown.)
As previously noted by The Recorder, Snap’s IPO prospectus states that GC&H Investments LLC—an investment entity formed by Cooley partners and associates—owns “239,800 shares of our Class A common stock and 239,800 shares of our preferred stock,” the latter of which will be converted into the same amount of “Class B common stock on the closing of this offering.” With Snap’s stock price closing Thursday at $24.48, the value of Cooley’s shares is now roughly $11.7 million.
The IPO immediately makes a billionaire of Snap’s Spiegel, a son of Munger, Tolles & Olson partner John Spiegel in Los Angeles and Melissa Thomas, the youngest woman to ever graduate from Harvard Law School and a former tax lawyer at a predecessor firm of Pillsbury Winthrop Shaw Pittman. (The couple’s 2007 divorce—and Evan Spiegel’s upbringing—were the subject of an L.A. Weekly feature story in 2014.)
In securities filings, Snap notes that Munger Tolles has received $649,314 in legal fees from the company over the past three years. John Spiegel, an entertainment industry litigator, has not handled any of that work. Former Hogan Lovells partner Christopher Handman, hired by Snap as its general counsel in 2014, receives a base salary of $475,000 from the company. Business Insider reported last month that Handman leads a close-knit team of in-house lawyers—many of whom once worked at Cooley—at Snap.
Goodwin Procter, which saw Cooley poach one of its partners this week, is advising underwriters on Snap’s IPO led by Allen & Co., Barclays plc, Credit Suisse AG, Deutsche Bank AG, JPMorgan Chase & Co., Morgan Stanley & Co. LLC and The Goldman Sachs Group Inc. Underwriters’ counsel on IPOs are usually paid separately by the banks, which are well-compensated for their roles handling the largest public listings.