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MICROSOFT, THE GOLD MINE : ARMIES OF LAWYERS TOIL FOR
By LAUREN BARACK
New York Post
2002, N.Y.P. Holdings, Inc. All rights reserved.
It's a recession out there - but not for Microsoft's
The Redmond-based software giant employs no fewer than five
law firms to argue on its behalf.
However the giant of them all sits smack in the middle of
New York. Sullivan and Cromwell, on Microsoft's payroll since
1992, when the Department of Justice started its case into the
company, oversees that issue, the remaining conflict with the
nine hold-out states, and the ongoing private anti-trust
Between 10 and 20 lawyers work full-time for Microsoft at
Sullivan & Cromwell, according to an inside source.
And while the firm says it doesn't bill by an hourly rate,
an average New York City firm would have cost Bill Gates
between $10 million and $20 million per year for the number of
lawyers devoted to its defense. Multiply that by the nine
years it's been working for the company and that starts to
look like $90 million to $180 million - just for Sullivan
Yet for a company with a $36 billion cash war chest, that's
a blip on Microsoft's ledger.
"It doesn't even show up," said Melissa Eisenstat, managing
director of software research at CIBC World Markets. "If it
suddenly had to start spending a billion a year, that would
give it some concern."
Oddly, $6 billion is a number bandied about by Nicholas
Economides , a professor of economics at New York
University's Stern School of Business.
"I quoted that based on civil damages," he said. "Nobody
discloses the numbers. But it's not $600 million."
Besides Sullivan & Cromwell, Microsoft also enlists the
aid of Preston Gates and Ellis. Yes, that Gates. Bill's
father's Seattle-based firm advises his son's company on
trademark and human resource issues. The company has been
fighting a number of discrimination cases that claim Microsoft
has violated employees civil rights.
Then there are a number of private lawyers.
Rick Rule with Fried Frank, deals with the DOJ issues. John
Warden, of Washington, D.C.-based Covington & Burlington
stand up for Microsoft on its regulatory issues. And Dan Webb,
of the Chicago-based Winston & Strawn who will be the lead
attorney in the remedy stage with the non-settling states.
And don't forget Netscape. Its recent suit, filed by owner
AOL TimeWarner, hasn't even been divvied up among Microsoft's
"We don't know how that will be handled yet," said Jim
Desler, a Microsoft spokesperson.
But clearly it will.
Long gone are the days when Microsoft almost egged on the
government in Washington's attempt to strong-arm the software
"I think they were trying to be clever at first," said
Eisenstat. "Now I think they'd love to settle."
Is this guy a good client or what?
Bill Gates is a gold mine for the legal world. Wherever
there's a Microsoft suit, there are a lot of lawyers draining
the company's coffers. Some of the lucky lawyers and firms
* Sullivan & Cromwell
Has been working with Microsoft since 1992.
* Preston, Gates & Ellis
Founded by Gates' father, it deals with human resources and
* Rick Rule, of Fried, Frank (formerly of Covington &
Rule focuses on Dept. of Justice issues.
* John Warden of Covington & Burlington
Deals with regulatory issues.
* Dan Webb of Winston & Strawn
Will be lead attorney for Microsoft when it deals with nine
holdout states in the remedy stage of its antitrust suit.