Legal Department Cost Savings Initiatives that Make an Impact March 9, 2011 Presented By: Bret Baccus Director Huron Consulting Group bbaccus@huronconsultinggroup.com Sheila Kennedy Senior Manager of Legal Operations Medtronic, Inc. Sheila.M.Kennedy@medtronic.com
Agenda Medtronic Overview Project Superior Q & A 2
Medtronic, Inc. Manufactures and sells device-based medical therapies around the world Founded in 1949 43,000 Employees 6 major business focused around a condition or therapy Cardiac Rhythm Disease Management (CRDM) Spinal and Biologics Cardiovascular Neuromodulation Diabetes Surgical Therapies 3
Project Superior Background Huron was engaged to conduct Diagnostic Assessment of Medtronic s Legal Department. The objective of the project was to develop a prioritized and executable implementation plan that would generate cost savings and improve operational efficiency. Workplan Interim Fee Arrangements and Financial Management Sourcing Strategy Preferred Provider Program Implement Updated/Integrated Matter Management and ebilling 4
Interim Fee Arrangements and Financial Management Targeted effort to achieve savings through a detailed Budgeting exercise for matters with significant expected spend at law firms and service providers with the highest volume of matters and spend. Determined the key law firms and service providers to evaluate (10 firms) Gathered detailed budgets from law firms for all active and anticipated matters Analyzed submitted budgets to identify opportunities for cost savings and benchmarks on staffing levels and rates Conducted negotiations Implemented fee arrangements and associated processes to ensure compliance Received additional savings offers from several firms 5
Sample Budget Template 6
Results Medtronic realized savings in these areas Rebates Rate Reductions Sourcing Decisions Alternative Fee Arrangements Expenses Ongoing execution of rate/fee reductions Enforcement of Guide Rules 7
Sourcing Strategy Focused on defining sourcing strategies based on the different matter types and defining internal and external roles and responsibilities to reduce duplication of effort and align tasks with the appropriate resources Met with leadership of groups within the legal department Determined work buckets and appropriate allocation of resources across phases and tasks Identified tasks and phases as internal or external Recognized Medtronic s key risk areas Assembled Medtronic s Panel of Firms profile to strategically align resources to matters Evaluated Medtronic s current organizational structure 8
Workshop Sample Task Group/Individual Task Internal External Use of Internal Resources External Staffing Model Mid. Sr. Atty Atty PL Partner Sr. AS Jr. AS AS PL Litigation Early Case Assessment & Strategy Development L110 - Fact and Case Investigation/Development X X X X X X X L120 - Analysis/Strategy X X X X X X L130 - Experts/Consultants X X X L140 - Document/File Management X X X X L150 - Budgeting and Project Management X X X L160 - Settlement/ADR Strategy, Preparation, Negotiation and Execution X X X L190 - Class Action Strategy, Analysis, Development and Administration X X X X Discovery L310 - Written Discovery X X X X L320 - Document Productiom X X X L330 - Depositions X X X X X 9
Preferred Provider Program, MP3 Focused on a consolidation of the number of law firms used and then supported the alignment of their usage along specific regions, expertise and risk levels. Developed preferred provider program model Surveyed Law Department Leadership to determine firms to include in the evaluation process Narrowed firms through a simple RFI, approximately 130 recipients Narrowed firms through interviews as needed Rolled out preferred provider program, Medtronic s MP3 10
Preferred Provider Working Process Under the Preferred Provider working process, preferred firms will eventually handle 80% of all eligible cases. 1 2 3 New Case is Served Case is assigned to Medtronic Attorney Medtronic Attorney is responsible for selecting Outside Counsel Attorney Consults List of Preferred Provider Firms Attorneys are encouraged to confer with colleagues regarding the capabilities of Preferred Firms Attorney Selects Outside Counsel Attorneys are free to select Outside Counsel from the Preferred List without seeking Leadership s approval In order to assign the case to a firm that is not on the Preferred List, Attorneys must get Leadership s approval Up to 80% of eligible cases Rare exceptions only 11
Matter Management and ebilling System Selection Process Improvement Implementation 12
Questions? Bret Baccus Director Huron Consulting Group bbaccus@huronconsultinggroup.com Sheila Kennedy Senior Manager of Legal Operations Medtronic, Inc. Sheila.M.Kennedy@medtronic.com 13