Monday, March 3, 2003

CIO Forum update

Spoke at the CIO forum last week in San Francisco, and found two presentations particularly interesting. Matt Kesner, CIO at Fenwick and West, spoke about TCO “religion” and the failure of most CIOs who look at costs instead of benefits. He’s an engaging speaker and clearly understands how to evaluate and prioritize technology initiatives within a firm.

The afternoon panel was about clients’ expectations of their law firms when it comes to technology. Mark Chandler, Cisco’s General Counsel, spoke about how he’s changed the model between Cisco and its outside counsel fairly dramatically. (A couple of my comments from this time last year, when Chandler was promoted to GC.) Here are some interesting points from his presentation:

  • He divides his legal work into four quadrants by looking at two criteria: core work vs. context work, and mission critical or non-mission critical. Into each quadrant are certain technologies he tries to leverage:

    • Mission critical, context: litigation, reputation cases, compliance. Matter management, discovery management and e- learning are all critical tech components here.

    • Mission critical, core: Business development, and the designing, building and selling of Cisco technology. Contract management and patent management databases are critical here.

    • Non-Mission Critical, Context: HR cases. Law firm-provided databases (for easy answering of basic questions) are a huge win for them – allows for self-service by any Cisco employee.

    • Non-Mission Critical, Core: Transactional work. Contract management, NDA management, clickwrap systems, and a document management system are all used to support these systems.

  • Cisco now requires all outside law firms to provide training (where appropriate) for Cisco employees on the area of expertise covered by the law firm. If you can’t provide that training electronically, you’re going to be severely handicapped competing for their business.

  • All patent work is now flat-rate: $9,000 per patent application. Cisco employs just two patent lawyers internally; they manage 600 patent applications each year (about 10 outside law firms share this business). [FYI: That’s $5.4m in patent applications.]

  • Chandler’s team figured out that the majority of their cost was in document review during discovery; one of Chandler’s employees streamlined the document review process by automatically identifying duplicate documents. The end result was that they saved over $20m in costs by eliminating much of the redundnancy suppression – and were able to focus the outside law firms on more strategic work.

  • Chandler’s goal: by 12/31/03, 80% of all outside counsel expenses will be non-billable hour work. Today that number is about 65%.

Final quote: “Technology is absolutely the only way firms will stay efficient and effective. Those who don’t use it well won’t survive.”

Most interesting to me – Chandler has effectively linked his outside counsel strategy to Cisco’s core operating philosophy. He identified Cisco’s goal: to be faster than the competition. This requires commoditization of anything that’s routine so that they can focus on higher value work. To that end, they require their law firms to automate as much as possible.

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