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CIOs share IT cost-cutting measures as recession hits law firms

Linda Tucci, Executive Editor
The economic recession has come to U.S. law firms. Pay cuts and attorney layoffs are now standard practice, as are IT cost-cutting

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CIOs from four law firms, speaking at the recent LegalTech event in New York, discussed how they are managing IT in a recession that has left even some of their top rainmakers with time on their hands. Their firms range from about $600 million to $2 billion in revenue and their budget-busting tools range from the scalpel to the ax.

The bright side? Renegotiating with vendors can preclude deep staffing cuts. Recession, at least at some firms, is also pushing conservative lawyers to see technology as a cost-cutting enabler, accelerating technology refreshes to allow more economical IT strategies.

Peter Lesser's charge was to cut costs without decreasing quality of service. "My firm has been quite forthcoming with us and said, 'No matter what you do, you will not decrease the quality of service of what you provide the firm, and there will be no indication that anything has changed to any of our clients or any of our partners,'" said Lesser, director of global technology at New York-based Skadden, Arps, Slate, Meagher & Flom LLP, a roughly $2 billion firm.

Cost cutting has been tough for a firm that has already consolidated data centers, virtualized its servers, virtualized all its desktops and extended the life of PCs "to a number that makes the manufacturer's heads spin" (5.5 years), Lesser said. "It's much harder to find savings once you have picked those pennies years ago."

So what is he doing? He's playing hardball with vendors. The aim is get this year's new PCs (about 20% are replaced annually) down to less than $500 apiece, buy more bandwidth for the same price and get a better service deal on Skadden's 1,000 or so BlackBerrys.

Neeraj Rajpal is CIO at San Francisco-based Morrison & Foerster LLP, where 200 people (about 10% of the staff) were laid off Jan. 29. He is also renegotiating with his top 25 vendors across IT. "I'll tell you, 90% are talking to us," he said.

Karen Levy, director of global technology at New York-based Debevoise & Plimpton LLP, is finding that understanding "every single line item of the expense budget" is critical. The firm, with about $700 million in annual revenue, wants to increase some technology investments deemed critical for staying competitive while at the same time cut costs to weather 2009.

My firm has said, 'No matter what you do, you will not decrease the quality of service of what you provide the firm, and there will be no indication that anything has changed to any of our clients.'
Peter Lesser
director of global technologySkadden, Arps, Slate, Meagher & Flom LLP
Often, the knee-jerk response is to lop off big chunks, she said, but "I have found that by focusing on some very small items, you can find many of them and they actually add up to significant savings on the operating side." Her information systems staff, preferring to scour for cuts than be slipped a pink slip, has helped tremendously -- in particular, those firm veterans who know the context of an IT decision made 20 years ago and whether the expense can be cut or done differently, she said.

An upside of the economic turmoil? The firm, by choice a late adopter of technology, is reconsidering its conservative approach. "I am sort of leveraging the firm to get us more in the middle of the curve in terms of adoption strategy, and in some cases leapfrog ahead because over time it does become more expensive to stay behind," she said.

That's what CIO Warren Jones of Pillsbury Winthrop Shaw Pittman LLP in San Francisco discovered when he was told to chop $10 million from IT this year. The radical cut let him entertain big changes in infrastructure and IT staffing, such as: What if the firm threw out all the servers and bought the best machines for virtualization (he chose VMware Inc.) and the perfect storage for virtualization?

"We found that the hardware investment needed to replace our entire infrastructure was identical to the maintenance costs we were paying each year," on the old infrastructure, he said. The data center is now one-fifth its former size.

His IT cost-cutting measures also include offshoring some of the firm's application work and help desk (minus any task that involved talking to a lawyer) to Indian provider Tata Consultancy Services Ltd. IT consolidated the firm's internal applications and used open source to build wikis and a conference room management system.

Let us know what you think about the story; email: Linda Tucci, Senior News Writer


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