Sears General Counsel Relishes Lack of Predictability

Roger Adler

The National Law Journal

05-30-2012

COMPANY PROFILE

In 1886, Minnesota railroad agent Richard Sears began selling watches to supplement his income. The following year, he moved to Chicago and hired watchmaker Alvah Roebuck. Sears, Roebuck and Co. was born. Now called Sears Holdings Corp., it is the country's fourth largest retailer, operating 3,900 stores in the United States, Canada, Guam and Puerto Rico.

The modern company is the product of the 2005 acquisition of Sears by Kmart Holding Corp. Both chains operate as separate brands but have struggled with the recession and shifting retail marketplace; in December, the company announced plans to close 120 stores. Still, sales of home appliances, tools, lawn and garden items, consumer electronics, automotive repairs, apparel and more generated revenues of approximately $41.5 billion last year — good for the No. 65 slot on the Fortune 500. Sears has 250,000 employees and maintains corporate headquarters in Hoffman Estates, Ill.

LEGAL TEAM AND OUTSIDE COUNSEL

Sears' legal department boasts a headcount of approximately 170 people, including 52 lawyers. In addition to the attorneys, the group comprises auditors, paralegals, compliance experts and support staff.

General Counsel Dane Drobny declined to identify the firms he calls upon for outside counsel, citing a company privacy policy. However, in its "Who Represents Corporate America" survey for 2011, NLJ affiliate Corporate Counsel reported that Sears used Portland, Ore.-based Fucile & Reising for contracts litigation; Orrick, Herrington & Sutcliffe for labor litigation; and Andrews Kurth and Bracewell & Giuliani, both of Houston, for intellectual property litigation. For torts, the company used firms including Bennett Aiello & Cohen of Miami; Eckert Seamans Cherin & Mellott of Pittsburgh; Tennessee firm Leitner, Williams, Dooley & Napolitan; and Atlanta's Strawinski & Stout for torts litigation. Drobny described the lineup as "strong local firms."

Periodically, he hires outside attorneys to handle regulatory, marketing or advertising matters. He has structured a variety of fee arrangements and eschews a one-size-fits-all approach to billing. He has employed fixed fees, contingent fees and a mix of arrangements in addition to conventional hourly billing.

DAILY DUTIES

Its lack of predictability, Drobny said, is one of "my favorite parts of the job" — he relishes the variability, new learning experiences and challenges. By comparison, his earlier litigation practice had a more limited focus. Drobny participates in the full range of a general counsel's responsibilities. Litigation, global compliance, securities and internal auditing represent key areas. Transactions and contracts, regulatory matters, marketing, labor and employment, environmental risk management and communications are others.

A point of emphasis and pride for Drobny is that, as Sears' legal chief, he takes a team-oriented approach to his job and solving problems. During an interview, he repeatedly stressed the contributions by his "outstanding team — the best lawyers and professionals I have ever worked with." His colleagues have "real expertise in practice areas, experience, and they care passionately about the business and the company."

Drobny reports to chief executive officer and president Louis D'Ambrosio.

REGULATION, TRANSACTIONS

Sears' business is extremely diverse, bringing varying degrees of state and federal regulatory oversight. Adherence to the Sarbanes-Oxley Act of 2002 is an important part of the company's compliance efforts, and the same holds true for the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In 2011, Sears completed the spinoff of its interest in Orchard Supply Hardware Stores Corp. into a separate publicly traded company. In 2012, it announced the planned sale of its Sears Hometown Stores and Sears Outlet operations and certain hardware stores through a multimillion-dollar rights offering. In addition, the company sold 11 shopping mall anchor properties to General Growth Properties Inc. Drobny declined to discuss these and other transactions. He reiterated that in crafting such deals, he is very much "part of the team."

Some of Sears' supply chains extend to outside the United States; a number of employees and various services are located abroad. Drobny deals with foreign jurisdictions as needed, hitting the road for business reasons "a couple of times a month." He works with the human resources department on union and immigration matters.

Additionally, the law department will step in if a major insurance issue crops up — whether a slip-and-fall lawsuit, a contract or class action. A large part of Sears' business, once revolving around its iconic catalog, is now conducted online, so electronic commerce adds to the legal issues on Drobny's plate. Finally, his team handles aspects of marketing, advertising and intellectual property from a legal perspective. "I like to be in on the details of stuff," he said.

ROUTE TO THE TOP

Serving as the legal chief of the retail giant is Drobny's second job since law school; before he joined Sears in 2010, he spent 17 years at Chicago-based Winston & Strawn. A capital partner there, he concentrated on commercial litigation, with some white-collar criminal defense added to the mix.

Drobny is the executive sponsor of Sears' Senior Leadership program, which is geared toward recruiting standout master of business administration graduates. He served on the hiring and summer recruitment committee while at Winston & Strawn.

PERSONAL

Chicagoan Drobny and his wife, Shawna, an attorney by training and now a "stay-at-home" mother, are the parents of Jack, 8; Connor, 6; and Gray, 4. Family time, running, sports and reading are Drobny's preferred leisure activities.

He graduated in 1989 with a bachelor's degree from Colgate University and earned his J.D. in 1993 from Washington University in St. Louis School of Law.

Drobny testified before the Illinois Legislature in connection with $150 million in tax breaks designed to keep Sears' headquarters in the state. Another career highlight was prevailing in a trial while wearing a cast, being on crutches and using a wheelchair; he had ruptured, then reinjured, his Achilles tendon while trying the case. During his tenure at Winston & Strawn, Drobny was named a "Top Under 40 Lawyer" by the Illinois Bar Journal.

His advice to his professional peers "is the same that my predecessor, Bill Harker, gave me: Get into the details; focus on being a problem-solver and be solution-oriented; and be a counselor and partner to the business. Your job is to minimize risk to the corporation and achieve compliance."

LAST BOOKS AND MOVIES

In the Garden of Beasts: Love, Terror and An American Family in Hitler's Berlin, by Erik Larson, and Drat That Fat Cat!, by Pat Thomson; and A River Runs Through It and A Bridge Too Far.

This article originally appeared in The National Law Journal.