Experts on the in-house legal market say they don’t think the recent deep layoffs at Snap, which included prominent members of the legal team, are a sign of things to come at other tech companies.
They cite myriad reasons, including that, at startups especially, legal teams tend to be so small that cuts there don’t move the expense needle. Then there’s the reality that much of what a legal department does is essential, in good times or bad, and as a result cuts there could force companies to farm out more work to pricey outside counsel.
“Companies need their in-house lawyers,” said John Gilmore, founder and managing partner of the legal recruiting firm BarkerGilmore. “You can’t live without the corporate governance or litigation or securities or labor and employment or whatever the specialized lawyer is. So somebody is going to have to do the work—whether it’s inside or outside.”
Law.com reported last week that at least a half dozen in-house lawyers and other legal team members were swept up in a more than 1,200-person layoff at Snap, the Santa Monica, California-based parent of Snapchat. They included a Seattle-based associate general counsel who had joined the company behind a week before she got the pink slip.
In August, Law.com reported that Notarize—a Boston-based remote notarization tech company that laid off about 25% of its 450-person workforce in June, has shrunk its more than 60-person legal department down to 17 over the past year.
Legal-market experts say that while similar examples might pop up in the future, they say legal departments generally will be much more likely to put the brakes on new hires than cut attorneys already on payroll.
Legal recruiters say there is an air of caution at tech companies as they plot 2023 budgets, but they say legal departments rarely are in the crosshairs for cost-cutting.
Legal ops teams—which help departments maximize efficiency and effectiveness—are critical in lean times to help companies make the most of the staff they already have, said Stephanie Corey, CEO of the legal ops consulting firm UpLevel Ops.
“We’re hopeful that, as during the pandemic, GCs continue to recognize the necessity of legal ops in order to scale without budget and head count increases,” she said.
Sumi Trombley, a senior consultant of UpLevel Ops, added: “Where the pandemic pushed legal departments to adopt baseline technology such as e-signature, the renewed focus on cost-efficiency will challenge legal departments to focus on process and evaluate what they should and should not be undertaking as a department with the resources they have.”
Gilmore said the tech companies that might be most vulnerable to layoffs are those highly reliant on selling digital advertising—a sector that has seen a precipitous dropoff.
Citing that trend, the investment firm Barclays this summer cut its stock price outlook for four advertising-dependent tech stalwarts—Snap, Meta, Alphabet and Pinterest.