As Yahoo Inc. loses ground to competitors and layoff rumors swirl, it's been buffeted by defections from a long-stable quarter — its legal department.
The Sunnyvale search engine's legal team in California has shrunk by nearly 20 percent since January 2011. Eleven attorneys have left for other positions, leaving Yahoo with about 56 attorneys in the state, according to the State Bar's website.
Two of the recent departures have been for rival Facebook Inc., a further blow as the patent battle between the two companies heats up. Yahoo sued the social networking site earlier this month over online advertising patents.
Yahoo's former senior legal director of privacy, Joshua Smith, joined Facebook as a lead privacy counsel in February. And former Senior Legal Director Susan Cooper spent four years at Yahoo before joining Facebook in April 2011 as lead advertising and product counsel.
Yahoo officials played down the significance of the departures, saying the number of in-house attorneys globally has held steady at about 140 for the past several years, and that some turnover is normal.
Recruiters in Silicon Valley and former Yahoo attorneys, however, say the recent departures from the search engine are noteworthy. But they're not surprising, given the company's uncertain future direction under new CEO Scott Thompson, and the competition it faces from rivals Google Inc. and Facebook.
"With any company, especially big tech companies, if there's a change in strategic direction or management, it's very common to see turnover rates spike," said recruiter Susan Tien, a managing director with The Dubin Group in Silicon Valley.
Ten years ago, Yahoo was one of hottest companies to work for in Silicon Valley, former lawyers said.
Not anymore. Yahoo has only a small slice of the U.S. search engine market, according to ComScore Inc., which tracks the U.S. search engine marketplace.
Yahoo's market share was 14 percent in February, compared to Google's 66 percent. In the Pew Internet & American Life survey published in February, only 6 percent of respondents said they used Yahoo most often, compared to 26 percent in 2004.
And as the search engine continues to lose eyeballs, former lawyers say, it's become much tougher for Yahoo General Counsel Michael Callahan to keep experienced in-house lawyers. Former Yahoo attorneys say Callahan is a well-respected leader who's been able to keep lawyers around a lot longer than many tech companies in Silicon Valley.
But attorneys watching Yahoo's stock stagnate have little reason not to take new jobs at hot tech companies such as Facebook, Google or Zynga Inc. — or the next startup hoping to make it big.
"And there's absolutely nothing a guy like Mike Callahan can do about that," said former Yahoo senior counsel Michael Kimball, who left to start his own emerging companies practice in 2007.
While several people who remain on Callahan's legal team have been with the company for more than 10 years, some who recently left had worked there even longer. Former Deputy General Counsel Belinda Johnson had been with Yahoo for more than 12 years. She joined online accommodations site Airbnb as its GC in December.
Jeanine Hayes had been at Yahoo for eight years, most recently as deputy general counsel and a VP for global IP. She joined Nike Inc. as a chief IP counsel last year.
Other notable recent departures include former Associate GC Anne Hoge, who had been with Yahoo for nine years. She left to join data storage company NetApp Inc. as chief compliance counsel in July.
Eugene Lao, who was regional general counsel for Asia-Pacific, had been with Yahoo for 10 years before leaving to join Zynga as a deputy GC in the international division.
Former Yahoo Legal Director Mark Kahn, who joined app maker Evernote Corp. as corporate counsel in November, said he was happy at Yahoo and wasn't looking to leave. It was just an opportunity he couldn't pass up.
"I had a tremendous experience at Yahoo," Kahn said. "But I just really wanted to work for a small company."
This article originally appeared in The Recorder.
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