Faced with the need to reduce bloated legal fees from outside counsel, Mark Chandler, General Counsel of Cisco Systems is using information technology to make his in-house staff far more productive and independent of BigLaw firms, with their skyhigh hourly rates and cancerous billables. See his speech ”Cisco General Counsel on State of Technology in the Law,” at the Northwestern School of Law’s 34th Annual Securities Regulation Institute.
At LegalBlogWatch (Jan. 31, 2007), Carolyn Elefant calls this a revolution and notes that Chandler has already “created an online contract builder so that its employees around the world can create NDAs and standard contracts. And Cisco is also working on a wiki with other Fortune 500 companies to allow direct access to firms’ knowledge management systems on securities regulatory compliance. Finally, Cisco “got tired of high billable hour rates from so-called global law firms,” so it’s selected a firm (which isn’t a huge global firm, but open to new ideas) to help it address issues related to corporate secretarial matters. And while Cisco uses two large firms for M&A work and litigation, those firms operate on fixed fees.” Carolyn sums up:
- The bottom line is that in an era where information wants to be free, corporations want access, and they don’t want to pay for every minute spent to find it.
Chandler is tasked with utilizing technology to streamline legal processes. He notes that the legal industry sometimes seems to be ‘the last vestige of the medieval guild system to survive into the 21st century’.” [It's nice to see someone other than Your Editor deride the profession's guild mentality; e.g., here and here.]
Peter Lattman of the WSJ Law Blog, “Law Firms: “The Last Vestige of the Medieval Guild System”“, Jan. 29, 2007, notes:
Chandler bemoans the law firm business model. “Put most bluntly, the most fundamental misalignment of interests is between clients who are driven to manage expenses, and law firms which are compensated by the hour.”
The whole speech is worth reading. Below the fold are a few select excerpts, in which Chandler tells of buying contract-builder software “off the shelf” and says that “counseling will be the next frontier.” (If software can assist with complex corporate legal counseling tasks, let’s hope the advances will soon trickle down to all legal consumers.)
As shlep demonstrates daily, technology has been helping the poorest members of our society to solve more and more legal problems without lawyers. Now, clients with the most clout (and money) — such as Cisco — are taking advantage of information technology to become do-it-yourselfers, and to unbundle legal services, while insisting that law firms provide far better value. Perhaps, then, we can hope that the vast, soft mid-section of the legal profession — those who serve the everyday needs of the average American, usually at unaffordable hourly rates – will soon embrace the benefits of the digital age and pass savings on to their clients. As Rick Georges suggests, such lawyers may find themselves at a great disadvantage if they do not figure out a way to offer far greater value to their clients (in service, results and price), including the use of document-creation technology (see our prior post).
It will help, of course, if middle class Americans were better informed about such alternatives as sophisticated self-help products, pro se centers at courts, and unbundling of services. Then, they can join in the revolution, with steady pressure for more options and competition from their Main Street lawyers.
Excerpts from a speech by Mark Chandler, “Cisco General Counsel on State of Technology in the Law,” at the Northwestern School of Law’s 34th Annual Securities Regulation Institute:
- [F]irst, winners will be those who are able to standardize services to meet clients’ cost management and predictability needs where very good is good enough. Second, those who can differentiate themselves by providing the top notch of customized services, where that is needed, will also win.
- “In contract processing, we have an online contract builder that allows our employees globally to build their own NDAs and other contracts. With electronic approval and digital signature, they can go from creation to execution to archiving. Five years ago, Cisco had to build its own system. Today we’re buying off the shelf. Within the next five years, a substantial proportion of the Fortune 500 will be doing the same.”
- “Counseling will be the next frontier, as tools like taxalmanac spread to other legal areas, from sweepstakes and promotions to export regulations to human resources to securities law compliance. We’re working with eight other Fortune 500 companies, and a number of law firms, to create a site called Legal On Ramp. Legal On Ramp will allow direct access to search the firms’ KM systems.”
- The opportunity is there to recognize the business realities that will be driven by new technology. We can seize the chance to offer more value to clients. We can seize the opportunity for our own employees to be more engaged and productive.