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The government’s lawsuit against Microsoft is merely the most high-profile case to thrust antitrust law into the spotlight. The burgeoning pace of corporate mergers, the globalization of business markets, and the new clout of regulators abroad as well as in Washington have combined to keep antitrust lawyers busy. The headlines are full of corporate couplings being subjected to government scrutiny. On Sept. 27, Legal Times brought together four corporate counsel with responsibility for antitrust and competition issues to discuss the practice: Mark Whitener, General Electric Co.; Gregory E. Neppl, Litton Industries Inc.; Keith Seat, WorldCom Inc.; and Elaine Foreman, Hewlett-Packard Co. The conversation, an excerpt of which appears below, touched on the qualities clients look for in outside counsel, the presidential elections, and the lessons of the Microsoft case. The event, “Antitrust: Competition and Consolidation in the New Economy,” took place at the National Press Club in the District of Columbia and was sponsored by D.C.’s Covington & Burling. (The editors of Legal Times selected the panelists, chose the questions, and edited the transcript.) It was the third in the Legal Times Roundtable 2000 Series. Jonathan Groner, Legal Times: One of our journalistic semi-clich�s is that companies like to hire the lawyer, not the law firm. But then there is the opposite view that says that the law firm’s reputation provides what economists might call a reputational benefit. In other words, if you go to a large firm, you know that whomever you are dealing with, you are dealing with somebody who has a certain level of expertise because of the brand name. Is either of these theories more accurate, or do they both function alongside each other, the well-known lawyer versus the reputation of the law firm? Mark Whitener, General Electric Co.: I think you are hiring a team, and ideally the law firm is the extension of our in-house team, or we are part of their team. We are all, ideally, functioning together. You need to have a group of people who are committed to understanding your business, who have spent the time over a series of matters over a series of years understanding how your business functions, how people communicate. And then you need a team that has a deep and a broad bench. You need that group of people, who know what you are doing and how you do it, to be able to address the whole range of antitrust issues that might arise. It may be a different person for a different job, a different phase of a matter. Some people excel at developing relationships with the agencies and communicate well when the key issue is credibility, especially in the initial review of a transaction. If you say the facts are X or Y, and that is credible, that is of immeasurable value. Other people are adept at showing the litigation hand, if that is what is needed. Ideally, you would have all that in one team, with one strong law firm logo, but I do not think this is so much a question of the overall reputation of the firm in Washington or internationally. I think that for the antitrust bar, the key question is “how are they perceived by the agencies?” more than how the overall law firm is perceived in other legal areas. Groner: That is very interesting when you refer to how they are perceived in the agencies. Just looking at perception in the agencies, what is the number one thing you would want of an antitrust partner in a major law firm? Whitener: Credibility. And it can be someone who is very friendly and has a style that is very collaborative with the agencies, while others are a little more confrontational. But if they are credible, that is the key. Groner: Any other thoughts on the number one quality? Gregory E. Neppl, Litton Industries Inc.: Actually, in a defense deal, it is very important for counsel to have contacts at [the Defense Department] and understand the DOD process. That may actually be more important than relationships with [the Federal Trade Commission] or [the Justice Department], because for most defense products, DOD is a monopsonist buyer, and once you satisfy the customer, you are going to satisfy the antitrust agency. So experience in working a merger through DOD is probably at the top of my list for a merger case. Keith Seat, WorldCom Inc.: I think credibility is a good one, and it covers a lot of other things. Groner: Do any of you try to put together teams to respond to antitrust agencies that include not only in-house people such as yourselves, but people from more than one law firm? Do you ever build teams that are unique to your problem, that do not really exist out there, that are not five people from Firm A, but that might be two from Firm A, and one from Firm B, and two from Firm C, that have been handpicked by your company? Is that a style that you have ever tried, and does it work for you? Elaine Foreman, Hewlett-Packard Co.: We tend to use firms abroad based on relationships that our foreign lawyers have with firms in their particular area. But we have not used that sort of model, to my knowledge. Groner: In earlier roundtables that we have had, some of the tech companies said that they are so fluid that they almost do not care about lines that divide between in-house and law firms, or between Law Firm A and Law Firm B, but that struck me as somewhat unusual. It is interesting, Elaine, what you suggest about international because there are a number of firms, primarily here in Washington, that have really tried to tout themselves lately as having antitrust capacity, both here and in other venues, whether it be in Japan or whether it be in the European Community. They say, “Look, we provide essentially one-stop shopping. We can do not only Hart-Scott-Rodino notification if it is a merger, but we can do the notifications of eight or 10 or 12 or 25 countries because we have people either with our firm or who are affiliated who can do this.” Does that count as a very strong point when you are putting together a team, when you are hiring a firm, or would you just as soon hire U.S. counsel and think about European or Japanese counsel another way? Foreman: A really strong point, it seems, at Hewlett-Packard is the relationship that you have with your outside counsel. And because we do have lawyers around the world, they have established relationships with counsel in the countries where they serve. So we tend to defer to that relationship because it is one that is existing. And just as we look to our outside counsel in the United States who have familiarity with our business, we are looking for the same thing to happen, be it in Europe or Asia or anywhere else. Seat: It is the same at WorldCom. Our top international lawyer and her team moved to Brussels and are located there, so there is a strong presence there with local connections. Whitener: There is obviously a tension between one-stop shopping and having the best team in each local jurisdiction where you have a deal where there may be substantive issues. My sense is that you need to have the best available antitrust counsel in the U.S. You also need to have a very strong team in Europe if you are going to have issues at the commission level. Then, ideally, your European counsel, or your U.S. counsel, can provide sort of a rest-of-world sweep, at least to identify filings and get the filings made. And then I think often you have to pick specific local counsel in a given country where you might have a significant overlap or an issue. But I think a one-stop shop is far from a reality today. I know firms are working on it, and some firms, perhaps, claim to have more of a capability to do that than they actually have. There is a market opportunity if somebody can really develop the ability to deliver a turnkey operation and high quality in all the countries where there are active antitrust regimes or at least in most of them. There is clearly a demand for it. Neppl: It seems to me that international firms are needed, given the proliferation of merger regimes throughout the world. Usually, you need the international firm not only to provide antitrust support, but also support M&A, corporate, tax, labor, and the full range of issues that go with the transaction. So I do not know that I would retain an international firm just for their antitrust expertise if I did not also need those other services provided on the international deal. Groner: There is a possibility that the Republicans will gain control of the White House. At some point, the Microsoft case will end. I do not know when that will be. Is there any thought that we might be entering a period where not only does the rate of growth of antitrust slow, but that antitrust actually retrenches a bit, the way it retrenched several years ago in the middle or late1980s? Do you see anything like that coming, or is the relatively high level of antitrust activity pretty much something that is going to stay with us? Seat: Well, it did cross my mind, seeing the news that the Supreme Court turned down the Microsoft case, that this might be the high-water mark. And if that case drags out for a year or two in the appellate courts, the government’s remedies do not look so good after they are a couple of years stale, and that may tend to have people take a more negative view towards antitrust in general. And I think that the high-profile cases that get all the attention are not really the bulk of the cases. The criminal side, no one has mentioned so far today, and all of the ongoing enforcement efforts do continue on through all sorts of administrations and all sorts of times and are very important to companies, regardless of whether the high-profile cases continue in the front page of the paper or not. Foreman: No matter what happens in the coming months with the political structure of the various agencies, we continue to have to be aware of private enforcement, and I do not think that that will go away at any time. So we continue to have to be aware of antitrust issues. Groner:That is interesting, Keith, that you mentioned the criminal side. When thinking about hiring a law firm as regular antitrust counsel, does that mean that you look to see whether that firm has easily tappable criminal defense, white collar crime, grand jury specialists? Is that, therefore, going to be part of your equation because criminal enforcement is somewhere out there lurking? Seat: No, not personally. But if that ever came up, I am sure that there would be people that we could tap. The counsel that we are using would be helpful for that because of their understanding of our business. But I think it is more just ongoing counseling and ongoing monitoring to make sure that there are not problems that arise. Groner: Well, when looking to a possible criminal investigation � a company has to, at some point, think about what it would do, should that unfortunate specter occur, would you really want to look to somebody among the people who think they are the elite of criminal law, of grand jury defense, and so on? Is there a role for such people in antitrust, or is there just too much of a mismatch between what companies do in the nitty-gritty of their business and the style and approach of a white collar defense lawyer? Whitener: Fortunately, I am not speaking from recent experience. [Laughter.] But having said earlier that it is very important that you hire an antitrust team that can learn your business and handle a wide variety of matters, perhaps I would make an exception for a criminal matter. The criminal antitrust bar is fairly small. A criminal law generalist will not do, and a civil antitrust lawyer, obviously, will not do. You need somebody who understands the grand jury process, who knows the players and the agency. And I think in that case, you hire the person or the specialist team. If a company has a problem like this, it is probably relatively less important that counsel has previously been immersed in the business’s culture, and more important to be the top person who can get in there and take care of the problem. Neppl: I would agree. You need a specialist familiar with the [Antitrust] Division’s grand jury practice, as well as the Division’s amnesty program. That is a pretty valuable program, and you need to know how it works and be able to take advantage of that, both for the benefit of the company, as well as the individuals in the company who may have participated in agreements the Division does not agree with. Groner: Are there any cautionary lessons, either substantive or procedural or even of a public relations nature, that you think we can infer from the Microsoft case? I am not asking about the merits, but just in terms of the way the case has developed, both in the agency and in the public eye. Are there lessons that could be learned from both the way Microsoft handled the matter and from the way that the government handled the matter, and from the way the press has handled the matter? Is there anything that could be learned for the next once-in-a-generation case or for smaller cases? Foreman: I think one of the things that has been useful, if you will, about the Microsoft case is showing our clients the fact that if you write something down in an e-mail, just from a purely litigation perspective, that those things stay on. And it has made us much better able to go in and talk to our clients about the importance of caution in what you do and not only what you do, but what you say orally or in writing. That is probably the strongest lesson on top of anything substantive that my clients have taken away from the Microsoft case. Groner: E-mail has become just so prevalent a means of corporate communication, it has almost been thought of in many companies as no different from a phone conversation or a casual remark at the water cooler, but it is not. And I think by now, a lot of companies may know that. Mark, do you agree with that? Do you have other lessons, possibly? Whitener: Yes. I agree entirely. The only point I would add would be to back up a step from the application of fingers to keyboard, so to speak, and ask where the urge to write the e-mail comes from. My colleague Ron Stern likes to say that we write like we think. And if we are putting together a business venture, there is clearly something going on that is potentially positive, and it is important to articulate that. I suspect that if Microsoft had consistently documented internally that what it was doing when it was adding Internet Explorer to Windows was adding functionality that people might like, we would not be talking about Microsoft today, unless we were talking about how we bought the product and thought it was neat. So we try to help people understand that in these civil non-merger cases, in particular, antitrust sometimes comes down to after-the-fact assessments of what a company was trying to do. And if what you are trying to do, ultimately, is something positive, then you need to be emphasizing that in what you say internally and what you write down. And if you are emphasizing harm to competitors, or harm to competition, then you are going to reap what you sow. Neppl: Elaine’s comments on antitrust compliance are important, and I think they also apply to small firms, because in the high-tech sector, technology changes very quickly, and the small firm today, in five or 10 years, could have 90 percent market share. And people in a start-up may not think about what they write or type, so I do not think you can emphasize enough with your clients how important it is not to write things which will come back to haunt them when and if they are ever successful in the marketplace.

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