Weathering the storm: A venture fund attorney’s guide to thriving in economic downturns
Economic downturns challenge everyone, but for attorneys navigating turbulent times, the stakes are particularly high. During periods of financial instability, attorneys become a crucial lifeline for clients navigating through a sea of complex issues. On top of helping others stay afloat, you’re likely juggling your own challenges too!
On the File Notes podcast, we recently spoke with Shane Goudey, a seasoned venture fund attorney in the heart of Silicon Valley, with experience navigating multiple economic crises like the burst of the dot-com bubble and the 2008 global financial crisis (GFC).
Now leading Sidley Austin’s Venture Funds practice, Shane spent nearly two decades at Cooley, advising hundreds of investment firms on fund formation and administration. As you can hear about in the episode, he’s also worked in international tax at PricewaterhouseCoopers, served as a legislative aide in the U.S. Senate, and even tried his hand at a professional baseball career!
With more than 1,000 venture and private equity funds launched under his guidance over the past two decades, Shane’s career offers trusted, real-world insights for navigating economic downturns. Whether you're a veteran attorney or a young professional, Shane's insights offer key strategies to not just survive but thrive in tough times.
Riding the waves of change: Lessons from the dot-com bubble and 2008 GFC
Shane's legal career began in 1999 when the internet industry was booming. Law firms were expanding rapidly and venture capital was abundant, fuelling many new tech startups.
"Law firms were hiring like crazy, and venture funds were popping up everywhere," Shane recalled.
"As a young associate, I was working 300 billable hours a month. It was bananas, but in a wonderful way, because business couldn’t have been better. The internet and internet venture capital communities were in their infancy, and it was incredible to be a part of it. You got a cup of coffee every now and then..and god forbid you actually got to eat — it was super busy!”
But in 2001, everything changed when the dot-com bubble burst. The bubble had seen inflated tech stock prices, driven by heavy investment in internet companies that weren’t generating significant revenue. Many companies went bankrupt and the stock market tumbled.
"It was terrible. You're so busy building so many businesses, and then you see the whole thing collapse…it’s painful.”
Suddenly, tech startups that once seemed unstoppable faced rapid collapse. The industry was hit hard by economic uncertainty. Law firms, investment funds, and businesses all felt the impact, and attorneys had to quickly switch from helping build businesses to helping them survive or close down.
“Being involved in the creation of a lot of it, that becomes personal,” Shane revealed.
“People became dear friends and [you watch] their businesses fail. It’s [an experience] you take with you.”
Fast forward to 2008, and the subprime mortgage crisis sent ripples through nearly every industry, creating another wave of upheaval.
Learning from Shane’s experience: Practical steps for attorneys facing economic uncertainty
Shane's experiences during the dot-com collapse and the 2008 GFC offer crucial lessons for today’s attorneys. Given the current economic uncertainty — predictions of a weakening economy and geopolitical tensions unsettling markets — Shane's insights are particularly valuable for navigating an economic downturn.
"When you go from the absolute height of the internet economy to the lowest valley in such a short time, you experience stress and anxiety,” he reflected.
“It was a difficult time for a lot of people, law firms included…but you learn lessons. As a young lawyer, those were incredibly valuable lessons.”
Challenges are inevitable. For Shane, navigating downturns isn’t just about mitigating losses; it’s about finding opportunities to grow.
“You learn how to counsel differently. It becomes a different kind of day. Instead of building new venture funds, you’re helping people through the [economic downturn] and the dismantling of businesses.
“But a couple of years later, things start to pick up again, and you rise with it. You take the lessons learned from economies of the past and keep them in the back of your mind… and you learn how to deal with it.”
Here are three critical lessons from Shane's journey that attorneys can apply in times of economic uncertainty:
Prioritize long-term relationships
During economic downturns, trust is everything. Shane emphasized how crucial empathy is in client relationships. He stressed that attorneys should approach every transaction with a human touch.
“The first time I went through it, I had no idea what I was doing. It was trial by fire, and you just survived a lot of it. But I came out of that a much better counselor, and more humanistic in the way I dealt with transactions.
“You have to understand and know the way you interact with a client is not just about the transaction — it's about the people behind it.”
Attorneys who take this empathetic approach have the opportunity to deepen their client relationships and set the foundation for lasting loyalty. By understanding the personal stakes involved in legal decisions, attorneys can build trust that lasts through good times and bad.
Adapt and diversify
Another of Shane’s lessons is the importance of diversifying in tough times. He highlighted how economic uncertainty pushed both his clients and his firm to think differently.
Cooley, where Shane worked as partner at the time, primarily focused on the Internet economy, venture capital, and emerging companies. When tough times hit, they pivoted. They faced difficult decisions like letting go of associates, but also adapted and grew by diversifying their practice areas.
“Cooley changed too…management learned lessons and expanded into new practices like banking and antitrust,” Shane shared.
“The firm grew and diversified, which made it more resilient. The recipe for success was there, and we just had to hold our breath during the tough times."
Firms must adapt to changing market conditions and need to be just as flexible today, whether it’s expanding into new areas or rethinking billing models, understanding client needs and being able to pivot accordingly can help recession-proof your firm in an economic downturn.
Maintain a sense of perspective
Economic downturns and legal crises can be stressful and overwhelming. Shane’s key takeaway from these crises? Perspective.
“Now, with more experience and some gray hairs, I approach each day with perspective,” Shane said.
"Yes, the economy is difficult, but this too shall pass."
A balanced perspective helps attorneys navigate these challenges with a clear mindset.
“I tell our young associates that this is their first tough economy, and I remind them it’s not as bad as 2008 or 2001. It’s tough, but the industry has changed, and it will come out of it. It’s a perspective I’ve gained from going through tough economies…you just have to bear with it and know that everything will be okay.
By focusing on long-term growth and development rather than merely reacting to immediate pressures, attorneys can create resilient practices that adapt to evolving market conditions, ensuring they are better prepared for future challenges and opportunities.
Opportunities amidst the challenges
Attorneys are pivotal in ensuring clients make strategic and resilient moves. For many attorneys, today’s economic uncertainty could be their first real test. However, for those who can adapt fast enough, every challenge brings new opportunities.
Shane’s experiences (which you can hear in full below) remind us that proactive client management, adaptability, and a balanced perspective are key to helping you, your firm, and your clients, not only weather the storms of an economic downturn but emerge stronger.
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