Editor: Do you consider that LexisNexis has a partnering relationship with corporate counsel?
Ceipek: Absolutely. For us partnering is all about understanding and addressing the key concerns and issues that our customers are facing. Today more so than ever, corporate counsel are struggling to cope with two fundamental concerns: legal protection and cost control. Firstly, they are confronted with an unprecedented level of legal risks mainly due to new regulations and a heightened law-enforcement culture; and secondly, they are dealing with rapidly rising costs that make it more and more difficult for them to keep their law department budgets in check.
Partnering for us means to help corporate counsel better deal with these concerns. This is what guides our product development efforts, our marketing, and everything we do at all levels of our organization to help our customers address these challenges.
A good example of how we partner with our customers on a day-to-day basis is our team of corporate counsel consultants. These are field-based attorneys with many years of practice experience whose main mission is to help our customers optimize the use of our suite of corporate counsel solutions.
Editor: What does partnering mean for LexisNexis in an emergency situation such as Hurricane Katrina?
Ceipek: Emergency situations such as the one caused by Katrina add to the concerns that corporate counsel are facing. The immediate thing for us to do in such situations is to help directly affected customers get back into operation as soon as possible. We have done this after the 9/11 attacks and we have responded in a similar way after Katrina. For example, we are providing complimentary access to our products, we have donated a number of laptop computers to the Baton Rouge Bar Association, we are temporarily hosting customer web sites, and we provide toll-free 24/7 customer support for researchers who temporarily have no online access. For more information see page 41.
Editor: Your company has been a key innovator in an ongoing process that has radically changed the practice of law by giving lawyers online tools for accomplishing a number of their core professional tasks. What is coming next?
Ceipek: You said it well -- the introduction of online legal research by LexisNexis has been and continues to be a key tool in helping corporate counsel better protect their companies while also saving a lot of time and money.
But it gets better. Now, new technologies are available to take legal protection and cost savings to a completely new level. These technologies are once again changing the way lawyers work. And this time they are not just changing the practice of law, but also what we call the business of law.
LexisNexis has been at the forefront of this change and for several years, we have been investing in technologies that address these key concerns in completely new ways. In recent years, we added and continue to invest in solutions for litigation management and e-discovery; electronic billing, matter management, and legal spend management; patent, trademark and copyright protection; knowledge management; law firm selection; regulatory compliance, to name but a few. What all of these tools and solutions have in common is that they are designed to help corporate counsel mitigate legal risks and protect what matters most to them-whether it is intellectual property or the overall reputation of their company. And, equally important, they also help the GC to keep his or her law department budget under control.
Editor: What are some of the new legal risks that concern corporate counsel?
Ceipek: The most obvious driving force behind corporate counsel's ongoing concern about legal risk are new laws and regulations such as Sarbanes-Oxley, the Patriot Act, strengthened corporate sentencing guidelines, new complex regulations affecting individual industries, etc. And, in addition to these regulations we are seeing more rigorous law enforcement. Think of Elliot Spitzer and what he is doing as New York attorney general and think of the many other state AGs and other government officials who are taking a similar path.
Corporate scandals such as Enron, WorldCom, or Arthur Andersen are just the tip of the iceberg. Convictions for violations of the U.S. Criminal Code that also run afoul of SEC requirements have increased five fold in recent years; jail time is up more than four fold.
And there's more. Identity theft and white-collar crime are growing at double-digit rates. Patent infringements are at an all time high with global companies facing the challenge of protecting their intellectual property in countries throughout the world. Litigation activity is up with increases in the number and size of claims being asserted, whether it's in intellectual property, employment law, or product liability class action suits. Being prepared for litigation and complying with discovery requests has become a huge issue.
Editor: What are the major factors contributing to rising law department costs?
Ceipek: What stands out are escalating outside counsel costs and dramatically rising litigation expenses-especially costs related to discovery. For most law departments, outside counsel costs are not only their single biggest cost item but also their fastest growing one. Think about it-an average FORTUNE 1000 company spends about $15 million on outside counsel each year. That's about 50-70 percent of their entire law department budget-about twice as much as the cost of in-house legal staff. Outside counsel cost has been growing at seven to ten percent a year. And, it keeps going up. That situation puts GCs in a very difficult spot. It means they can't hire more staff to deal with the increasing workload; it means they have to work longer hours; and it means more intense pressure from management.
Editor: So you're helping GCs reduce risk as well as cost. How do you do that?
Ceipek: Through customer focus and product innovation. Let me be more specific. We have identified major sources of corporate counsel's risk and cost concerns and have dramatically expanded our product and service offerings to address those concerns. This includes our acquisitions of Applied Discovery and Examen, the launching of new patent products, and the enhancement of our knowledge management tools so that corporate counsel can find and reuse existing knowledge in their own files.
Editor: What can CounselLink do to control soaring outside counsel costs?
Ceipek: Examen, which we acquired earlier this year, is a leading provider of legal spend management solutions and LexisNexis CounselLink is our new flagship product in this area. An average FORTUNE 1000 company can save approximately $1.5 million dollars per year through the use of this technology. It's easy to implement and you don't have to be in the FORTUNE 1000 to reap the benefits.
It helps GCs reduce the cost of outside counsel by about 10%, or even more, thanks to an amazing piece of technology that ensures law firms comply with a corporation's billing and engagement guidelines. It compares a legal department's billing guidelines to outside counsels' billing invoices-not only those that are coded, but even those that are written in plain English. That allows us to include invoices from all law firms in the review process, even those that are created manually.
CounselLink not only identifies errors that need to be corrected, but also allows corporate counsel to review spending patterns by law firm, case type and attorney. These include such things as hourly rates, time spent by particular attorneys and other expenses, such as travel and reproduction. Together with LexisNexis CourtLink and Martindale-Hubbell, CounselLink provides comparative information that enables corporate counsel to select the best lawyers and law firms and fee arrangements including alternative billing for particular assignments. This means that corporate counsel now have important management tools for controlling the cost of outside counsel-and for satisfying the internal control requirements of Sarbanes-Oxley.
Editor: How can Applied Discovery reduce risks and produce savings?
Ceipek: Applied Discovery is a leading provider of e-discovery and litigation support solutions. This solution helps corporate counsel prepare for litigation, respond quickly to discovery orders, and avoid the risks of non-compliance. The compliance aspects of e-discovery are immensely important to corporate counsel. Non-compliance with discovery orders recently resulted in very high damage awards and can be a major reputation risk for a company. We are currently working on a solution that permits the user to archive and store documents likely to be requested in advance of receiving a subpoena using what we call a "Persistent Data Agent," which permits the specific documents requested in the subpoena to be quickly identified and retrieved. So it's not only a huge money saver compared to the enormous cost of paper-based discovery, it also helps GCs and their companies stay out of trouble by responding appropriately to subpoenas.
Editor: How can you assist corporate counsel to manage a corporation's patent portfolio and to protect it against the risks of infringement?
Ceipek: With our recent acquisition of Univentio, we now have the world's most comprehensive full text patent collection-full text patents from more than 20 countries plus many more in bibliographic format. Based on this unique data collection we are launching a completely new and innovative online research product for patent professionals, called LexisNexis TotalPatent. In addition, we have released our newly developed patent drafting tool PatentOptimizer, which helps patent lawyers write watertight patent applications. These tools are key new additions to our entire suite of patent solutions that include some of the best known legal treatises about patents, trademarks and copyrights as well as our patent file history service. Together, our suite of patent solutions is an essential tool for all corporations who seek to manage and protect their intellectual property rights-domestically and globally.
Editor: Are there other products that address corporate counsel's concerns about risks and costs?
Ceipek: We have established a suite of knowledge management tools including LexisNexis Total Search that allows corporate counsel to re-use existing knowledge and prior work products and save substantial cost by not re-creating them over and over again. We have also launched solutions to help GCs protect copyrights, ensure the selection of the best outside counsel, conduct in-depth due diligence, and combat fraud. And, there's more in the pipeline that I can't talk about yet. But you can see that the common theme of all these tools and solutions is that they help GCs address the two major concerns that they are dealing with: protecting against risk and controlling costs.
Editor: Katrina is illustrative of a major risk, namely that of a natural disaster. How does the strategy you have mentioned enable corporate counsel to better cope with such events?
Ceipek: As we discussed earlier, we have reached out to our customers to help them cope with their immediate problems in the wake of Hurricane Katrina. Affected corporate counsel are concerned about losing documents and being out of touch. We help them address these immediate issues which we hope will reinforce their appreciation of LexisNexis as a reliable partner who is there to address their top concerns of legal protection and cost control.
Editors Note: At LexisNexis, Mr. Ceipek is the executive responsible for the business unit that develops, markets, and delivers solutions specifically for corporate counsel including GCs, compliance officers, intellectual property professionals, and tax professionals.