Since Brad Smith took the helm of Microsoft's 1,000-plus in-house legal department in 2002, the company has undergone a multiyear armistice campaign, settling several cases with industry competitors in the U.S. The company still has one major appeal of a $1.4 billion fine levied for failing to comply with an earlier European antitrust ruling.
A joke can help even a billion-dollar fine.
Even when Microsoft was facing major antitrust sanctions from the European Union, legal counsel Brad Smith was laughing with Europe’s antitrust lawyer about the similarities between the negotiations to the end of the movie “Fatal Attraction.”
Each time they thought they had reached a settlement to resolve monopoly concerns about Microsoft Windows and Internet Explorer, someone would come back and try to kill the agreement, like psychopath Alex Forrest rising from the bathtub with a knife.
Settling the case was crucial, because in a previous ruling the European Commission had fined Microsoft $1.4 billion.
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“The more stressful the environment, the more important it is for there to be a little levity in the right way at the right time,” Smith said. If you can’t think of anything original, he said, then “lawyer jokes are universal.”
As consigliere for a behemoth software company, Smith can be called to action as lawyer, politician and diplomat. Like many Microsoft executives, he has the ability to juggle any number of tasks — lobbying U.S. regulators, brokering major business deals or negotiating a settlement with a continent. Unlike the many high-strung overachieving engineers at Microsoft, he also has the ability to relate to people on all sides of an issue.
“Brad put a smiling face on an aggressive strategy,” said Thomas Vinje, an attorney who has represented several U.S. tech firms in Brussels that compete with Microsoft.
No matter how aggressively Microsoft negotiated with Europe, the settlement the two reached still represented a significant concession for Redmond. Microsoft agreed to offer all Windows users in Europe the option of switching to Internet browsers made by its competitors — Opera, Mozilla’s Firefox, Apple’s Safari, Google’s Chrome.
It was like Burger King putting a Big Mac on its menu.
It was also symbolic of a company no longer determined to fight every battle to the death, even over a product of dimming importance to its strategy. Whether it’s a sign the company has sprouted its first gray hairs or waved the white flag, it took a decade and billions of dollars to reach this point.
A continent away
In a Churchill-Roosevelt trans-Atlantic courtship, Smith spent months last year working with the European Commission, the European Union’s antitrust arm, to come to agreement.
He started his days at 6 a.m., held an 8 a.m. videoconference with the European Commission attorneys, drafted proposals through the day, then sent them off at 10 at night for Brussels to wake up and review. In the morning, the cycle started all over again.
By the fall, the company had held 24 video conferences, 34 conference calls and 76 e-mail submissions.
“It was an unprecedented negotiation between a private company and a government,” Smith said.
Even the attorney who represented Europe, Philip Lowe, said he had full respect for Smith, describing him as “somebody who comes out, looks for a solution, gets things done, remains calm.”
That said, Lowe is clear about the EU’s intentions to make sure Microsoft keeps its word.
“They may kill again,” he said. “But we did reach a reasonable settlement with them, and the market thought so too.”
Stuart Eizenstat, former U.S. ambassador to the EU, called it “one of Brad Smith’s crowning achievements with Microsoft.”
Since Smith took the helm of Microsoft’s 1,000-plus in-house legal department in 2002, the company has undergone a multiyear armistice campaign, settling several cases with industry competitors in the U.S.
It still has one major appeal of a $1.4 billion fine levied for failing to comply with an earlier European antitrust ruling.
But the European war is mostly over, for now. The European Union and the U.S. Department of Justice both approved a Microsoft-Yahoo search deal Thursday.
With those issues off his plate, Smith said he is ready to turn his attention elsewhere, such as toward pushing regulators to develop policy on cloud computing.
Smith is also taking a stronger role in local philanthropy on behalf of Microsoft. He and his wife, Kathy Surace-Smith, are co-chairing the United Way King County campaign this year. He will also chair the Washington Roundtable group, connecting business leaders to government.
“It’s incredibly sobering to think that a century ago, the most prosperous parts of the country were Detroit, Cleveland and Pittsburgh and the Upper Midwest,” he said. “You have to take away from that the sense of urgency that is important for Puget Sound to invest in the things that are going to generate long term, sustained economic growth.”
Smith grew up in the Midwest, graduating from high school in Appleton, Wis. His father was an engineer at Wisconsin Bell.
An overachiever in high school, Smith was involved in everything, including editing the school paper and serving as student-body president at the same time.
He graduated from Princeton, where he met his wife Kathy, now general counsel at Bothell-based SonoSite. They married while they were in law school at Columbia and moved to Switzerland, where he studied at the University of Geneva.
After graduating, Smith joined Covington & Burling, a large law firm based in Washington, D.C., in 1986. He told the hiring partner he would take the job on one condition: He wanted a computer.
“I had to specifically get permission from our managing partner,” said Stuart Stock, who hired him. “He was the first person in the firm to have his own personal computer.” It ran Word 1.0.
Smith ended up running Covington’s London software practice. That’s when Microsoft recruited him to take over the company’s European corporate affairs in 1993. For several months, Steve Ballmer, then head of worldwide sales, worked out of the same office down the hall from Smith.
In 2002, Smith was named to the top legal job. “When I was growing up, I thought I either wanted to be a lawyer or a politician or a diplomat,” Smith said. The surprise is that he’s been able to play all those parts as Microsoft’s attorney.
In January, Smith was in Washington, D.C. (lobbying), London, Greece (meeting with the prime minister), Brussels (European Union work) and Davos, Switzerland, (World Economic Conference) during a seven-day trip.
He got back just in time to drive his 15-year-old daughter to her high-school dance. He and Surace-Smith also have a 17-year-old son.
There are still major lawsuits pounding at the gates of Microsoft. There are 50 patent cases pending against it, 10 of which are set for trial this year.
Earlier this month, a federal appeals court affirmed an injunction on Microsoft Word and a $290 million damages award in favor of i4i, a small Canadian software company that sued Microsoft for infringing on its patent.
But Smith is also focused on having Microsoft play a leadership role in the legal world, committing pro bono hours for immigrants and pushing for diversity in the profession.
For instance, Microsoft awards rate increases if outside firms it hires increase diversity not only in the ranks, but among lawyers assigned to high-profile Microsoft work. Year-end bonuses for in-house attorneys at Microsoft also depend on whether the outside firms meet their diversity goals.
“What Brad did that was incredibly innovative in a world where people talk about diversity but they rarely walk the walk,” said Horacio Gutierrez, a Microsoft deputy general counsel.
Smith says his hero growing up was Bob Gibson, an African-American pitcher for the St. Louis Cardinals in the 1960s, who led the team to a World Series win. In addition to what Gibson represented for African Americans during the civil-rights era, he was a tough competitor known for hitting batters with pitches.
Friends say they could see Smith serving in at a Cabinet-level position some day. He said he’s not interested in leaving Microsoft for the foreseeable future.
“I told Steve Ballmer I want to be general counsel for as long as he’s CEO,” Smith said. “I can’t imagine anything I would like to do more than what I’m doing now.”
Sharon Pian Chan: 206-464-2958 or email@example.com