Metrics  that  Ma+er  

Gary  Chadick,  SVP,  General  Counsel  and  Secretary,  Rockwell  Collins  Gary  Nelson,  VP,  Legal  Opera@ons  &  Risk  Management,  Medtronic,  Inc.  Lisa  Damon,  Partner  &  Execu@ve  Commi+ee  Member,  Seyfarth  Shaw  

Today  •  Open  up  some  new  thinking  for  you  about  metrics  

•  Share  examples  of  “Metrics  that  Ma+er  (MTM)  in  Ac@on”  from  innova@ve  in-­‐house  counsel  

•  Get  you  to  do  some  ‘on  your  feet’  thinking  with  your  colleagues  

Our  panelists  •  Gary  Chadick,  Rockwell  Collins    

 -­‐-­‐  Metrics  that  ma+er  with  internal-­‐external  teams  

•  Gary  Nelson,  Medtronic    – Metrics  that  ma+er  to  execu@ve  management  

•  Lisa  Damon,  Seyfarth  – Wolverine:  Metrics  that  ma+er  in  porVolio  management  

What  you’ll  learn  from  our  panel  •  What  makes  a  metric  a  “Metric  that  Ma+ers”  •  What  MTM’s  you  can  use  to  best  manage  costs,  improve  quality  of  non-­‐financial  results  

•  How  to  get  data  you  need  from  inside  and  outside  your  organiza@on    

•  How  MTM  can  help  you  engage/  lead  teams  •  How  you  can  use  metrics  that  ma+er  to  strengthen  your  department’s  posi@on  as  a  strategic  business  partner  

Rockwell Collins’ Law Group:

Re-engineered Its Processes For Engaging Outside Counsel And Achieving Great Results

Who We Are – Rockwell Collins

•  A Global Aerospace And Defense Company Operating In More Than 60 Locations In 27 Countries

•  $4.8 Billion in Sales (2012) –  Operating Margins About 20% –  R&D Investments ~ $900 Million (18% of Sales)

•  A Balanced Business –  55% Government Sales –  45% Commercial Sales

•  ~ 20,000 Employees

Who We Are – Rockwell Collins (Continued) •  Commercial Systems

–  Serves The Air Transport And Business & Regional Aircraft Markets –  Aviation Electronics (Displays, Radios, Autopilot, Flight Management

Systems) –  Cabin In-Flight Entertainment, Moving Maps And Cabin

Management Systems –  Service, Repairs And Commercial Simulators –  Flight Information Management (Flight Planning And Scheduling,

Trip Support)

•  Government Systems –  Serves U.S. And Non-U.S. Governments And Defense Contractors –  Aviation Electronics (Cockpits For Fixed And Rotary Wing Aircraft) –  Communication And Navigation Solutions (Handheld GPS And

Radios, SATCOM) –  Surface Solutions (Targeting Systems, Soldier Systems And Military

Simulators) –  Repairs and Logistics Support

Who We Are – The Office Of The General Counsel

The Office Of The General Counsel

•  65 Employees

•  3 Groups: Law And Corporate Secretary (21) Ethics And Business Compliance (12) Export And Import Compliance (32)

•  OGC Annual Budget = $14.9 Million (2012) –  Annual Outside Counsel Spend = $7 Million

Introduction To The Law Group Lean Project

•  Using Lean ElectronicsSM And Six Sigma Principles –  Value Stream Mapping

–  DMAIC Methodology (Define, Measure, Analyze, Improve and Control) o  Voice Of The Client In The Measure Phase o  Force Field Analysis In The Control Phase And After The Pilot

•  Re-engineered Our Processes For –  Selecting, Engaging, Managing And Evaluating Outside Counsel

Why We Embarked On This Journey

•  2010 Voice Of Employee Survey – Lean Not Visible –  Only 52% Agreed That RC Does A Good Job Of Improving Efficiencies

(i.e., Reducing Waste, Streamlining Processes)

•  CEO Lean Renewal Imperative (FY11)

•  Invited A Law Firm Partner To Speak About Her Firm’s Project –  Used Six Sigma Tools To Re-engineer Their Processes

•  I Saw Opportunity To Improve Our Processes And The Way We Engage With Outside Counsel

What We Accomplished

•  Developed A Lean Workflow Chart Housed On A TeamSpace Site

–  Depicts Steps In The Process For Selecting, Engaging, Managing And Evaluating Outside Counsel

–  Contains The Tools, Templates And Agreements For Each Step In The Process

•  Utilizing Alternative Fee Arrangements On All New Matters Over $50,000 (And Some Under $50,000) –  Focus On Success Fee And Fixed Fee Arrangements

•  Conducting Lessons Learned Assessments (Four Per Attorney In The First Year)

•  Increasing Utilization Of Request For Proposals

(A1) OGC Lean Workflow - Selecting and Engaging

Start

A01

Receive New Matter and Notify

GC

Requirements for Notification and Approval of Matters with the General Counsel

A03

Review Dashboard and

Reports

Dashboard

Completed Lessons Learned Report(s)

Detailed Results of Outside Counsel Scorecard

A04

Develop List of Potential OC to

Consider

On-Line Resources (Chambers, ACC, Best Lawyers, etc)

A06

Determine Whether to Send

Out SF-RFP

SF-RFP Decision Tree

A07

Continue Discussion with Potential OC,

including Essential Terms A08

Select OC and Obtain GC Approval

Requirements for Notification and Approval of Matters with the General Counsel

A02

Consider AFA

AFA Decision Tree

Checklist Determining Appropriateness of Using an AFA

Checklist for AFA Discussion with Outside Counsel

Yes

D- SF-RFP Workflow

A05

Narrow OC Selection Using

Metrics and Conduct Initial

Conversation with OC

Dashboard

Lessons Learned Report(s)

Guidelines for Initial Conversation with Outside Counsel

A09

Draft and Execute Engagement

Letter and Attachments, as

necessary

Engagement Letter without Terms and Conditions of Engagement

Fixed Fee Insert Entire Matter -Litigated

Fixed Fee Insert Phases - Litigated

Fixed Fee Insert - Non-Litigated

Success Fee Insert - Litigated

Success Fee Insert - Non-Litigated

First Engagement with Outside Counsel

Subsequent Engagement with Outside Counsel

A10No

A11

What We Accomplished (Continued)

•  Created A Scorecard Measuring Outside Counsel’s Performance (In FY11, Generated 46 Scorecards)

Example Of A Scorecard

[Insert Attorney’s Name Here] 3.85

A Great Success

•  Achieving Excellent Results While Controlling Costs

•  New Processes And Templates – Efficient And Promotes Use Of AFAs

•  Savings of $598,000 Over Past 10 Months

•  Strengthened Relationships With Our Outside Counsel

Metrics That Matter

•  Metrics Related To The Law Group Project –  Total Dollars Saved Using AFAs ($598,000 Saved On $3.4 Million –

17.4%)

–  Percentage Of Total Spend Using AFAs (49%; 58% If You Include Discounted Hourly Rates)

–  Number Of New Matters Using AFAs vs. Standard Hourly Rates (By Quarter)

–  By Attorney, Number Of Matters Using The Different Type Of Fee Arrangements

Success Fee Matters by Subject Matter

16  1   2   0   2   3   1   0  

0  20  40  60  80  

0   2   3   4   0   3   0  

63  

0  20  40  60  80  

0   0   0  9  

0   0   0   0  0  

20  40  60  80  

Fixed/Flat Fee Matters by Subject Matter Capped Fee Matters by Subject Matter

Metrics That Matter •  Legal Department Metrics

Customer Satisfaction: Export Licensing - Meeting Business Need Dates 98% 93% 99%

Customer Satisfaction: Product Classifications - Meeting Business Need Dates 98% 98% 99%

Managing Operating Costs to Plan $14.9M ≤ $14.2M (FYE) TBDAchieve New Import Duty Cost Avoidance/Savings $1.3M $1.5M $2.0M

Cost Savings from Use of AFAs (%) 17% ≥ 17% ≥ 20%

% of Total Spend Using AFAs 60% ≥ 60% ≥ 80%

Patent Filings XX XX (FYE) TBD

Diversity & Inclusion: Leaders Participate in at Least 2 Activities 100% 100% 100%

Diversity & Inclusion: Non-leaders Participate in at Least 1 Activity 100% 100% 100%

100% Lean Certification Associate 100%Champion 100%

Associate 100%Champion 100%

Associate 100%Champion 100%

Complete VOE Focus Area Actions 100% 100% 100%

Use of Outside Counsel that are Diverse 48%Average ≥ 40%

of Total OC Hours

Average ≥ 50% of Total OC

Hours

Long Term Goals

Sustainable and Profitable Growth

Talented and Motivated People

Goals to Support Rockwell Collins

Vision

Office of the General CounselOperational Measures FY13 GoalsFY12

Forecast

Superior Customer Value

= Missed = Met = At Risk (Forecast Only)

KEY:

Office Of The General Counsel FY13 Scorecard

Medtronic Metrics that Matter for Executive Management

What  are  we  trying  to  do  with  metrics  at  Medtronic?  Answer  Tough  QuesAons  

• Top Ten Reports: by Firm, by Timekeeper, by Matter

• Preferred Provider Network (MP3) Spend

• AFA Spend Summary

• Drive-by Timekeepers

• Workload by Preferred Firm

• Timeliness of Invoicing

• Executive Committee Dashboard – Key Matters

• Legal Spend by Firm – Budgets & Forecasts • Average Hourly Rates by Firm • New and Resolved Matters and Length to

Resolution • Patents Filed and Issued • Total Outside Professional Services by Year • Legal Spend as % of Total Revenue • Open Matters by Matter type

Examples:  

Paint  a  Comprehensive  Picture  

Raise  Tough  QuesAons   Trigger  AcAon  |  Ignite  a  Response  

Reduce  OrganizaAonal  Amnesia   Improve  Predictability  

Start  with  repor@ng  objec@ves    

What  does  the  report  look  like?  

Where  do  we  get  the  informa@on?  

Answer  Tough  QuesAons   Paint  a  Comprehensive  Picture  

Raise  Tough  QuesAons   Trigger  AcAon  |  Ignite  a  Response  

Reduce  OrganizaAonal  Amnesia   Improve  Predictability  

Produced  Monthly    Covers  Top  15  Legal  Ma+ers    

Descrip@on  &  Status  Updated  Manually    Working  on    Automa@on  from  Ma+er  Management  

Case  Study:   Significant  Ma+ers  Report  

Case  Study:   Financial  Summary  Report  

Case  Study:   Trends  and  Composi@on  

Case  Study:   Pies,  Bars  and  Suppor@ng  Detail  

Case  Study:   Timekeepers  

Using Metrics to Manage a Portfolio Wolverine World Wide Trademark Case Study

Overview  •  4,000  marks,  800  domain  names,  190  countries  •  Wanted  Lean  approach  to  help  drive  consistency,  quality,  efficiency,  lower  cost  

•  Program  now  in  Year  2  •  9  metrics  for  performance,  5  of  which  influence  firm  compensa@on  

•  Alt  fee  structure  for  porVolio,  not  per  ma+er  •  Efficiency  improvements  of  15-­‐20%  

Metrics  Ma+ered  -­‐  2011  •  Prosecu@on  produc@vity  –  number  of  hours  per  ma+er  worked  on  per  period  

•  Specimen  response  –  days  from  specimen  request  to  specimen  delivery  

•  Disbursement  control  –  incen@ve  based  on  keeping  foreign  associate  disbursements  below  a  certain  level  

Metrics  Ma+ered  -­‐  2012  •  Prosecu@on  produc@vity  •  Specimen  response  

•  First  ac@on  approval  –  percentage  of  U.S.  applica@ons  that  have  an  approval  as  their  first  ac@on    

•  Renewals  efficiency  –  reduc@on  in  overall  cost  per  renewal  

•  Opposi@on  ini@a@on  efficiency  –  days  from  receipt  of  watch  no@ce  to  first  ac@on  on  an  opposi@on    

•  Domain  name  takedown  rate  –  percentage  of  problem  domain  names  we  are  able  to  successfully  take  down  

29 | © 2011-12 Seyfarth Shaw LLP

• Key Takeaways ► Average renewal cost continues to beat target YTD in 2012.

• Next Steps ► As noted in last report, we are targeting an average 15% decrease in

paralegal billable time over the next three periods starting with period 6, based upon further training of our renewals specialist. In period 6, billable hours were down by over 40% from period 5.

$931 $931 $846

$750 $795 $782

0

200

400

600

800

1000

1200

1 2 3 4 5 6 7 8 9 10 11 12 13 Thru Period

Renewals Efficiency - Average Cost per Renewal 2011 Average 2012 Target Avg Cost YTD

$830 2012 Target

$1,038 2011 Average

30 | © 2011-12 Seyfarth Shaw LLP

• Key Takeaways ► Metric suffered an uptick in period 6. We have identified two anomalous 37-day

initiation periods in period 6 that distorted the average. We are examining the cause of these outliers.

• Next Steps ► Upon identification of cause of the anomalies in period 6, we will devise a solution.

We anticipate finding slight delays (over periods 4 and 5) in each phase of the process, rather than one single cause. If so, we will expect to see improvement in period 7.

► We look forward to introducing to Wolverine our new watch reporting “app,” which is in final testing, to enhance our data with respect to this metric.

23 23 20.14 18.87 17.47

19.82

0

5

10

15

20

25

30

35

40

1 2 3 4 5 6 7 8 9 10 11 12 13

Opposition Initiation in Days 2011 Aug-Dec 2012 Target 2012 Average YTD

35 Day Average 2011 Aug-Dec

28 Day Average 2012 Target

Discussion  •  “My  favorite  metric”  •  Why  it  ma+ers  most  

Table  exercise  •  Iden@fy  3  “metrics  that  ma+er”  that  you  will  use  to  demonstrate  progress  and/or  challenges.    

•  In  the  spirit  of  transparency,  these  3  metrics  that  you  will  share  with  the  board  must  also  be  shared  with  your  internal  clients,  law  team,  law  firms.    

•  Factor  in  how  you  will  collect  data.  •  Report  out  from  facilitators.  

Metrics  that  Ma+er  

Gary  Chadick,  SVP,  General  Counsel  and  Secretary,  Rockwell  Collins  Gary  Nelson,  VP,  Legal  Opera@ons  &  Risk  Management,  Medtronic,  Inc.  Lisa  Damon,  Partner  &  Execu@ve  Commi+ee  Member,  Seyfarth  Shaw