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?

BradReese.Com Cisco Refurbished - Services that protect, maintain and optimize Cisco hardware Contact: Brad Reese | Twitter: http://twitter.com/BradReese

  1. Is the fair value of Nortel's metro Ethernet and 40Gig product line only $600 million?
  2. Former Cisco star joins Arista Networks
  3. Ericsson President and CEO has no fear of competing with mighty Cisco
  4. Wall Street Analyst: IBM is hedging its bets on Ethernet switches
  5. Cutting out the channel, are we seeing Cisco's future with the launch of Eos?
  6. Exactly how new is Cisco's organizational structure?
  7. Management vision of Cisco CEO John Chambers under fire
  8. Cisco says there's no CCIE amnesty program
  9. Employee reviews on Glassdoor.com slam Cisco
  10. In-line monitoring vs. NetFlow or sFlow
  11. Cisco board directors are at the epicenter of the Microsoft and Yahoo! deal
  12. What business is Cisco in today?
  13. HP scolds the Cisco unified computing system
  14. Cisco CEO John Chambers to stay at Cisco for another decade or more?
  15. Cisco buying Dell: Allan Leinwand's idea is brilliant
  16. Chocolate icon Hershey fails at online retailing
  17. Juniper tries to pound spike into Cisco's heart
  18. Wall Street analyst suggests Cisco may recover lost market share during 1Q10
  19. Does Cisco discriminate against CCIEs by not promoting them to management?
  20. View Brad Reese on Cisco Story Archives
Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2009 IDG Communications, Inc.