Former Sears lawyers talk about the lessons learned, bonds formed

In the 1990s, Sears, Roebuck & Co. surged into a new era, opening more stores and increasing product sales. As the Hoffman Estates retail giant reworked its business plans, it also reorganized its legal department — turning it into a place that produced many influential in-house lawyers.

Matt Revord, Pam Schneider and Jim Keane serve as prime examples, starting in the new Sears legal department in 1996 and later moving into larger leadership roles in companies across Chicago.

Revord serves as the senior vice president, general counsel and secretary of Potbelly Sandwich Works, a restaurant that started in Chicago and now spans more than a dozen states. He recently spent time in Dubai, opening two of the company's first international restaurants.

Schneider works as the general counsel of Accertify Inc., an Itasca-based company that gives businesses software, tools and strategies to stop online fraud. Since American Express bought the company in November, she expanded her staff from one to three lawyers.

Keane serves as the president and chief executive officer of the Boys & Girls Clubs of Chicago, managing 16 clubs that work with more than 10,000 young people. He worked previously as the executive vice president and general counsel of the YMCA of Metropolitan Chicago.

While these three lawyers fill distinct and diverse roles, they all credit one person with kick-starting their successful in-house careers. They joined more than a dozen other lawyers who long time Latham & Watkins partner Michael Levin recruited to transform the legal department at Sears.

Levin had represented Sears as outside counsel for several decades before he became senior vice president, general counsel and secretary of the company in 1996. After learning that the company's business people were not receiving the support they wanted from the legal department, he made a drastic cut to the staff and replaced the lawyers who left with newer law-firm lawyers.

He created a stronger legal department that handled not only dynamic issues for the growing company, but also the scandal that erupted over its credit card practices in 1997. His controversial reorganization plan, coupled with accusations that the company violated the rights of credit card holders, landed him a leading role in Newsweek 's "The Sorry Side of Sears" and other national news coverage.

Despite the negative attention, Levin united the lawyers in the Sears legal department, calling on them to help resolve the crisis for the company.

This legion of lawyers grew under his guidance and later moved on to prominent companies throughout the Midwest. Many of them remain connected today by the time they spent with Levin and with Sears.

"The overall plan of action was to get some good leaders in for each of the substantive business areas and let them revitalize the thinking and energize it and build ties with the businesses," Levin said. "If I had the right people, I didn't have to do much. That's the way it worked out."

Levin represented Sears for nearly 30 years before he moved in-house with the company. When he started as in-house counsel, he said, the legal department was continually impeding the business.

"The staff spent most of their time trying to avoid the law department," he said. "I knew that was the wrong answer, because good lawyers can actually help a lot."

Robert Guttman, the senior vice president, general counsel and secretary of Ulta Salon Cosmetics & Fragrance Inc., started in the Sears law department 10 years earlier. He called it a "sleepy department," where people didn't care much about performance.

"What Mike did — there's a story," he said. "He got the whole department together.

"He said, 'I talked to all of the officers in the company and here's what I learned about the law department. You, A, don't work very hard, and B, your advice isn't very good. You're risk-averse. I'm going to change all that.'"

At the time, the Sears legal department employed nearly 40 lawyers. In his first year, Levin asked one-third of those lawyers to leave and replaced them with his new recruits.

"You'll find in many large corporations, and many of the people at Sears, were sort of protecting their jobs," Levin said. "They were living out their time until they got to retirement.

"I was looking for people who wanted to plunge in and really work on problems. It was a time in the economy when there were a fair number of people like that, and I was fortunate to find a bunch of them."

Revord, who started his career at Kirkland & Ellis, received a call from Levin while working in-house at Oak Park-based Waste Management Inc.

"He said, 'I am hiring a bunch of guys like you. A bunch of big law firm guys who work hard, who are aggressive and who will help me transform the Sears legal department,'" Revord said.

"That's what he did. He hired Kirkland guys. He hired Skadden guys. He hired Latham guys."

Steve Cook, vice president, general counsel and secretary of PulteGroup Inc., a national home-building company in Bloomfield Hills, Mich., moved in-house with Sears from Skadden Arps Slate Meagher & Flom. He spent his first day as assistant general counsel flying to Los Angeles to negotiate the acquisition of Orchard Supply Hardware.

"Mike is the kind of guy who, once he knows that you know what you're doing, and he can trust you, he gives you a tremendous amount of respect," Cook said. "Because I was an M&A lawyer at Skadden, and I came in to do M&A work, I was able to prove right away that I had a lot of experience in what I was doing."

While Sears supported Levin's plan to bring in new recruits, the lawyers who remained from before his tenure likely saw the changes as "very demoralizing and quite controversial," Levin said.

"I'm sure I was for many of the people more blunt and rougher than they were accustomed to, but I thought we had a huge hill to climb and we didn't have a lot of time to waste," Levin said. "When I'm working to solve a problem, I'm very focused and relentless. It's the way I went after stuff there. I would challenge people."

Guttman agreed that it became tense in the legal department and that his colleagues had trouble digesting so many changes in such a short period of time. He considered himself lucky to get the chance to stay, even though Levin let him know he needed to improve, he said.

"It was a career-changing event for me," Guttman said. "He made me think about things in a totally different way. He would not tolerate mediocre lawyering under any circumstances, whether it was internal or external counsel, and he would not tolerate bad advice."

Levin placed new leaders in the legal department and encouraged them to help the younger lawyers build ties with the businesses within Sears.

He dispersed authority and avoided a "centralized command-and-control type of environment," he said.

"If you're a young person, it gives you a very heady feeling and I think that was a powerful motivator," he said. "That sort of thing is a good thing to do for people if they can handle the responsibility."

Kathleen McJohn, the vice president, general counsel and secretary of WMS Industries Inc., a slot machine and video lottery terminal manufacturer in Waukegan, worked with Levin at Latham & Watkins before she left to become a staff attorney at Amoco Oil Co. When Levin joined Sears, he asked McJohn to start as assistant general counsel.

McJohn said while some legal departments become an ivory tower that never connects to the business, she saw Levin work to align the departments. He found new ways for lawyers to support Sears and anticipate potential problems, she said.

"Instead of leaving the business people to wonder, 'Who I do call or should I call?' he assigned a handful of lawyers to go out and educate the business on where legal could be helpful to them," she said. "It's amazing how quickly people started beating a path."

When Levin asked Keane to leave then-Schiff Hardin & Waite for Sears, Keane feared that moving in-house would mean giving up the aspect of law firm life where lawyers challenge each other, he said. But when he heard that Levin recruited leaders like Cook and McJohn, he knew that wouldn't be the case, he said.

"Mike really organized the law department a lot like a law firm," Keane said. "It would be more business-centric by having a lawyer actually assigned to the business who could also be a point of contact with the law department."

Levin approached the legal department with an idea for a new general counsel training program, telling them he would assign each of the businesses with a staff lawyer who would handle their legal matters for a full year.

Keane started his new special counsel position without knowing anything about credit law, and what was supposed to be a one-year assignment turned into a three-year assignment due to turmoil in the business.

Since Sears engaged in looser lending in its earlier years, Keane integrated with business leaders like Alan Lacy, who later became the company's chief executive officer, to create a more profitable credit business.

"Many of the director-level people had MBAs and they all thought in spreadsheets," he said. "I knew kind of how to use a spreadsheet, but I really dug in and became fluent in it.

"If they were doing a deal, or doing this project or that project, I really wanted to know what they were working on. I wanted to know how they did the math."

Dave Merritt, the general counsel and secretary of CCC Information Services, a Chicago company that provides software, tools and technology to the automotive claims and collision repair industries, met Levin when he started at Latham & Watkins in 1989. He rejoined Levin at Sears when the general counsel recruited him from Cherry & Flynn to become senior counsel in complex litigation.

Merritt also participated in the new general counsel training program, becoming special counsel for the home services division. Rather than just defending incoming lawsuits, he focused on spotting and addressing legal issues for that business, he said.

"The thing that Mike provided me was exposure to other senior managers in the company," Merritt said. "I was a little more junior than some of these other folks, but that really gives you a sense that you're not just a cog in this huge law department."

The Sears lawyers remember several of the lessons they learned from Levin, who many characterize as a demanding, but fair lawyer.

Schneider met Levin when she came to Latham & Watkins and handled her first transaction for Sears in 1984. She was general counsel of JMC Group Inc. in San Diego when Levin asked her to join him at Sears as vice president of the home services business.

She called Levin a loyal mentor who set high standards and gave hard-working lawyers opportunities to learn and grow.

At the same time, she admitted that some lawyers objected to his tough exterior and hard-line approach.

"I would work for Mike tomorrow, but Mike is not for everybody," Schneider said. "I think that was part of his challenge. He does better with a small group, and not as much being a dynamic leader of hundreds of people. Hundreds of people aren't going to feel warm and fuzzy around Mike."

If Levin's lawyers couldn't answer a question, he expected them to admit that they couldn't answer and then work to find that answer, McJohn said. He also expected them to give business people advice that they could actually use.

"If your business has a short question, they want a direct answer and not a five-page memo," she said. "They're looking for advice — 'May I, yes or no? If it's yes, are there any caveats? If it's no, is there anything I can do differently and still get to what I want to do?'"

Levin trained young lawyers the same way in private practice, McJohn said. He encouraged them to think through issues, and once he grew comfortable with their skills, he gave them room to stand on their own two feet, she said.

Matt Myren, senior vice president, general counsel and secretary of Enesco, an Itasca-based company that distributes giftware and home and garden décor, was working at Skadden when Cook, his mentor, announced his move to Sears and asked him to come along.

He immediately joined Cook in the acquisition of Orchard Supply Hardware and a number of other supply companies. While Myren helped move Sears into a new market, he learned from Levin the importance of attention to detail.

"If you mess up on the little things, people won't trust you on the big things," he said. "He valued being a law department that didn't just say no, but that looked for creative ways to do things and say yes."

Keane recalled that Levin once found a mistake in one of the director's biographies in one of his proxy statements. The general counsel used his "famous" green pen to write "this is terrible" across the document.

"We sat down together, we went over it, and I said, 'You're right, this is terrible, I'll fix it,'" Keane said. "It didn't take any time and there was no emotion.

"That's the way Mike was and that's the way people around him were. They were willing to face the facts that if you get a director's bio wrong, that's terrible. Nobody had thin skin."

Levin and other senior lawyers also organized monthly review meetings where they went over every complex litigation case with staff attorneys.

"One of the things I remember him saying that has stuck with me was that if something doesn't seem to make sense to you, then it's probably not right," Merritt said. "Even though we might be working in an area outside of our expertise, use your legal judgment and trust your gut."

Levin taught Cook that while private practice lawyers serve many clients, in-house lawyers serve their corporation. He also taught him that the principle became even more important as people injected their own agendas into the business.

"Mike was very clear that our service was to Sears as the corporation," Cook said. "We were a model for the rest of the organization."

Levin taught the law department one of its greatest lessons after a Boston bankruptcy judge accused Sears of illegally collecting debts from bankrupt credit card holders in 1997.

The people responsible preceded Levin's arrival by 20 years, he said. Since they had already left the company, he faced a tough task in finding resources to handle the problem.

He recruited a task force of bankruptcy counsel from several law firms and brought in other advisers to handle the major criminal action and complaints from 50 states' attorneys general. For several months, he initiated a daily afternoon conference call to keep the players in touch.

"While lots is known about corporate bankruptcy, very little is known about personal bankruptcy," Levin said. "People didn't go into that if they had opportunities to do something else.

"It all had to be invented from scratch … It took a lot of my time. It was fairly far along, but by that time, the high-quality hiring had occurred and there were people who could step in and work these issues."

He counted on his lawyers, who spent several months manually reviewing hundreds of court records that stretched back decades. Whether they worked on transactions or litigation, they came together to alleviate widespread damage to the company.

"It became a very big deal for the entire law department and for Mike Levin," Revord said. "It was a very negative event, but it certainly served as a crucible to unify the law department. There was an enormous amount of work to do and we had to get to it."

For many of the lawyers, one of the best parts of working at Sears was building relationships with their colleagues.

Cook recalled one late night that he worked on several deals with Myren and Keane and realized things "jelled so good" between them.

"I remember thinking to myself, 'It doesn't get any better than this,'" he said. "'There is not going to be another set of working relationships that can equal this.'"

Keane agreed that the lawyers viewed their partnership at Sears as "something special and not as a total coincidence." They came in with high standards and recognized those standards in each other.

"Sears was where I really was able to practice the ideal job," Keane said. "That is where you have a round table, and around that table, you have people with different skill sets and different training, but you all have a single objective. You are not in silos, you are working together."

The lawyers also found ways to interact on a social level, running together on trails near Sears and combining their musical talents to perform for their co-workers.

"If someone left the company, there was this group that would write songs and perform for their going-away parties," Myren said. "Jim Keane is a very talented guitar player and Revord sings high harmony … Cook can't sing, but he provided us with air cover because he was more senior than the rest of us.

"It was a fun group of people. We managed to get the work done and still have a good time."

That group still plays poker together four or five times a year. Even though Cook lives in Michigan, he counts these former colleagues among his closest friends.

"I think that's one of Mike's legacies," Cook said. "He attracted some very, very talented, smart lawyers and those people that he hired were able to also attract very talented, smart lawyers."

In 1998, Levin left Sears after a large acquisition that he hoped to close in coordination with the "Softer Side of Sears" campaign never occurred. He returned to Latham & Watkins, where he practiced until he retired in 2007.

"They had a very powerful television advertising campaign that got people really excited about the company and the business," Levin said. "But, unfortunately, they couldn't get the goods in the stores and it sort of faded."

Guttman left Sears and became general counsel at CCC Information Services in 2000. He recruited Merritt to handle litigation and when he became general counsel of The Reynolds and Reynolds Co. in Dayton, Ohio, Merritt took his spot as general counsel.

Guttman continued to call on Levin, who became his chief corporate and securities counsel at both companies.

"Working with Mike, both as a general counsel and department head that I reported to, and also working with him when I went on to be general counsel, was really one of the highlights so far of my career," he said.

Merritt still calls on Levin's expertise when he works to balance the legal and business interests of his company.

He also remembers the importance of hiring quality attorneys and letting them do their jobs, he said.

"When I was at Sears, I always felt that while I had the support of Mike and the other senior lawyers when I needed it, I didn't feel like I was being micromanaged," he said. "That's the way I try to work with the three staff attorneys who report to me."

Cook, who later became general counsel of Sears, immediately recognized the benefits of lessons he learned after starting as general counsel of PulteGroup in 2006. He used his experience in dealing with business restructurings and shake-ups to help guide his new company through the difficult economic downturn.

"It has been complete carnage and turmoil in the industry," Cook said. "This is also a company that has gone through restructuring after restructuring and various reductions in force and in having to navigate the legal minefields in a situation like that, it was very helpful coming out of Sears."

Schneider left Sears eight years after Levin and worked as general counsel at Apac Customer Services and Movie Gallery before starting at Accertify.

She once counted more than a dozen lawyers who worked with Levin at Sears before they became general counsel of their own companies in Chicago or other cities. She said there's no question that he left a mark on the company and its legal department.

"It was dramatic, and it was painful, and what he did there did not make him a lot of people's friend, but every general counsel who followed him had a legacy that he or she was able to really grow and develop," she said.

Schneider also credits Levin not only with her choice to become a corporate and securities lawyer, but also with her ability to become a competent lawyer.

"He knew me, he trusted me and he knew what I was capable of doing," Schneider said. "Not only did Mike help me grow, but the people that Mike brought there also helped me grow."

When asked about his biggest achievement at Sears, Levin easily answered: "The people. Look at them. Look at the success they have had. That one combined source produced an incredible number of general counsel.

"If you can provide a base for people to have that kind of success in life, it makes you feel good," he said. "You can't ask for any more than that."