So I've made it to the second stage of the fight with Lao and get him to about 1/3 health before he flies up in the sky and kills my party almost instantly with some lightning attack. Any tips?

Kill the chimeras, or move far enough away to not get hit by the AoE. Consumables help if you've farmed them from Division rewards. Also when you respawn wait for your Gears.. cough cough to refuel enough to hit him hard right away. As long as you can multitask your team he isn't too hard.