CSC Cuts Legal Expense for SafeAuto - Analyst Blog

Zacks Investment Research
Posted: May 09, 2012 5:52 PM
CSC Cuts Legal Expense for SafeAuto - Analyst Blog

Computer Sciences Corporation (CSC) announced last week that it will be licensing its legal management software to SafeAuto Insurance Company. Financial details of the deal were kept confidential.

Ohio-based SafeAuto Insurance Company is a property and casualty insurance carrier. The company provides auto insurance directly to car owners across 16 states. The inexpensive insurance coverage fulfills the state-wise legal requirements.

The software named Legal Solutions Suite provides a data bank that can be used by companies to determine the charges, work patterns and documentations required by attorneys and law firms under different state jurisdictions. Therefore, it reduces the time, money and effort required to search for law firms and even eliminates redundant documentation.

Leveraging the solution, the auto-insurance carrier will be able to measure its legal expense before-hand and reduce the same accordingly. Moreover, it will allow SafeAuto to improve communication with law firms and individual lawyers. This will ultimately help the company to expand into additional geographical locations while dealing with legal matters easily.

While practically every company has to bear a certain amount of legal expenses, companies like SafeAuto, because of the nature of their business, have to bear a hefty amount. Such a software could prove to be of great help for SafeAuto.

According to Computer Sciences, the Legal Solutions Suite has already been deployed by several companies from an array of industries. These companies benefited from immediate savings of about 8% of their total legal expenses. We believe that the solution is a useful tool that could attract more deals in the future and continue to support revenue streams.

Deal wins are catalysts for any company and Computer Sciences has no dearth of them. But the growing uncertainty regarding the U.K. National Health Service contract, negative pre-announcements of the company’s fourth quarter results (scheduled for release on May 17), intense competition in the IT and cloud computing space from both small and big players such as Accenture plc (ACN) and Hewlett-Packard Company (HPQ), its European exposure and strained federal budgets have prompted our bearish outlook on the stock.

Currently, CSC holds a Zacks #5 Rank (implying a short-term Strong Sell rating).

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