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Episode Summary:
This episode explores how in-house legal and HR teams can form high-functioning partnerships to deliver better outcomes for organizations. Rich Sedory discusses building a legal department from scratch, managing compliance in a regulated manufacturing environment, and negotiating contracts that drive value. Special emphasis is placed on the collaborative efforts between legal and HR in navigating TPA and PBM negotiations.
Transcript:
David Hall
Well, hello and welcome to Inside Counsel and Leadership. I’m your host, David Hall, Chief Administrative Officer at Hall Benefits Law. This podcast is dedicated to highlighting how in-house counsel and corporate leadership teams successfully collaborate to drive compliance, innovation, and business success. Before we get started, I would like to thank our sponsor, Hall Benefits Law, where we help businesses maximize the value of their employee benefit plans while minimizing legal risks. We’re proud to support these important conversations. Today I’m very excited to welcome Rich Sadori, General Counsel at Wastequip. Rich has an incredible track record of success in fostering strong partnerships between legal and HR leadership. We’ll be discussing today how effective collaboration made a meaningful impact on his company’s TPA negotiations, an effort where his team worked closely with HBL. We’ll also explore his approach to working with leadership teams broadly.
Now those experiences may shape future initiatives including PPM negotiations. Rich, thank you for joining us today.
Well, let’s dive right in Rich. Typically what I’d like to do is start just asking you few questions about your history and background. So if you could give some highlights for the audience about your career journey. What led you to your career as general counsel?
Rich Sedory
Sure, thanks. So, I think certainly…somewhat unique in that I’ve always been in-house my entire legal career after passing the bar. I worked in law firms while I was in law school, but immediately went in-house. For me, it was something that I knew I wanted to do. Part of my undergraduate degree is business, and so I knew I wanted to go there. And I’ve been in large excess of 250 attorney in-house departments in, you know, Fortune 50 companies, but also in very small. And even to the point of building the general counsel in the in-house legal function, which I’ve done twice in my career, that’s what brought me to Wastequip was to build the in-house function as its first GC.
David Hall
So you are Wastequip’s first GC in the history of the company?
Rich Sedory
First and only.
David Hall
Okay, all right. So for someone who may be listening and not maybe understand the function of general counsel within an employer, what are some of the key responsibilities, that you oversee there?
Rich Sedory
Yeah, so certainly a traditional chief legal officer, right? So that’s all of the responsibilities that come with being the chief legal officer for a company. So contracts, leases, M&A, litigation, intellectual property. So all of the things that occupy my desk here and that of a senior counsel that I have who’s on our staff as well. But in addition to that, what you find with some general counsel, particularly similar to where I am, where it’s a private equity owned portfolio company, you’ll find that we have ancillary responsibility in addition to those chief legal officer roles. And so for me, that would include things such as risk. I have the responsibility for all of the insurance programs for the company. I have responsibility for all of the real estate portfolio. So, our 60 locations throughout North America, I have the responsibility to interact with our commercial real estate brokers but also maintain all of the responsibility for lease interpretation. In addition to that, certainly, anything else that comes across the transom at me.
David Hall
Okay, so let’s start at a high level, Rich. I’d like to dig in a bit more on your role, but can you describe a little bit for our audience how you work with other departments outside of legal? So HR in particular, managing benefits and compliance initiatives. What is the crossover and what does that interdepartmental interaction look like?
Rich Sedory
So being a private equity-owned company, the cost structure is very well contained. And so that means that we run very lean. And that means that the CEO staff is in constant communication with each other.
And I’ve been very fortunate and blessed that in particularly this company, there’s no distance at all between the vast majority of the people in the C-suite. So we are in constant discussion. We are in constant alignment with each other. Hopefully, at least this is what we believe and it’s our expectation, that that alignment also rolls down through the organization. That doesn’t mean that there’s not challenge and pushback and the ways that the normal ebb and flow of a corporation, but on the other hand, there’s very good alignment with that group. And so what that does is also afford itself to have a lot of collaboration. A lot of people, not a lot of people, I there’s six or seven of us on the C-suite. There’s very little territorialism. And so we know that we’re all in this together. And so we all rely upon each other to help out. I hope that’s as refreshing for our audience as it is for me. I know that some of the impetus behind the.
David Hall
I hope that’s as refreshing for our audience as it is for me. know that some of the impetus behind the podcast itself is because as a firm, we’ve seen the challenges that legal and HR and other departments face when communicating with one another on critical initiatives that are essentially required as a part of their producer duty. so it’s really neat to see that ecosystem working so well within Wastequip. So speaking of Wastequip, the company, you guys operate within a very unique industry. The garbage industry if you will. I apologize I don’t know a better way to describe it you can tell us how you describe what we could does other people and then within that unique ⁓ that unique industry does that pose any any challenges from an employee benefits or vendor relationships for legal perspective?
Rich Sedory
Yeah, mean, that’s so great question. It’s so, so. Guess what, what do we say? We are in the waste haul, we are in the waste storage and hauling and handling industry. So, I, yeah, well, but I always then have to follow it up with, we’re garbage men, right? So yeah, we make garbage cans and garbage trucks and we make a lot of them. And so, so the, the unique challenges that we face, on an industry side is that we do have a fair amount of regulations that we have to adhere to. And it’s primarily on the manufacturer of the products that we make.
And so there are certain standards that apply to the products that we make. There are certain warning labels that we have to place on our products. There are certain ways that we have to do things that does not necessarily translate into some level of immunity because we get sued all the time whenever people either misoperate or mishandle our equipment. But but there’s that regulatory aspect that I have to be cognizant of. Then we have on the supply side, have vendors and suppliers who are sending us material.
And if you have been paying any attention in the last 30 days, there’s a huge amount of focus right now in the US on tariffs. Tariffs being placed on imports coming into the US and then potentially retaliatory tariffs on products that we will be sending to those countries that we are going to put tariffs on.
So we have to be very aware of that and I’m intimately involved as general counsel in all of those discussions, the analysis, the modeling, what if this happens, what is our reaction. And so we have those which are government regulations. I say regulations that potentially are going to be imposed on the materials coming in for our suppliers and vendors. And then on the sales side, we have individuals who are government contractors. We sell a lot to municipalities and so in selling to municipalities, the whole issue of governmental immunity comes up, so you have to be incredibly well-versed. Someone sitting in my chair in all of those things. And David, think as you and I have talked previously, I often describe myself as being an inch deep in a mile wide, right? Because you have to know a lot, you have to know little about a lot of things. And the critical piece of that also is to know where your blind spots are. And so being able to identify those things, very sophisticated legal terms, those things that you don’t necessarily have a great working knowledge of, you can try to educate yourself quickly, but also you need to rely on experts in that field. And so a great example is how Wastequip started using Hall Benefits Law because that was an area where I did not have that level of expertise. I probably could have got a 50 % level from where I was to get to some level of expertise. But what I found in Hall Benefits Law was the ability to tap into someone and a team that had that expertise. And so that’s the other piece of what I have to do as general counsel is to be able to say where there are gaps, I have to fill in those gaps.
David Hall
Thank you for that peek under the hood at your mindset, and your challenges. And also thank you for making my job very easy because that was an incredible segue into the next portion of our conversation. We’ve been working with you, Rich, our legal team has been working with you directly in the area of negotiating contracts, and master services agreements with vendors. In our mind is a fiduciary obligation of plan sponsors to make sure they’re getting the best pricing, the best cost for the services they’re receiving in the areas of employee benefits, which clearly crosses over and from retirement plans to health and welfare plans and beyond. And specifically with the group health plan that is sponsored by Wastequip, we were able to alongside you negotiate terms that gave Wastequip significant savings in that area, more so perhaps than might have been expected at the initiation of the relationship. Can you just tell us a little bit about, number one, how did you become aware of the fiduciary obligations that are incumbent upon plan sponsors like Wastequip relative to those group health plans? And then secondly, once you got into the process with HBL, what did the cross-collaboration between your department, other internal departments, specifically HR at Wastequip, and then the legal team at Hall Benefits Law look like? And that’s a big question, so take as long as you need to answer it.
Rich Sedory
So knowing my Fifth Amendment rights against self-incrimination, I would say that we always had a knowledge of our fiduciary obligations under all of these plans. But the practical answer to that is, I was not as involved in that historically as I then became involved approximately a year ago. And it got onto my radar, probably through a variety of ways. And some of that was because of my knowledge of the fiduciary obligations we had under our 401k plan.
And then as we moved into seeing changes in medical benefits laws and obligations in-house and also upon our providers, then the light bulbs started going off to say, wait a minute, what’s the level of scrutiny we are putting our plan, our plan sponsor, our brokerage firm under? And where does the fiduciary obligation and responsibility lie? And so that led to a conversation with several members of the Hall Benefits Law team and certainly, Ian Tyler as well, to be able to say, you know, what should we do? What are our next steps? And full disclosure, as I started digging into it, a couple of things happened.
One, pardon me, I start to uncover some things that start to raise some questions and some red flags. For example, our brokerage agreement had not been reviewed in quite some time with our broker. Our agreement with our provider had not been amended, had not, those amendments really weren’t fulfilling all of the requirements that likely we needed to fulfill.
And then that was the legal pieces of it. And then the relationship pieces of it also became very interesting. And it was interesting there because with this long standing relationship with our broker, there was concern about calling somebody’s baby ugly. And so we…
I, you know, you push, but you push firmly. And so it was more, instead of a strategy of this is a problem and bringing a hammer to the equation, it was more of, hey, why is this like this? Why is this contract from this era? Why have we not updated this? And so asking a lot of probing questions that would lead to the same conclusion, but not necessarily coming in with a hammer to take care of it. And so when everybody after asking those questions said, hmm, that’s a really good question and I don’t have an answer to that. We need to probably go get an answer. And so that started to get us down the path of being able to say, you know, this is fertile ground for us to start looking at. This is fertile ground for us to start figuring out what’s happening here.
And so then as we bring Hall Benefits Law into this mix. Then those questions became a whole lot more focused. The discussion became a whole lot more focused. There was the ability that I had to have good cop, bad cop, where Hall Benefits Law and this is not in a derogatory way, to be able to use Hall Benefits Law as the hammer that I referred to, to be able to say, look, Wastequip is my client. I am here to make sure that I can represent my client appropriately and this doesn’t look right. And by the way, here’s the things that are outside the parameters that based on what Hall Benefits Law was able to have knowledge of, and here’s looping sort of back to the prior conversation, you know, this is where the expertise comes in, where the Hall Benefits Law team was able to say, for a company your size, here’s what this should look like, here’s the benefits you should be getting, here’s the concessions you should be able to get. If I was self-educated and didn’t have the expertise on the outside, I would not have been able to access that level of information. And so at that point, then I’m also able to show my HR colleagues that the benefits of going down this path are going to result in real economic savings for the company. And that also helps us whenever we report back to our private equity owners to say, the HR function, the legal department, yes, we are cost centers, we’re not revenue drivers. But on the other hand, here’s the savings we just accomplished. And so as a result of that, that’s the measuring stick, I was able to say we’re not just an anchor around the boat. So long answer to it, long question.
David Hall
No, that’s a great answer. And I think what I’d like to share with the audience is that, number one, that perspective is so important. And when we, from the outside, as a law firm, as a legal team, look at the state of the industry, the benefits industry, and the service providers that serve that industry, for too many years, the plan sponsor has sat outside the circle of service providers. And what we’re trying to do as a law firm is to help plan sponsors understand that their rightful place is in the center of that ecosystem with everyone working for the benefit of that central hub of the plan sponsor, right? And so we’re really just trying to align everybody with your fiduciary best interests. And at the same time that we get the big target off your back for fiduciary breach litigation, put some money back in the plan sponsor’s pocket to be used for X, Y, or Z.
David Hall
Rich, you just described some of the process of the TPA negotiations that we did together. We’re going to be working with you to do a similar process on the PBM, the Pharmacy Benefit Manager side. Are there any lessons you took from the time we spent together working through the TPA negotiations that you will take into this next stage?
Rich Sedory
Yeah, mean, certainly, I mean, the obvious ones are the collaborative steps, right? So where it is, it’s a collaboration between I say a Wastequip, but that is legal and HR and finance. And then a collaboration approach with Hall Benefits Law and with whatever parties are outside that scope to be able to approach it in the same manner and the same function. me. Certainly objectives will be as I think about it, the objective is probably slightly different, right? Because the objective, the primary objective will likely be some sort of financial analysis. You know, are we getting the best we can financially? There certainly will likely be a fiduciary component. There will be an obligatory component where as members of, you know, as an officer of the company, we’ve got obligations to the company to make sure that we’re doing things. But I think there’ll probably be a slight focus or twist in what primary objective will be and you know probably more financially driven than at least as we started on the TPA negotiations.
David Hall
Well, and I would observe that those financial benefits may have more of a direct impact on your plan participants via the PBM negotiations because they are the end users not only of the health plan that’s managed and claims which are managed by the TPA, but they are direct users of those medications that are then priced out by the PBM. And as we all know, Scott, the healthcare costs are skyrocketing. And I think you made a very cogent point, Rich, which is that when we do negotiate on behalf of plan sponsors, on either the TPA, but especially on the PBO side, there is direct financial impact. Not only to the plan sponsor as a business but in this case to its plan participants. And so they will actually feel that in their pocketbook. So that’s one of the things that excites us. Knowing we have limited time together, Rich, what do you feel is the thing that you now expect from your benefits of vendors? What do you feel is the thing that you now expect from your benefits of vendors at a minimum level to feel like they’re fulfilling their obligations to Wastequip? Is there a change in mentality or expectation on your part, or do you feel like this has created a level set and that we’re starting from a new ground zero?
Rich Sedory
I’m not sure that those are diametrically opposed, the question you just asked. I so for me, probably going to come across the wrong way. But you know, the old saying, fool me, fool me once shame on me, fool me twice shame on you. Or I’m sorry, fool me, fool me. It’s the opposite way around. know, fool me once shame on you, fool me twice shame on me. So, so with the, with the provider, I think, and our broker as well, I think there was a little bit of laissez faire inertia.
And it was Wastequip, good company, always been with us, move on, go to the next one. And so what we found when we really dug into it was confirmation of that. And what I mean by that is that…is it, I don’t remember if it’s whatever cell phone carrier, the question is, do you treat new customers better than you treat existing customers? Everybody should get the same deal. And we were finding that we weren’t getting the same deal as new customers. And so the fact that we had been with them a long time, maybe there was a little bit of forgetfulness to treat us as well as new customers.
So that to me became the fool me once scenario. And so we created a new level to say, you need to treat me just like everybody else. And… I expect that you will continue to treat me like you are treating others. That just because we may have a long relationship with you, that doesn’t mean you can take advantage of that. Not that they took advantage of it intentionally, but certainly the end result, as I viewed it, seemed to be that way. And so it creates a new level set. It creates a new relationship between the provider and broker and company. But it also set a new standard internally where there’s a higher level of awareness and acuity to let’s pay attention to this stuff. Let’s make sure it stays on our radar. Let’s hold people accountable that everybody’s busy, but on the other hand, you can still hold people accountable to what you said as your expectations. And so I think to me, that’s the new lesson learned across this continuum, but. also across all the other continuums that we have where, you know, that’s that is my constant pushback to the HR function as well when it is not related to benefits. But here’s something new we’re rolling out here is an existing policy. Our team is going to audit that and our expectation is that you will pass that audit with flying colors. And so you should also have that expectation that you’re going to get audited. So that has permeated throughout the relationship between legal and HR and finance and everybody else.
David Hall
This, Rich, has been a fantastic conversation. Thank you for sharing your insights, especially on HR collaboration with the legal function. Your experience with TPA negotiations is a great example of how in-house counsel, HR, and finance can come together and collaborate to drive positive business outcomes. I know our listeners are going to appreciate your perspective as you embark on the next stage of PBM negotiations with our team. And I’d also like to thank our sponsor, Hall Benefits Law, who made this podcast possible. For those of you tuning in, be sure to join us next time when we’ll be discussing another exciting topic, with another guest. And we do have many fantastic guests lined up, so please do stay tuned. To all the in-house counsel and corporate leaders out there, remember, the best legal strategy is a collaborative one. Thanks for listening, and we’ll see you next time on In-House Counsel and HR Perspectives.
Hall Benefits Law, LLC
