Article 19 of 36
New York Post
Page 30
Copyright (c) 2002, N.Y.P. Holdings, Inc. All rights reserved.

It's a recession out there - but not for Microsoft's lawyers.

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 cases.

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 & Cromwell.

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 legal team.

"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 behemoth.

"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 are:

* Sullivan & Cromwell

Has been working with Microsoft since 1992.

* Preston, Gates & Ellis

Founded by Gates' father, it deals with human resources and trademark issues.

* Rick Rule, of Fried, Frank (formerly of Covington & Burlington)

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.


Bill Gates. N.Y. Post: Don Halasy

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