"Cabela's GC Starts from Scratch" The National Law Journal, 2002

Copyright 2002 NLP IP Company - American Lawyer Media, All Rights Reserved.
National Law Journal, April 22, 2002
SECTION: BUSINESS; Vol. 24; No. 33; Pg. A15
LENGTH: 1349 words
HEADLINE: Wild kingdom
BODY: Name and title: David W. Hutton, general counsel
company: Cabela's Inc., based in Sidney, Neb., calls itself the world's foremost outfitter of hunting, fishing and outdoor gear.

Seven very large retail stores (some 150,000 square feet) are in five Midwestern states, but most of the company's sales are by catalogue. A family-owned business, Cabela's does not disclose financial information. According to its Web site, it employs more than 6,000 people and ships 60 million catalogues a year to all 50 states and 120 countries.

first GC : In January 2000, Hutton became the company's first general counsel and first (and only) in-house lawyer. He credits Paul Jessen of Omaha, Neb.'s Koley Jessen with convincing the company that it needed a GC. Jessen, who is a company director, had been functioning as the de facto GC for years, Hutton said.

Before Hutton arrived, Jessen had at least a half-dozen lawyers from his firm tackling Cabela's legal needs. But employees weren't always sure which lawyer to call, and even when they were, the lawyers weren't always available, Hutton said.

Even so, Hutton wasn't exactly embraced with open arms. The company had been in existence for 39 years without a legal department, and the 600 employees in the corporate office weren't used to running their work past lawyers. After about a month on the job, Hutton got a taste of the resentment when he walked into the office of a senior manager in fishing. A five-foot sailfish with a mannequin arm stuffed in its mouth was mounted on the wall, and clutched in its hand was a subpoena bearing Hutton's name. "Now it wasn't meant maliciously, but rather to show the level of seriousness and regard they had for the legal department," Hutton deadpanned.

The laughter ended abruptly a short time later, Hutton said, when a class action was filed in California alleging that lead in the company's marine and fishing products had caused environmental damage. When Hutton handled it in-house and settled "for an insignificant amount," other departments quickly realized that the legal department was an asset to the company he said.

establishing a unit: When he arrived in 2000, Hutton told his employers that he would stay for eight years and establish a highly structured department. "I don't prefer those types of environments" to work in, he said, which is why he won't stay, but he's convinced it's the department the company needs.

In the meantime, however, the structure is still on the drawing board. The department consists of three paralegals and himself. He plans to hire a second lawyer this year. Down the road, he envisions two more attorneys: one in charge of human resources, labor and Title VII issues; the other overseeing contracts, intellectual property and information technology. His lawyers will know the outside counsel they partner with, and the company's employees will know which in-house lawyer to call.

Hutton's workload has greatly expanded in recent months because he's now doing much of the work himself, he said. When he arrived, the legal bills were$840,000 a year for outside counsel; now they're below $200,000.

Unlike many GCs, Hutton has a background in litigation. And even though he hopes to cut back on his involvement in company litigation and become more of generalist, he feels it's an advantage in choosing outside counsel and evaluating cases.

litigation: As an example of his unwillingness to capitulate when threatened with litigation, Hutton cited tough ongoing negotiations with the Lemelson Foundation over patents related to bar code technology. Though nearly 1,000 companies, including some of the world's largest and best known, have been licensed under Lemelson's patents, Cabela's (among many others) has refused to be intimidated and will not reflexively settle, Hutton said. The results may be influenced, he added, by a Nevada case in which a company has countered Lemelson's claim with a "prosecution laches" defense, arguing that there was an unusually long and unexplained delay between Lemelson's filing of its original applications and the issuance of the relevant patents. In January, the U.S. Court of Appeals for the Federal Circuit ruled that the defense could not be dismissed as a matter of law and remanded the case to federal court in Reno, Nev.

One of Cabela's largest cases, Hutton said, is a lawsuit brought in federal court in New York against the company and 55 other firearms retailers byte National Association for the Advancement of Colored People and the National Spinal Cord Injury Association.

The suit alleges that the retailers' negligence in failing to regulate the distribution of their weapons helped create an underground market, causing numerous deaths and injuries to African-Americans. Cabela's, which sells19th-Century replica firearms, filed a motion to dismiss last year. In it, Hutton wrote: "Regretfully, this political issue is wrongfully and shamefully attached to the noble and ever sensitive causes of race and spinal cord injuries and utilized as a vehicle of transportation to the Federal Court System." The case is pending.

precision outsourcing: Hutton's goal has been to find the best firms at the right prices.

First, he announced that all cases would be "joint ventured"-meaning he'd work with the firms as a partner. Then he scrutinized rates. Some large national firms were overbilling, he said, so he kept looking.

He's now working with Anthony Pisciotti of New York's Renzulli, Pisciotti & Renzulli on the gun case. Al Underhill of Minneapolis' Merchant & Gould has helped him build an IP infrastructure-a growing area, Hutton said, because the company has been selling more products under its own trademark. "With that comes a lot of issues of infringement-whether someone against us or allegations of us against someone else." Koley Jessen helped them construct a Web site in-house.

One of the most demanding tasks has been drafting labor relations and employment policies. Jeff Starling of Birmingham, Ala.'s Balch & Bingham has been instrumental in this area, Hutton said. He helped bring Hutton and the human resources department up to speed, explaining various laws and regulations and facilitating the creation, for the first time, of written company policies that were clear and complete. Starling took them through a host of issues, such as which job titles were exempt from wage and hour laws, which laws applied if someone wanted to distribute leaflets in their stores and what rules governed union organizing. They have now distributed policies and guidelines throughout the company, and HR has implemented them, Hutton said.

route to the top: After graduating from the University of North Alabama in1980 and earning a law degree from California Western School of Law in San Diego three years later, Hutton hung out his shingle as a solo practitioner in Jackson, Miss. His practice was mainly devoted to criminal defense-especially narcotics and white-collar crime. He moved to San Antonio in 1992, specializing in money laundering, embezzlement and mail, wire and bank fraud. In 1996, he moved to Pulaski, Tenn., where he grew up, to help the family commercial real-estate development business through a particularly bumpy period.

He heard about the job at Cabela's by accident and decided to apply not because he thought he had much of a chance, but because it would be a "learning experience." He was shocked when they offered him the job. He believes they responded to his "passion for the practice of law" and his experience litigating a variety of cases in a dozen states.

During his interview, an executive asked him about IP, products liability and other subjects Hutton freely admitted he was not familiar with. Finally, the executive asked, "Can you learn this?" He seemed to like Hutton's answer: "I'm one of the best lawyers in the country. I can learn anything."

last book read: The Neon Rain, by James Lee Burke.

-David Hechler

LOAD-DATE: April 24, 2002