#39 The Legal Profession This Week - Cooley’s Client Woes​

By Dheepa​

Cooley’s Client Woes

Last Saturday, The Wall Street Journal reported that Elon Musk had requested the firing of a Cooley associate in 2021. This was on the basis of the associate's previous role at the US Securities and Exchange Commission (SEC); he was alleged to have assisted the SEC with its investigation into Musk and the decision to take Tesla private. Instead of complying with Musk’s demands, Cooley backed the associate.

The decision could not have been an easy one to make. In the past, Cooley has represented Tesla in a large number of corporate, IP and litigation mandates. The firm has also worked on matters for Musk’s aerospace company SpaceX. Since late December, however, the firm has been replaced by Quinn Emanuel Urquhart & Sullivan on three of Tesla’s most high profile ongoing litigation (Law.com).

Since the story broke, several other law firms have made statements in support of Cooley, applauding the firm’s “integrity, independence and fidelity to professional standards”. This is in stark contrast to how the firm handled previous issues with another big name client, Amazon. According to The Lawyer, associates and partners across Cooley’s offices were told to drop new clients if the work could in any way jeopardise the firm’s long standing relationship with the e-commerce giant. The London office was forced to drop its biggest intellectual property and trademark client last year because of this. As a result, the firm lost some of its biggest London partners.

The difference between Cooley’s Tesla and Amazon troubles seems to be this - with Tesla, there were only external pressure from the client, while with Amazon there was internal pressure from the firm’s US based offices. One lawyer at the firm said that if there was potential for conflict between Amazon and the new client “A partner in Palo Alto would simply say: if you act on this, you are fired” (The Lawyer).

The distinction between a client demanding a lawyer to be fired and a partner threatening to fire a lawyer in the name of protecting a client relationship seems unclear. It is of course well within a firm’s right to decide which clients are worth keeping. Avoiding conflicts of interests between old and new clients is also a natural part of law firm management. However, the firm’s blanket and aggressive exclusion of most of Amazon’s competing businesses seems difficult to defend when at the very least discussions should be had surrounding the issue. This seems especially necessary since Amazon’s business spans across a variety of industries beyond just the technology sphere.

Independence from client demands may not always be that easy to maintain.

‘Business as usual’ – the notable deals and cases which went ahead this week:

The sale of GSK’s consumer healthcare business is the latest big deal dominating headlines. Linklaters is acting for Unilever as it bids £50bn for the business. Slaughter and May is acting for GSK. GSK is reportedly looking for an improved bid of £60bn (The Lawyer).

Quinn Emanuel Urquhart & Sullivan is representing 44 million Facebook users in a £2.3bn collective action against the Meta group. The claim is challenging the overall business model of most BigTech companies with consumers alleging that Meta is abusing its dominant market position by controlling and monetising users' personal data. Users who refuse to hand over their data when signing up are left with little other choice outside of Facebook.


Image Credit: Michael715 / Shutterstock.com