Many global companies comparable in size to Callaway have larger legal departments than ours. But the competitive nature of the golf industry—as well as our continued focus on strict cost management—have forced us to become very efficient with a small legal team. At one point, we had more than 20 people in the law department; now we have just nine.
We’re a public company, so that means our law department handles all of the same legal matters as privately held companies, plus responsibilities associated with the Securities and Exchange Commission, corporate governance, regulation, and compliance. Fortunately, I have a very broad background in the law, having worked in private practice, for the federal government, and in-house with public corporations. Through these roles, I obtained some experience in most areas of the law, which has proven to be very helpful in my role as general counsel.
Callaway invests heavily in its research and development department—more than $30 million annually. We make high-end, premium products that are significantly technical and advanced, so there is a lot of intellectual property work around patents and trademarks. The law department is involved throughout the product development process. Our IP lawyers meet with the developers at the outset to discuss legal boundaries and potential issues. For example, there are far more than 2,000 golf ball patents in the golf industry, so any time we develop a new golf ball product, our IP lawyers must weave through troves of patents to ensure we do not infringe on a patent held by someone else.
The global nature of our business also makes our work very challenging. We operate and sell in more than 100 countries, with operations in the United States, Canada, Mexico, Europe, Japan, South Korea, China, Australia, and elsewhere around the world. As a result, we handle and provide advice on a variety of domestic and international real estate matters, advertising, litigation, contests and promotions, antitrust, customs, acquisitions, and employment, as well as almost 2,000 contract matters annually.
One key to being able to handle such a wide array of legal matters with a small staff has been the retention of highly qualified, competent, and experienced personnel. While we have had to reduce staff over the years, we have tried to retain someone with experience in each primary legal area. The average tenure of the law department is 12 years. Having long-tenured team members provides a lot of institutional knowledge and generally means we do not have to start from scratch on most issues. Some companies have hundreds of lawyers and the luxury of employing many specialists, but here, we have to be jacks of all trades.
There are challenges beyond workload with such a lean staff. Unfortunately, with a small department, there is less frequent opportunity for upward mobility. To help offset this reality, I try to give the team increasing amounts of independence, as well as new areas of responsibility, to keep the work fresh and rewarding. Just because there is less frequent opportunity does not mean there is no opportunity. I was fortunate in that, during my 15 years with Callaway, I received a new role or increased responsibilities every two or three years, ultimately leading to the role of general counsel. The diversity of our practice is also part of what makes the department’s work appealing. We are firmly entrenched in the success of the business, and that level of involvement is motivating to my team.
Despite having a great team, there are times when the workload is too much or we need to fill a particular area of expertise, and for that we use outside counsel. We keep a nice balance of outside attorneys, from those who have represented us for 20-plus years and have good familiarity with our business and institutional knowledge to those who are relatively new to Callaway but bring a fresh perspective. To be candid, we’re a little on the demanding side. We have to be able to reach our outside counsel at all hours, including nights and weekends, because we work across every time zone. There are simply no off hours. But I don’t think our partners mind too much. We offer interesting and complex work. And we pay our bills on time.
The golf industry is competitive and dynamic. We have been able to attract a high-caliber board and management team, which demands the law department perform at a high level every day. I push my team to work hard, grow, and adapt. It helps a great deal that—lean or not—they understand we have to keep up, and they are professionals driven to do that through meaningful work and a good job.