Legal Department as Change Agent
One of the best parts of user conferences is finding great customer stories. At Emptoris’ Empower Conference last week, I thought Cisco’s story was one of those winners. Steve Harmon, Senior Director of Legal Services at Cisco, gave a presentation describing how they have transformed their legal department from being “the ivory tower that says ‘no’,” into a “gateway that provides value to the corporation.” OK, so what exactly does that mean?
The legal department’s mission statement gives some hints:
- Transparency and integrity
- Low cost, high quality
- Partner with clients.
What is particularly striking is that we usually don’t think of a legal department as being change agents, or as driving lower costs, efficiencies, and reduced cycle times. Quite the opposite – most businesspeople groan when they know lawyers have to get involved. Harmon is in charge of the group that automates and optimizes legal services, including contract management and export compliance tools. His group’s job is to help expedite the worldwide legal team’s work and allow them to focus on “core” activities while automating or outsourcing “context” tasks. The goal is to minimize the time delay between the negotiation of an agreement and the time the customer is able to place orders against that agreement.
Paper No, Electronic Yes
In practice, one implication is that they don’t do anything in paper unless they have to, and they use electronic acceptance of contracts and agreements whenever possible. Signed paper contracts are scanned and then disposed. As long as you have a robust technology infrastructure you can rely on, there is no need to keep the paper. To date Cisco has processed an astonishing 25 million transactions through their electronic acceptance engine.
This means that Cisco has a heavy focus on the use of e-signatures to expedite processes. Harmon said that the use of e-signatures is low-hanging fruit not addressed by most organizations. He pointed out that the main purpose of the any signature (paper or electronic) is to make it difficult for the signer to repudiate the agreement, and electronic signatures are actually much stronger than physical signatures in that regard.
Automating Contract Creation and Approval
Harmon’s team helps Cisco’s lawyers prioritize their use of time so that the lawyers can concentrate on the areas where they actually add value. Non-disclosure agreements (NDAs) are a good example of a document where lawyers add little value. NDAs are necessary, but are readily standardized, and are rarely or never a core document used in litigation. So, the process of generating and approving NDAs is automated at Cisco. Cisco executes about 250 NDAs per month, and the vast majority are never seen by a lawyer.
Cisco uses Emptoris’ Contract Management and Business Integrity’s ContractExpress, as well as other tools, to achieve this level of automation, not just with NDAs, but across a wide range of legal documents. These systems enable a library of contract building blocks, including common, pre-approved terms and clauses, as well as localized playbooks. This approach helps to fully automate and speed the construction of contracts, while maintaining a consistent operating model across the business. If there is an individual clause that needs to deviate from the pre-approved standard, the system routes the agreement for approval of just the individual clauses that have been modified, rather than requiring the whole agreement to be approved.
To minimize the need for deviations from the pre-approved standards, the legal team builds prospective, predefined fall-back alternatives. The team puts a lot of energy into identifying, defining, and getting upfront approval for these. It requires a rigorous pre-approval process to ensure that the database is kept up-to-date, but the reward is a flexible system where many agreements across a wide variety of circumstances are pre-approved, while maintaining meticulous corporate standards.
The interface for the business user is generally through a “Wizard,” such as an NDA Wizard or a Beta Test Agreement Wizard. The business user is presented with a series of questions. Depending on their answers, the system determines whether it can generate a pre-approved agreement from the database. If so, it automatically goes out for e-signature. There are many types of agreements that are amenable to this highly templated and automated approach, such as NDA, field trial agreements, beta test agreements, etc. For non-standard circumstances, the system will automatically route the user to speak to one of the lawyers. The questions are asked by the Wizard UI in a way that minimizes the possibility for business users to game the system.
In Part Two of this article, we explore Cisco’s framework for contract management, how they reduced the number of approvals required, and the evolving role of the legal department.
To view other articles from this issue of the brief, click here.