Cisco adds lawyers to its cost-cutting list

Cisco's forcing legal fee haircuts onto its outside law firms.

The Wall Street Journal is reporting that lawyers have joined the restroom janitors on Cisco's cost-cutting list.

According to a past speech made by Mark Chandler - Cisco's Senior Vice President and General Counsel; Cisco's got 4.7 legal employees per billion of revenue, total legal spend is about .38 percent of Cisco's revenue, and non litigation spend about .16 percent. Additionally, Cisco spends $38 million internally and about $80 million per year with outside counsel.

Chandler recently told the Journal:

"Cisco Systems Inc. has notified its stable of outside law firms that it is vital for the company to move away from the hourly billing structure. Cisco now uses fixed fees or other alternatives to the billable hour for about 80% of its legal work."

However, Chandler was much more blunt during his past speech:

"As Cisco gets bigger, the share of revenue devoted to legal expense needs to gets smaller. Letters from law firms telling me how much billing rates are going up next year are therefore totally irrelevant to me, or as we say in Silicon Valley, orthogonal to my concerns. Think about it: not one of the CIOs of your firms expects to get a letter from Cisco explaining how much more our products will cost next year. And not one of our suppliers comes to us to tell us how much their prices will go up next year. So from my perspective, I don’t care what billing rates are. I care about productivity and outputs."

As I think about the above quote from Chandler's speech, I ask myself, if Cisco's not sending out letters to CIOs explaining how much more Cisco products will cost next year, just exactly how is Cisco getting its message out?

Well, I believe Cisco gets the message out with the following list:

Cisco End-of-Sale and End-of-Life Products

What's your take?

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• Cisco
• Data Center
• LANs / WANs
• Mark Chandler - Cisco's Senior Vice President and General Counsel