On the front line
Lawyers treading the familiar path from private practice to in-house often talk about the ability to see how their legal advice impacts on the heart of their employer's business in a way that is impossible at a law firm.But it is hard to imagine a company in which strategic legal issues would go further to the heart of its business than Microsoft. After all, the US-based computer giant has been lauded and condemned in equal measure since emerging to dominate the PC market in the 1980s.
Moving from private practice to in-house could be seen as a safe move – but Microsoft’s UK head of legal Dervish Tayyip says differently. Leigh Jackson reports
Lawyers treading the familiar path from private practice to in-house often talk about the ability to see how their legal advice impacts on the heart of their employer’s business in a way that is impossible at a law firm.
But it is hard to imagine a company in which strategic legal issues would go further to the heart of its business than Microsoft. After all, the US-based computer giant has been lauded and condemned in equal measure since emerging to dominate the PC market in the 1980s.
For Microsoft’s UK head of legal, Dervish Tayyip (pictured right), that means a job that involves wrestling with fast-evolving areas of law in intellectual property (IP), copyright and the patchwork of law governing the internet and competition policy.
“There are a lot of different challenges in-house compared with private practice,” he says. “It is much more satisfying to work closely with decision-makers; you see things from inception to execution.”
In a sense, Microsoft and Tayyip are an obvious fit. Having made the move in-house in 1999, after training and practising at Adlers and joining the partnership at Reid Minty, Tayyip was keen to see his advice in action.
“New legal issues are continually rearing their heads,” Tayyip says. “The nature of issues such as IP place lawyers at the centre of the business.”
Rising to become Microsoft’s top UK lawyer in 2007, Tayyip has always sought an influence on company decisions, a drive that he put to use with his involvement with the company’s Customer and Partner Experience. The initiative tackled the complexity of software contracts by consulting with business consumers to ensure that IT agreements are more easily understood.
Tayyip says: “This initiative is testament to how an in-house legal department can be uniquely placed to play a role in transformation – both in terms of bringing a wider company vision and ultimately maximising its contribution to the business it serves.”
As Microsoft has grown as a company, the role of the legal function has taken on a new dimension. It has taken a strong line against spam since it filed a number of lawsuits against spammers in the UK and the US in 2003, setting up sophisticated software solutions and working within the industry to tackle the problem.
The company has also fought a highly-publicised IP battle with pirates offering illegal copies of the company’s operating system and Office suite.
The company recently moved to tackle the issue in China – one of the most affected areas – by significantly slashing the cost of some of its software by 70%. According to a recent survey, the piracy rate for personal computer software in China was more than 80% in 2007.
Tayyip’s 11-strong UK legal function now includes two lawyers dealing specifically with anti-piracy, underlining the company’s approach to tackling the issue, while a further six lawyers specialise in commercial matters and three handle government affairs.
Tayyip reports directly to Europe, the Middle East and Africa associate general counsel Chris Parker, where a further 55 lawyers sit in the same divisional structure.
In the corporation’s head office in Richmond, Washington – home to 75% of Microsoft’s 1,100-strong legal team – lawyers deal directly with competition, litigation, IP and licensing issues, as well as government affairs, anti-piracy and commercial matters.
And, according to Tayyip, dealing with the particular legal issues presented by Microsoft’s business lines requires a certain type of in-house lawyer.
“There is an ever-changing dynamic which means we look for lawyers who can live with ambiguity and change. Our lawyers need to constantly add to their skills-set and mind-set.”
With the majority of Microsoft’s industry-specific work staying with its in-house team, most of the company’s routine work goes to its external law firms which, in the UK, include Olswang, Mishcon de Reya and Wragge & Co.
While Microsoft does not operate a formal panel, opting instead for an informal and flexible approach to instructing firms, it still keeps a close eye on its relationship with its advisers.
“We are not a mass of lawyers, but we are not trying to keep all our work in-house,” Tayyip says. “Work goes outside when we have overflow or need special expertise. The work we keep closer are the things that matter; some of the more routine day-to-day work is outsourced.”
Microsoft’s relationship with its firms is also subject to the corporation’s commitment to diversity. In the US the company implemented a scheme in the summer offering its regular advisers financial incentives in exchange for promoting diversity within their ranks.
Practices that can achieve either a 2% rise in the diversity in their Microsoft-focused team or a 0.5% increase in diversity across the firm as a whole will be in line for an increase in fees.
While the system has yet to be rolled out among Microsoft’s global legal teams, diversity is still one of the main factors considered when the UK team selects its external partners.
Tayyip comments: “Without hesitation, both diversity and pro bono work are up there as factors we look at, but we are not a UK-specific corporation – there are very significant diversity and pro bono initiatives from our US parent corporation.
“It applies equally to internal and external lawyers. It is about different perspectives when dealing with evolving and changing times.”
And while the company is happy to extend financial rewards to its firms, it is by no means content for them to simply dictate the terms of their contracts.
For Tayyip – and the majority of in-house lawyers – value is very much a buzz word, especially when trying to tackle the ever-increasing billable hour.
Aside from encouraging diversity, Microsoft adopts a flexible policy on billing practices in the UK.
“We are not dead against [the billable hour], but it is about value,” Tayyip explains. “We sometimes use alternative billing arrangements such as discounted volume or blended rates as opposed to the fee earner rate multiplied by the number of hours worked. We have to work with non-stop increases, but how long can they be sustained?”
And despite the fact that both Microsoft’s external and internal lawyers are able to exert a considerable amount of influence over the business, Tayyip still believes that the legal function has more of a role to play at board level.
He strongly believes that general counsel have important skill-sets and perpsectives to bring to the boardroom table. “If they [the board] see value – whether the general counsel is technically on the board or not is neither here or there. General counsel should be used as a strategic sounding board and featured in board decisions. In essence, it is about substance and not form.”
Nevertheless, while Tayyip believes the role of general counsel has developed substantially in the UK in recent years, he concedes there is still a long way to go before in-house lawyers match the profile of their US counterparts.
He says: “A lot of it is to do with the evolution of the profession in different jurisdictions. The history of the in-house legal profession goes back further in the US and it is held in higher esteem by business clients.”
However, he certainly has no regrets about his career path. He comments: “I was concerned about being pigeonholed when I was in private practice but I feel I made the absolute right decision to move in-house.”
Dervish Tayyip’s career to date
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