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It’s not often that prominent general counsel disappear. But that’s what happened to Sears, Roebuck & Company GC Anastasia Kelly back in January. Her abrupt and unexpected resignation didn’t even prompt a press release from Sears, sparking rumors and speculation in the media. But the explanation turns out to be pretty straightforward. Kelly’s was the last in a long string of departures initiated by Sears CEO and chairman Alan Lacy, who’s been remaking his executive team since taking the top job in October 2000. According to Kelly, her departure from the Hoffman Estates, Illinois � based retailer after four years as GC was amicable. It was prompted by Lacy’s desire “to look for his own person” for the general counsel job, she says. Lacy, who was Sears’s president of services before becoming chief executive, has completely overhauled senior management. He’s eliminated nine positions, redefined seven others, and created six new ones. The shake-up comes at a critical time for the 115-year-old retailer, which is struggling to redefine itself in the face of competition from the likes of Lowe’s Companies, Inc., and Wal-Mart Stores, Inc. Sears’s credit card business, the source of over half its revenues, has also been beset by losses and is now for sale. “A Different Model” The 53-year-old Kelly explains that she was hired by former CEO and chairman Arthur Martinez to reorganize and reenergize the law department. “Arthur and I had chemistry,” says Kelly. She and Lacy do not. Although Kelly declines to elaborate, she says that Lacy wanted “a bit of a different model” in his GC. Sears’s account of the GC’s resignation jibes with Kelly’s. Lacy directed inquiries to a Sears spokesperson, Jan Drummond. She attributes the departure to routine turnover. “It was part of the normal course of evolution of the corporation,” Drummond says. A Chicago-based recruiter familiar with the situation, who spoke on the condition of anonymity, says: “Kelly didn’t screw up in any way.” But the GC’s departure was quick and quiet. Many � including June Eichenbaum, the New York � based recruiter who placed Kelly in the job � were surprised when informed of Kelly’s exit two months later. Slashing Costs It’s been a rough ride for Sears’s legal department. Morale in the 90-lawyer department suffered under Michael Levin, Kelly’s predecessor, who was GC for two tumultuous years before departing in 1998. In the wake of Levin’s exit, Kelly tried to foster a sense of teamwork. In Corporate Counsel’s 2002 Quality of Life survey [December 2002], respondents gave the department and Kelly’s leadership mixed reviews, portraying a department and company under financial stress. Kelly also reorganized Sears’s lawyers into four practice areas; slashed the number of outside counsel firms; brought litigation, largely handled by outside counsel under Levin, back in-house; and achieved what she calls “dramatic” cost savings. Most recently she presided over the selection and installation of an e-billing system, Smart Counsel, that should allow even closer scrutiny of costs. Lacy apparently did not have a candidate for the job waiting in the wings when Kelly left. According to Drummond, Sears has launched an external search. Steve Cook, vice president and deputy GC, heads the department for now; he declined to be interviewed. What’s ahead for Kelly? Reached in Vail, Colorado, in mid-March, she didn’t sound anxious to get back to work. Kelly says she wants to spend more time with her 13-year-old twins. “I loved what I was doing,” she says. “But it was very busy and very intense � it’s great to have time to just watch the snow fall.”

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