1. Best Practices in Converging and Building a High-Value Outside Counsel Network
Sheila Kennedy, Director, Legal Operations – Medtronic, Inc.
Deborah Ratterman, Director, Legal Operations – Sears Holdings Management Corp.
Joe Otterstetter, Managing Counsel and Associate General Counsel – 3M Company

2. Overview and Objectives
Preparing to converge
Building team alignment
Processes, templates, and tools
Managing a preferred counsel network
Law department size or budget are not barriers to sensible convergence

3. Preparing for Convergence

4. Sears’ Goals/Objectives
Eliminate “jump ball” mentality for complex high risk cases
Too many “my favorite” firms selected
Develop true partnerships vs. once/twice a year use
Consolidate firm use from over 100 to under a dozen
Exceptions to consolidation were identified
Already consolidated, unique area, doesn’t meet selection criteria
80% of our work lived with 20% of our firms
Identify 4-6 full service that effectively provide services in multiple areas
1-2 Specialty firms (select areas/high volume)
1-2 Local firms (per region)
Regional firm that specialized in specific jurisdiction

5. Sears “At the Starting Line”
Understand current state
Develop criteria for future state
Develop standards for firm selection
Develop KPIs for spend management
Review and update OC guidelines
Identify internal controls/changes
Identify external controls/changes
Timeline for implementation
Measure once, measure twice
Socialize concepts
Socialize objections
Socialize, socialize, socialize
Make sure the right people are in the room – not necessarily leadership

6. Medtronic Preferred Provider Program “MP3”
Strategy first. Develop strategic, long‐term relationships with a small number of firms, with the goal of concentrating about 80% spend in Network
Determine Value. We will work with these firms to establish innovative service models and competitive rates, and build collaborative relationships between Medtronic and the firms and among the firms themselves.
Implement PM tools
Define Goals, Scope,
Risk and complexity of our matters
Identify Stakeholders – Internal and External
Timeline
Measure ROI
Partner with Sourcing – SME in Legal Ops working with Sourcing or benchmark sourcing tools and processes
Refresh

7. 3M Preferred Counsel Network First Principles
No compromises on quality or responsiveness of legal service
We want fewer, deeper relationships with our firms
Pay for value and results, not activity
Select the right firm for each engagement
Reward risk sharing, risk avoidance, and early resolution
Work with firms that share our values, including our commitment to diversity and pro bono
Portfolio teams lead the selection with support from our GC and our core team

8. Mass tort local counsel
3M “Portfolios”
Commercial & Products Litigation
IP Litigation (patent and TM)
Insurance Coverage & Recovery
M&A and Equity Investments
U.S. Trademark Policing
Mass Tort
9-6 portfolios
-Antitrust  Commercial and Products
-TM litigation  IP litigation
-FC litigation  Commercial and Products
-Mass tort…local counsel remains a standalone
Mass tort local counsel

9. Lessons Learned Preparation+ Δ
Clarity of objectives and “why”
Benchmarking – huge ROI
Data mining and clean-up
Portfolio definitions and exceptions
Portfolio teams
Sourcing and Ops engagement
Communications – OVER-communicate
Overly-aggressive schedule
Change management under-estimated
Prepare for continuous change- GC, integration/ divestiture -retain process tools for re-use

11. Medtronic Preferred Provider Program “MP3”
Align Practice Group leads and GC/Steering committee on overall risk profile and needs of Medtronic – refresh regularly but not too often
Develop MP3 Council with representation across business unites and shared services supported by an overall Program Charter
Continuous reporting
Align and connect law firm experts with Medtronic teams to ensure capabilities needs are met
Measure on-going MP3 program VALUE
Continuous communication: legal department, GC and Ex Com

12. Lessons Learned Alignment+ Δ
General Counsel support
Team leader appointment and engagement
Make it easy for the colleagues who have to execute
Change management challenges under-estimated
OVER-communicate – early and often

13. Processes, Resources, Tools

14. Sears Holdings Developing Questions for RFI
General Questions
Questions
How do you leverage technology to better communicate with clients?
Describe your early case assessment process?
How do you approach budgeting a matter? Is there a formula? How do you avoid highly unpredictable cost overruns?
What programs have you implemented with other clients to reduce incidents that result in litigation?
How does the firm utilize project management to avoid the following: Overwork or overstaff a matter or use more expensive staff than needed on a case?
Data Security
How many data breaches have you advised on?  What kinds of information were at risk and how were they handled?
How many regulatory investigations have you have handled with respect to data security matters?  Who were the regulators and what were the results of those investigations?
Specialized Core Competencies
Incident Response
Data breach notification laws
Data breach regulatory investigations (federal and state)
PCI compliance and process
Security Standards and Frameworks:  HIPAA, GLB, NIST, etc.
In-house Technology Expertise

15. COLLABORATION COLLABORATION COLLABORATION
MEDTRONIC
Develop Criteria
The selected firms shall at a minimum have:
Expertise in the identified practice area. A strong bench with broad experience.
Strong value proposition. Demonstrated successful experience with AFAs.
Demonstrated ability to deliver innovative and successful legal outcomes.
Knowledge of medical device industry and technologies.
Proactive, solutions-based approach.
Strong project management capabilities, efficient staffing strategies.
Ability to collaborate/ build relationships with Medtronic and other core MP3 firms.
Commitment to diversity.
Results
Reduced Legal Service Cost
Cost Effective portfolio management with year over year cost savings
Focused Customer Interaction & Competitive Edge
Responsiveness to legal requests
Keeping Medtronic informed of relevant trending in key practice areas
COLLABORATION COLLABORATION COLLABORATION

16. Medtronic Tools

17. Process Maps and Checklists

18. Request for Information

19. Request for Proposal

20. Interviewing & Scoring

21. Lessons Learned Process & Tools+ Δ
3-step process
Sourcing engagement
Objective questions
Word limits – and fewer open-ended questions
Asking for hourly rates
Target # of portfolio firms
Still too many questions that do not help us separate firms
RFI not needed if pool is small
Communications
Use MS Word rather than online tools

22. Working with and managing your preferred counsel network

23. Sears Holdings Sample Internal Firm Survey
Firm Name Rating Scale (1 Lowest/Worst - 10 Highest/Best) How would you rate the firms responsiveness to your questions or requests? Is the firm proactive in its approach toward issue spotting, strategic advice and risk reduction? What rating would you give the firm for their communication style and method? Does the firm provide proper notice and clarify of deadlines?

24. Medtronic Preferred Provider Program “MP3”

25. 3M’s Preferred Counsel Network
Transparency builds trust
Managing exceptions
Communication
Annual summit
Business review meetings
Regular feedback and evaluations

26. 10 minutes for questions