What To Do With The Microsoft Monster

The American Lawyer

Bill Gates, the second-richest man in America, was working through his second round of visits this past summer at the Federal Trade Commission, a place as creaky and antiquated as Gates’s Microsoft Corporation is sleek and dynamic.

Gates had a potent lobbying team along: Microsoft’s chief in-house counsel, William Neukom; former FTC commissioner Patricia Bailey; and partners from New York’s Sullivan & Cromwell and from Preston Thor-grimson Shidler Gates & Ellis, the big Seattle-based firm where Gates’s father is a senior partner.

But in his visits to each of the four participating com¨missioners on two clammy July days, the 38- (then 37-) year-old Microsoft chairman did much of the talking himself. And at times he got a bit carried away-just as his company sometimes does in the heat of battle against competitors. Like when he barked, "You don’t know what you’re talking about," at an FTC official in a meet¨ing in the chairman’s office.

Or when Commissioner Dennis Yao, a soft-spoken former Wharton business school professor, floated a line of hypothetical questions suggesting possible curbs on Microsoft’s growing monopoly power, including disclo¨sure to competitors and the public of technical data about its dominant personal computer (PC) operating systems, MS-DOS and Windows.

Gates was vexed. "He started by calling Yao’s ideas socialistic," recalls a source familiar with the July 15 meeting, "and as he got angrier and angrier and louder and louder, he got into calling them Communistic."

Battling The Bomb

The American Lawyer

A nuclear device "not much more than twice the size of this table," Thomas Graham, Jr., notes over lunch one day, "could level Washington from here past the Beltway, in all directions."

It was a table for two, looking across a grassy square at the White House. "I’ve held one in my hand, about the size of a basketball," Graham adds. That one, a crude nuclear land mine, could wipe out ten square blocks or so.

Graham has been using the tools of the law to keep that sort of thing from happening for 23 years at the Arms Control and Disarmament Agency, including 14 years as ACDA’s general counsel. Most recently, since becoming acting director when the Bush administration left office in January, he has steered the agency with signal success through two high-stakes battles.

The arms control job is not getting any easier, what with thousands of warheads rattling around in a Russia threatened by anarchy and racked by organized crime, with thousands more in Ukraine and Kazakhstan, with Pakistan already boasting nuclear weapons, with North Korea and Iran seeking to build them or buy them on the black market.

"Americans should feel more threatened now than they were during the Cold War," Graham explains in another conversation, in his office. "Whereas a full-scale thermonuclear war is now unlikely in the extreme, it never was very likely. On the other hand, the prospect of some terrorist group or criminal organization acquiring a nuclear device and smuggling one or more into an American city is much greater than it was during the Cold War." Take note, New Yorkers.

Graham drove home this deadly danger of nuclear proliferation during two policy debates this year, in which he and more powerful allies in Congress prevailed over high-level Clinton political appointees at the Defense and State Departments.

Inside The Whirwind

Zoe Baird and her husband Paul Gewirtz, were sitting alone in a small conference room at the Washington, D.C., office of Melveny & Myers about 8 P.M., splitting a sandwich left over from lunch. Their "illegal alien" problem had burst onto the front page of The New York Times that morning, January 14. Another cold blast of bad press was on its way.

"They both looked white as sheets," says a lawyer who saw them there that evening. "The were having a small conversation, a little chitchat, and the two of them mustered a smile. I was struck by how small they looked, with this huge tide about to roll over them, looking very white and very small and very sad. And there wasn’t a damn thing they or anyone else could do.

"You can’t know what it means until you have seen that happen to a human being," this lawyer continues. "It just hit me in the stomach. These are good people who got hit with this thing, and they didn’t deserve it."

The impossible dream – first woman attorney general! brightest new star in the Clinton cabinet! – was beginning to turn into a nightmare. It would unfold over the next seven days with all the cold, capricious cruelty of fate. And it would do lasting damage to our polity by unleashing furies of selective ethical puritanism that will disable or deter many people of integrity, like Baird, from pursuing public service. The casualties – Kimba Wood, Charles Ruff, and more – mounted rapidly as Bill Clinton’s search for an attorney general degenerated from tragedy to farce.

Just 20 days before, on Christmas morning, Baird’s nomination had dominated the news. There were glowing profiles and front-page pictures of her and President-elect Clinton beaming at each other. "You might as well resign right now," a friend recalls telling Baird that day, "because it’s never going to get any better than this."

Mediagate: Anatomy of a Feeding Frenzy

The American Lawyer

Remember Iraqgate? It may seem ancient and obscure. But just two years ago, it was big. Very big.

This was the "scandal" that hounded George Bush as he slumped toward the 1992 election. Thousands of newspaper articles and a gaggle or television specials turned his greatest triumph-his victory over Iraq’s Saddam Hussein in the 1991 Persian Gulf war-into a political liability, by spreading unfounded claims that Bush had secretly and illegally plotted to arm Iraq and then had orchestrated a cover-up.

Iraqgate grew out of legitimate criticism of the Reagan-Bush policy of seeking normal economic relations with-and, some say, appeasing-the brutal, Kurd-gassing, arms-buying Iraqi regime in the years leading up to its August 2, 1990, invasion of Kuwait. Bush may well have paid too little heed to warnings that Iraq was intent on using Western technology to build nuclear, chemical, and biological weapons.

But what made Iraqgate front-page news everywhere was a crescendo of allegations and innuendos of criminality, which New York Times columnist William Safire sum marized as "the Bush administration’s fraudulent use of public funds, its sustained deception of Congress, and its obstruction of justice." Such charges multiplied throughout 1992, due to assiduous promotion by an array of prominent journalists, congressional Democrats, and a federal judge.

From Statesman to Front Man

The American Lawyer

Prologue – The Tragedy Of An Aging Appollo

Clark McAdams Clifford sat before the congressional rabble he had wowed in years past, explaining why the multimillion-dollar stock deal that had been arranged and financed for him by the Bank of Credit and Commerce International had been a fitting reward for his stellar service as chairman of First American Bankshares in Washington, D.C.

First American, Clifford noted, had prospered since 1982 under leadership that he and Robert Altman, his protege and law partner, had provided: Assets had quintupled, profits quadrupled. In the first few years Clifford had taken only token compensationña paltry $50,000 a year. By 1986, Clifford explained, First American’s stockholders "wanted a closer bond with Mr. Altaian and me," cemented by a stake in the company’s continued prosperity.

But this time the House Banking Committee wasn’t buying it. The members greeted Clifford’s testimony on that September day in 1991 with hostile skepticism. This legendary wise man, whose extraordinary persuasive talents had carried him to the apex of prominence and wealth, could hardly persuade anyone that his stock deal didn’t stink.

"I think it’s the stock deal that cost Clark the esteem of people who admired him in Washington," says a longtime friendly acquaintance of Clifford’s. "It was such a phony deal."

Was it? Hindsight is always twenty-twenty. And Clifford projects such unwavering belief in his own innocence that even one of his prosecutors doubts that he consciously did anything corrupt in dealing with BCCI. "I believe that Clark Clifford doesn’t think he was guilty of anything," this prosecutor says. "He thinks it’s what he did all his life. It’s good advocacy."

Who Handles The Next Scandal?

The American Lawyer

Lawrence Walsh is not winning any popularity contests lately. Nor is the federal independent counsel law, which he and his Iran-contra investigation have come to symbolize, and which will expire December 15 unless reenacted.

Senate Republican leader Robert Dole calls Walsh and his aides "assassins" for charging former secretary of Defense Caspar Weinberger with lying and concealing evidence to protect himself and President Reagan. Elliott Abrams, the former State Department official who pled guilty to two misdemeanor counts rather than risk a felony trial for misleading Congress, fantasizes (in print) about his wife murdering the prosecutors. Oliver North calls Walsh a "vindictive wretch."

And Ronald Reagan-who is virtually certain not to be indicted-called a Walsh aide who took his deposition in 1990 a "special persecutor."

Republicans in Congress trash the statute as an engine of oppression, with Attorney General William Barr hinting agreement. And some supporters of the statute worry that Walsh is giving it a bad name. They question his late hit against the 74-year-old Weinberger, long after Congress and the public have lost interest in Iran-contra. They roll their eyes at Walsh’s pursuit of an arresting but apparently unprovable conspiracy theory: that a cover-up of the U.S. and Reagan roles in the possibly illegal arms-for-hostages dealings with Iran in 1985 was cemented by an odd charade at a November 1986 meeting of the president and all his top aides.

Fight For The Future – Part 2

The American Lawyer

Capitol Hill is swarming with lobbyists in a war over the future of information services-pitting the Baby Bells and their allies against the nation’s newspapers, AT&T, and their broad coalition.


Thomas Hale Boggs, Jr., premier Washington lobbyist, was co-hosting a duck-hunting party at his farm on Maryland’s Eastern Shore for House Democratic leaders and moneymen. Some of his old buddies would be there, among them Congressmen John Dingell and Jack Brooks, the two committee chairmen whose help would be most critical to Boggs’s new client, the American Newspaper Publishers Association.

So Boggs brought along a new friend: James Cox Kennedy, chairman and CEO of his family’s Cox Enterprises, Inc., the $2 billion-a-year media empire based in Atlanta.

The 44-year-old newspaper-cable-broadcasting baron and the 51-year-old, $1.5 million-a-year senior partner atPatton, Boggs & Blow had met a few weeks before at an ANPA board meeting in New York. Kennedy is a key player in the ANPA’s desperate push for legislation this year to shield newspapers from competition by the seven "Baby Bell" telephone monopolies in the burgeoning field of electronic publishing-the provision of information ser¨vices through telephone technology.

Kennedy was also to the duck blind born, so to speak: A scion of one of America’s ten richest families, he has a hunting lodge of his own and is a crack shot-"one of the best I’ve ever seen," Boggs says.


This is the second article in a two-part series on a multimillion-dollar litigation-lobbying extravaganza in which opponents of the seven Baby Bell telephone monopolies are bidding to kick the Bells out of electronic publishing and keep them out of the long distance and telephone manufacturing markets-or at least restrict their access.

Fight For The Future – Part 1

The American Lawyer

THE BIG HEARING ROOM IN THE RAYBURN HOUSE OFfice Building was overflowing with top executives and lobbyists for some of America’s biggest companies and most influential industries. Nine made their pitches to the Judiciary Committee from the witness table. Another 150 or so were gauging members’ leanings, schmoozing, billing time- keeping abreast of an epic lobbying battle that will shape the future of telecommunications and electronic publishing in America.

The newspaper industry, American Telephone & Telegraph Company, and its rival MCI Communications Corporation were there in force, spearheading a broad but fractious coalition of groups ranging burglar alarm companies and telephone ratepayers to West Publishing Company and the cable ‘1W industry. They were united-for at least-in a desperate push to get Congress to protect them from seven regional Bell telephone companies.

These "Baby Bells" were barred, by the landmark 1982 consent decree that spun them off from AT&T, from markets in which they could use their local telephone monopolies to strangle competitors-electronic publishing, long distance services, and phone manufacturing.

Now that decree is unraveling in the courts. The Bells broke down the door to electronic publishing last October, despite a warning from Judge Harold Greene of the U.S. district court in Washington, D.C., that this would lead to disastrous monopolization. A Bell lawyer predicts that the courts may wipe out all the restrictions by 1995. So the newspapers and their allies bear the heavy burden of moving a bill through Congress-always a much harder task than blocking someone else’s bill-to get back some of the protection they are losing in court.

What’s Really Wrong With The Way We Choose Supreme Court Justices

The American Lawyer

The fundamental problem with the Supreme Court appointment process is not its tendency to he hijacked by eleventh-hour El-legations of scandalous conduct.

Nor is it the unseemly, kangarocourt atmosphere that sometimes prevails at Senate confirmation hearings.

Nor is it that somebody leaked Professor Anita Hill’s allegations of sexual harassment against Judge (now Justice) Clarence Thomas to the press, along with the Judiciary Committee’s I initial, secret decision to dismiss her immensely troubling account without hearing her give it.

Nor is it that the resulting firestorm forced the Senate then to have her testify at a public hearing, which predictably degenerated into a Roman circus.

Nor is it that liberal interest groups, senators, and their staff scour the nation for dirt about conservative nominees. Nor that the White House and Republican senators conducted a cynical smear campaign against Hill. Nor that either Thomas or Hill (I know not which) is the victim of a monstrous lie.

Nor is it that the odds are at least 50-50 that we now have a rampant perjurer on the Supreme Court.

Those phenomena preoccupy the public mind after the Senate’s partisan food-fight over the sexual harassment issue.

But the fundamental problem is the Senate’s unwillingness to insist on the best and, in this era of divided government, on a frank compromise as to the political and judicial philosophies of Supreme Court nominees.

The problem is that most senators will give the president’s nominees the benefit of the doubt-not that some won’t-when the issue is not whether the nominee should go to jail, but whether he or she should go to the nation’s highest tribunal-for life. This has enabled the president to get away with making highly ideological, partisan nominations of conservative mediocrities.

The major problem, in short, is not the confirmation process but the nom¨inating process.

The Law Made Them Do It

The American Lawyer

High school senior Matthew Theurer punched out at & 8:21 A.M. on Tuesday, April 5, 1988, after spending thenight cleaning deep-fat fryers at a McDonald’s in Portland, Ore- gon. He had volunteered for the A all-nighter between two school days. But now he was tired, Theurer told the manager, who granted him relief from his shift later that day.

Then the 18-year-old got into the red 1982 Nissan Sentra that his McDon¨ald’s earnings had paid for and headed for his home town of Estacada, 19 miles away.

A few miles down Highway 224, Frederic Faverty was en route to a job trimming the shoes on a horse when he no¨ticed the red car coming toward him, taking a curve wide. It drifted over the double line-and came straight at him. Faverty swung right, too late.

The head-on crash demolished Theurer’s light compact and flipped Faverty’s tan 1979 Chevrolet Suburban truck onto its side. The 40-year-old Faverty was badly hurt, with extensive leg, hip, and ankle injuries.

Matt Theurer died on impact. The in¨vestigating officer reported that Theurer had apparently fallen asleep at the wheel.

Almost three years later, on March 29 of this year, a Multnomah County circuit court jury concluded that the accident was the fault of McDonald’s. Finding after a five-day trial that the company had negligently worked Theurer such long hours that he was a hazard on the road, the jury awarded Faverty $400,000 in damages, by a 9-to-3 vote.

Less than a week later Theurer’s mother filed a $10 million wrongful death suit against McDonald’s, seeking punitive damages for wanton disregard of the safety of her son and society at large. Her case has not yet gone to trial.