Justin Kan, CEO and co-founder of Atrium. (Courtesy photo)

Silicon Valley-based alternative legal services provider Atrium acknowledged Monday that it was shedding much of its legal staff as part of a "restructuring," 16 months after announcing $65 million in new venture capital funding.

Co-founder and CEO Justin Kan said the company—which launched in 2017 as two entities, a law firm and a software company, both operating under the same roof and aiming to serve the technology community—would be eliminating the jobs of most of its lawyers. He said the company, which has raised a total of $75.5 million, would instead be expanding outside of legal services to focus on a "professional services network" supporting startup founders.

"Our in-house attorneys will shift to have the option to become preferred providers in our professional services network. I want to recognize the dedication and hard work of those who are impacted by this," Kan said in a statement Monday.

Kan, who previously in his Silicon Valley career sold the live streaming platform Twitch to Amazon for $970 million in 2014, added that Atrium would keep a small number of partners in-house to serve clients on financing and mergers and acquisitions. These partners will work with a network of vetted outside firms to provide general corporate legal services.

"This model of collaborating with firms through our professional services network has been an integral part of Atrium's success to date," Kan added. "The specialists in this network, most staffed by attorneys formerly in Big Law, share our entrepreneurial spirit to deliver exceptional legal services through our technology platform."

Atrium did not immediately respond to an inquiry about the number of attorneys losing their jobs and the number of partners that would be remaining with the law firm. But the company's website listed 20 attorneys, including two partners, on Monday.

In a 2018 interview, Kan said the company had built a roster of 250 clients.

News of the job losses first emerged Sunday with a LinkedIn post from former Atrium general counsel Tony Wang, who left in December to found Mission Law, a legal services business for "mission-driven" founders and companies.

"Many of my colleagues at Atrium were among the hardest working, team-oriented, and forward-thinking individuals I've had the pleasure of working with in my legal career and I'm sad to see this happen, as it comes as a complete surprise and shock," wrote Wang, who declined to comment further on the situation at his former company.

That social media post indicated that the job losses extend to non-lawyer professionals and other support staff. Wang told potential employers that paralegals as well as startup attorneys were looking for new work, and a senior learning and development manager as well as an office coordinator commented that they were also looking for new opportunities.

On Twitter on Monday, Gabriel Shapiro, a former Atrium attorney whose identity was verified by ALM, said that he had been hired in November and moved across the country to join the company in the second week of December. He said that he rejected the company's offer to join their "preferred provider network," on which he would be expected to pay all costs and Atrium would take one-third of all fees. Shapiro also said that he said no to the option of lateral hiring assistance.

"Who wants to negotiate offers in a massively weakened & rushed position, or to delegate this to people who would drop the ball so hard as to hire someone new at a time like this in the first place?" he wrote.

In the midst of the job losses, Kan did say that Atrium would soon be announcing the hire of new senior partners who will handle legal work.

But he emphasized that several years in business has indicated that startup founders need a wider range of services: "not only surrounding legal but with questions such as when to hire a sales leader, how to best announce their latest fundraising, how to handle recruiting technical talent in a job seeker's market, and so many other areas that are important to scaling a startup."

The announcement was vague about the future of the tech side of the operation, which promised centralized access to legal documents and a simplified platform for processing new employee documents.

"The goal with the tech side has always been, not to replace attorneys—I don't think that's possible—but to help attorneys spend more of their time on meaningful work and less of their time on crank-turning work," Kan said in 2018.

Kan founded the company alongside former Orrick partner Augie Rakow, who stepped down as managing partner of Atrium in April 2019.

The company raised $65 million in September 2018 from Silicon Valley heavyweight Andreessen Horowitz, along with General Catalyst, YC Continuity Fund and Sound Ventures. An announcement at the time of Rakow's departure said Atrium had landed a total of $75.5 million in funding.