Retailer sees litigation costs cut by nearly half under Ogletree Deakins program

June 1, 2016

Management at hhgregg realized it had a problem. It was spending too much in legal costs — more than $70,000 a month — and the retailer and its employees did not have a centralized place to go for legal answers. In addition, management worked with a host of law firms.

young-charlie-mug Young

So the Indianapolis-based retailer sent out a request for proposal and the firm of Ogletree Deakins Nash Smoak & Stewart P.C. won the bid. Charlie Young, chief human resources officer for hhgregg, said the law firm had everything the consumer electronics and appliances company wanted.

“We sat down with them and they were willing to work with us,” Young said. “They were willing to adjust or modify our collaborative relationship. Whatever they could do to better the positon of hhgregg, they would do, and that was the right approach of an outside legal partner.”

baldwin-chuck-mug Baldwin

Chuck Baldwin, managing director at Ogletree Deakins in Indianapolis, worked with hhgregg to implement what the firm terms the “OD Advantage,” a package of services that provides a flat-fee agreement for legal and employment services. The services streamlined the process hhgregg went through when it had employment law questions, providing information for HR managers and employees when they needed it and giving the company and employees ways to solve problems other than through litigation.

The process worked. Questions are now resolved in a matter of minutes instead of eight to nine days, claims have been reduced by 60 percent, and litigation has dropped by 74 percent. Hhgregg’s settlement amount is 27 percent of the national average.

Before hiring Ogletree Deakins, the company was spending $70,000 monthly on labor and employment legal expenses. Now the retailer has saved 44 percent since working with the law firm thanks to a national flat-fee agreement. Ogletree Deakins calls it value-based and volume-based pricing.

The partnership between hhgregg and Ogletree Deakins was recently recognized with an Association of Corporate Counsel Value Champion Award, given by the in-house counsel association to firms and partners who have utilized value-focused management practices to cut spending, improve predictability and generally achieve better outcomes.

However, the award was just icing on the cake for hhgregg, as the savings and predictability have been the main rewards of the partnership.

“The process has been exemplary as a general rule,” Young said. “They had a sense of understanding for the space and states we’re in and knowledge at their fingertips.”

Hhgregg has nearly 230 stores in 20 states. Ogletree Deakins has offices across the country, including Indianapolis, and two in Europe.

The first step after Ogletree Deakins was hired in April 2014 was an audit that looked at all parts of hhgregg’s legal department and processes, as well as employee training.

The main theme that came out of the meeting was a focus on being proactive instead of reactive to situations. That included a mandatory arbitration clause on employement issues, which was done in conjunction with hhgregg’s open-door policy with employees. It’s cited as a big reason for the drop in litigation.

Baldwin said the open-door policy provided more encouragement for employees to raise issues. “If we made a mistake, we fixed it, and that approach was different in strategy from what they were doing before. If employees feel like they have an internal avenue, most of them will take it.”

Ogletree Deakins also focused on training hhgregg management and staff to be better communicators and identify issues employees are having early on. That not only resolved issues faster, it also saved the company money.

“Proactive dollars give a much higher return on investment,” Baldwin said. “Litigation is expensive and inefficient and we’ve been able to avoid that. We’ve had money to spend on training, and providing training materials and added resources.”

Those resources have included extra in-house lawyers and professionals, more educational resources, tips on how to implement the Family and Medical Leave Act, and many webinars and seminars on a hot topic of the day.

“It keeps everything in front of mind for them,” Baldwin said of hhgregg mangement. “They’re constantly on guard for a big potential problem.”

There’s also an extranet that employees can access through their internal networks that provides answers for many of their questions.

Baldwin said Ogletree Deakins’ size helped in this case, as it was able to solve issues at hhgregg stores across the country using lawyers at all of its locations nationwide. Those lawyers were familiar with the state and local laws in those areas, and were better able to implement a plan to solve problems.

“We had boots on the ground in other states, and that’s what (the attorneys) do every day. They were able to share local and state developments in a cohesive and efficient way that adds value and reduces cost.”

Baldwin said he thinks the bundling of services that Ogletree Deakins offered to hhgregg and has also used in other cases is the future of law, especially in larger legal matters such as those faced by hhgregg.

“Fifteen years ago when we started this (bundling) it wasn’t commonplace, but this is an efficient and coordinated way to handle large projects. We’ve continued to get better at it and we’re still looking for ways to improve, either through technology or other solutions.”

Young said he’s been extremely happy with Ogletree Deakin’s services and is excited to see what the future holds.

“If you can get an exemplary product at a great price, well that’s nirvana isn’t it?” Young said. “We’ve been privileged to work in this space with Ogletree. It makes our job easier; it’s improved engagement and morale. Any time you can control and reduce costs, it’s a home run.”•


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