The general counsels at Microsoft, Google, Cisco, eBay, Yahoo!, Qualcomm, Autodesk, and Oracle—Stanford Law School alums, all—have changed the face of the technology industry and redefined the role of the general counsel.
William Neukom ’67 looked up from his desk in the Seattle offices of Shidler, McBroom, Gates & Baldwin. William H. Gates, the firm’s managing partner, had just popped his head into Neukom’s office to ask him something: “My son’s coming to Seattle. Would you be the lawyer for his company?”
“I don’t know why he asked me. I wasn’t an expert in any particular area kind of a country lawyer, doing a little bit of everything,” recalled Neukom 26 years later. “But when the managing partner says, ‘Will you?’ you say ‘Sure!’”
Six years after that conversation, Neukom went back to his managing partner to make the case that it was time for their client, Microsoft Corp., to have its own legal department. Some of the partners might have been concerned about losing a client, an experienced lawyer, and lots of billable hours. They may also have been mystified that a partner would want to alter the trajectory of his career path to go in-house—especially with a company that, at the time, cast a relatively short shadow on the national corporate landscape. But Gates senior agreed with Neukom’s recommendation, as did Microsoft, which then formed a legal department and asked Neukom to head it.
The rest is history.
Twenty years ago, the title of general counsel often evoked a cozy sinecure, a haven far from the high-pressure partner track, a semi-retirement spent vetting corporate documents and keeping regular hours. But a group of Stanford Law School graduates at the legal helm of some of the world’s most powerful technology companies has played a critical role in redefining the job. Today’s high-tech general counsels have a hand in nearly every major strategy decision their companies make, from designing the legal infrastructure underlying the new markets their companies are creating to shaping international policies on technology and intellectual property. They are the field generals of their companies’ senior executive teams, experts in the tactical execution of high-level strategies.
In 2002, Neukom returned to private practice where he is chair of his old firm, now known as Preston Gates & Ellis LLP. Microsoft’s legal department had grown from a four-person office to a staff of more than 600, 250 of whom were professionals. But even now Neukom remains arguably the technology industry’s most recognizable general counsel, thanks to Microsoft’s extended battles with the U.S. Department of Justice and other regulatory adversaries. He’s also the elder statesman of an all-star lineup of Stanford Law School graduates who are making corporate and legal history as general counsels for technology’s ranking heavyweights:
- Daniel Cooperman JD/MBA ’76, who marshaled an army of lawyers through Oracle Corp.’s bitterly fought hostile takeover of PeopleSoft Inc. from June 2003 to January 2005;
- Michael Jacobson ’80, who spends his days crafting legal approaches to the previously unheard-of situations created by eBay Inc.’s entirely new system of commerce;
- Mark Chandler ’81, who guides Cisco Systems, Inc.’s global push to stay atop the high-speed networking game;
- Marcia Sterling ’82, who travels the world as a spokesperson for the Business Software Alliance, representing her company, Autodesk, Inc., as well as the entire software industry;
- John Place ’85, who took pains to preserve Yahoo! Inc.’s fun-loving startup mojo as its first general counsel, while preparing it for adulthood as a public company;
- Louis Lupin ’85, who stands guard over Qualcomm Inc.’s teeming trove of mobile communications patents; and
- David Drummond ’89, who has shepherded Google Inc.’s youthful executive team through one of the most meteoric rises in the annals of technology.
From the Outside In
In addition to their shared alma mater, most of the field generals (with the exception of Chandler) have something else in common: they started as outside counsels but ended up going in-house. Their stories differ, but follow a similar pattern: the company retains a law firm to help it through a stock offering, a major acquisition, or an important piece of litigation; the head lawyer on the firm’s team becomes intimately familiar with the company, its strategic objectives, and its senior executives; he or she joins the company as full-time general counsel. They all describe the allure of the executive suite—the rush of being involved in major deals, the prospect of participating in the kind of rapid wealth creation that characterizes the tech industry, and the satisfaction of being part of a team that creates something permanent.
“The biggest challenge as a general counsel was finding ways to explain the technology and business of Microsoft, particularly to government officials and other influentials.”
—William Neukom, Microsoft
“‘In-house’ was almost a derogatory term,” said Marcia Sterling, who left her partner perch at Wilson Sonsini Goodrich & Rosati to become general counsel of Autodesk in 1995. “I thought I was going to work less hard,” she said with a laugh. “Going from being a partner at a big firm to being a general counsel, you have no training for being an executive,” said Sterling. “As most employees work their way up the corporate ladder, they learn about sharing power, building consensus, how to push an agenda ahead. We come in cold at the executive level.”
As a newly minted executive, Sterling was unprepared for the challenge of frequent public speaking engagements. In her first week on the job, Sterling found herself on a panel in front of an audience of 150 mid- and upper-level Autodesk managers. That’s when it hit her that being an executive meant having something more profound to say than expressing a legal opinion. It’s also when she first noticed the symptoms of spasmodic dysphonia, a neurological condition that affects control over the vocal cords. After several speaking engagements, Sterling approached Autodesk CEO Carol Bartz to discuss whether her vocal-cord condition was hurting her job performance.
“She told me, ‘I didn’t hire you for the sound of your voice,’” recalls Sterling. “‘I hired you for the quality of your thinking and your judgment.’” Her confidence bolstered by Bartz’s support, Sterling not only stayed on as general counsel and continued to speak at Autodesk events, but has since become a frequent speaker abroad for the Business Software Alliance, an industry group that advocates for strict antipiracy laws. “The kind of work you do as outside counsel is limited,” said Sterling. “You get in late, after the major decisions have been made. You’re detached from the heart and soul of the business.”
“Going in-house has become a wonderful career path,” said John Roos ’80 (BA ’77), CEO of Wilson Sonsini, a Palo Alto, California, law firm that has been intimately involved with the technology industry since the early years of Silicon Valley. “Now, general counsels are a core part of the senior teams at the companies we represent. I don’t think that was the case 20 years ago.”
“These are situations where law is unsettled—no one has a clue as to how it’s going to apply. What you do know is that, in all probability, it’s going to be a lawsuit involving you that will establish the law.”
—Michael Jacobson, eBay
Losing some of his firm’s best and brightest lawyers to clients on an increasingly regular basis stings a little, Roos admits. But the firm has found a way to turn the phenomenon to its advantage: It created an alumni association of current and former members of the firm that holds frequent networking events. These events often lead to career opportunities for young Wilson Sonsini lawyers who are impatient about making partner. Rather than going to other firms, these young lawyers sometimes move in-house to work with Wilson Sonsini alumni. Stronger relations with Wilson Sonsini alumni, of course, also lead to more business for the firm.
“Sometimes you lose people you’d rather not lose, but overall, [the popularity of the in-house career path] has become an advantage to us. Witness the former partners who are now general counsels at major companies,” Roos said. “The legal departments of a significant percentage of our clients are run by former attorneys of ours. When I give speeches to our first-year associates, I talk about career paths, and going in-house is one of them.”
The Government vs. Tech Icons
One indicator of any general counsel’s value is whether the company’s business continues to function well under the glare and pressure of regulatory investigations and actions. And nowhere is that more important than in the technology industry, where the government has been quick to step in to stop acquisitions, curtail the use of new technologies, and force companies to alter their business practices.
“The biggest challenge as a general counsel was finding ways to explain the technology and business of Microsoft, particularly to government officials and other influentials,” explained Neukom. Most people think of Microsoft’s antitrust battle—the highest-profile case brought by the government against a corporation since the breakup of Standard Oil in 1911—exclusively in terms of the five-year struggle over Microsoft’s decision to make its browser technology part of the Windows operating system. Neukom, however, sees it as a continuous 12-year campaign with regulatory agencies, which was fueled primarily by the government’s long-running solicitation of complaints from Microsoft’s competitors. “In those days, there was a lot of envy and suspicion in the technology business; companies and careers and fortunes were being made and lost in real time,” said Neukom.
One of Microsoft’s old adversaries, Oracle, faced a bit of karmic comeuppance in 2003 when PeopleSoft invoked antitrust law in its attempt to block Oracle’s $6 billion hostile takeover. “PeopleSoft’s antitrust defense was to actively lobby regulators,” said Daniel Cooperman, Oracle’s general counsel since 1997. “Even though the company itself was the target of a tender offer made directly to shareholders, PeopleSoft’s officers put their thumb on the scale by visiting the major states to lobby state attorneys general and representatives in Congress to oppose the deal on antitrust grounds. They spent time at the Department of Justice and with European Commission regulators too, encouraging them to oppose the deal.”
In February 2004, Oracle upped its bid to more than $9 billion, PeopleSoft rejected it, then Oracle suffered a setback that looked like it might kill the acquisition. “The Department of Justice sued us to enjoin the transaction, joined by seven states,” Cooperman said. Stymied by the U.S. Department of Justice and facing an adverse staff recommendation of the European Commission, Oracle mounted an aggressive defense of the transaction in federal court. After a federal judge found no basis to block the transaction and the European Commission withdrew its opposition, PeopleSoft’s shareholders overwhelmingly agreed to tender their shares, and the acquistion was completed in January 2005, a year and a half after it had been launched.
“Managing this process, from a legal perspective, was really fascinating,” said Cooperman, “because there was so much more going on than just the corporate aspects of the transaction.” Cooperman, who came to Oracle from McCutchen, Doyle, Brown & Enersen (now Bingham McCutchen LLP), commands a 175-person legal department, including 130 lawyers, a little more than half of whom are in the United States. During the battle for PeopleSoft, he deployed more than 100 lawyers from outside firms. “The PeopleSoft transaction required very comprehensive coordination among our legal team,” he explained. “In addition to the challenges of the tender offer and the antitrust approval process, we faced active litigation on corporate, commercial, and regulatory issues.”
At the Vanguard of New Law
Navigating antitrust attacks while staying at the top of an industry is no mean feat, but neither is navigating the often-lawless wilds of the Internet. “What we’re doing is brand-new,” said Michael Jacobson, general counsel at eBay. “These are situations where law is unsettled—no one has a clue as to how it’s going to apply. What you do know is that, in all probability, it’s going to be a lawsuit involving you that will establish the law.”
Jacobson has seen more than his share of unprecedented legal situations, and prefers to preempt precedent-setting cases whenever possible. Jacobson lays claim to the distinction of heading up a legal department that includes the country’s foremost experts in an extremely obscure field: mastodon law. When an eBay auctioneer wanted to put up a mastodon tusk, Jacobson’s team had to figure out whether the sale of the prehistoric prong would violate an international ban on the ivory trade. Another time, someone in Siberia listed a section of mastodon pelt, and Jacobson dispatched the company’s resident expert to pore through tomes of trade law to determine if regulations governing international fur trade applied to mastodon fur. In each case, eBay allowed the auction to proceed.
On a more mundane note, eBay increasingly finds itself in the middle of cases involving virtual or software-based entities and items, another area with little or no legal precedent. Over the last few years, gaming-software companies have repeatedly objected to the sale of virtual characters and items that gamers put up for auction on eBay.
“We have spent an awful lot of time doing things that were not legally required, so that once we’re in front of the trier of record we can say, ‘Wherever you’re going to draw the line, we’re on the right side of it,’” said Jacobson, “rather than approaching things in a more traditional way, saying, ‘We know where the line is, let’s talk to the business people about how close we can get to it.’”
“One of the most challenging parts of my job is navigating the legal regimes of all the countries of the world, some of which are not particularly well developed.”
—David Drummond, Google
Over at Google, general counsel David Drummond often finds himself charting legal precedent as well. He has his hands full with a controversy over the Google Print Library Project, which entails scanning and digitizing the collections of some of the world’s foremost libraries, including those of Oxford, Harvard, and Stanford universities.
Several publishing-industry groups have objected to Google’s plan to scan copyrighted works. And the Authors Guild, together with three individual authors, have filed suit against Google claiming copyright infringement. It’s the first situation of its kind, so it’s unclear whether copyright law precludes scanning and indexing works owned by libraries. In August, Drummond and Google decided to postpone the scanning of library books currently covered by copyright, giving rights-holders an opportunity to provide Google with a list of works that should be excluded. Google intends to resume scanning any copyrighted works not specifically excluded by their copyright owners.
Intellectual Property: The Crown Jewels
Companies like Google may on occasion find themselves fighting against copyright restrictions, but most of the time these high-tech general counsels are busy drawing a legal line of ownership around intangible assets like software code and engineering designs. That’s because patents and copyright are the bedrock on which technology businesses are built.
“Technology companies are intellectual property companies— those are their assets,” said Neukom. “It’s not like owning a quarry of scarce minerals or shelf space. It’s about people coming to work, creating useful technology, getting it out to users, and engaging in a constant feedback cycle with customers. In order for the work of that brain trust to have commercial value, you have to find ways to convey that value and protect against its unauthorized use. You do that by establishing and enforcing legal rights in that intellectual property by means of patents, copyrights, trademarks, and trade secrets.”
In the software industry, success in the marketplace often precedes the establishment of a de facto standard (à la Windows). The telecommunications industry, however, relies on pre-established standards around which to deploy its multibillion-dollar capital expenditures on network equipment. Here, patent law is all-important.
Qualcomm general counsel Louis Lupin joined the wireless powerhouse in 1995 after representing the company as a partner at Cooley Godward Castro Huddleson & Tatum in a pivotal patent-infringement lawsuit that threatened to derail Qualcomm’s drive to establish its CDMA (code division multiple access) technology as the standard for cellular phones. Qualcomm prevailed, and Lupin, a former border patrol agent for the U.S. Immigration and Naturalization Service and agent for the U.S. Drug Enforcement Administration, joined Qualcomm’s legal team.
“In my demeanor and approach, I tried not to reinforce the stereotype of
a typical authoritarian lawyer. I made sure I could communicate with them on a more collaborative level.”
—John Place, Yahoo!
“That case had everything,” said Lupin, “IP rights, standardization, technology advancement, and commercial adoption. It’s a particularly important intersection for us because we not only make chipset products, but we derive a substantial portion of our profits from licensing.” In 2004, Qualcomm pulled in $1.3 billion in licensing revenue from Sony, Motorola, Nokia, Ericsson, LGE, Kyocera, Samsung, and every other major handset manufacturer.
Lupin heads up a 70-lawyer legal department that includes 30 internal patent lawyers and another 70 people in patent support roles, working with an equal number of lawyers in outside firms. “At any given time,” Lupin said, “there are about 200 people working on patents for us.” Lupin is responsible for coordinating the work of as many as 70 firms worldwide each time Qualcomm files for a major new patent—which is quite often. Qualcomm holds more than 6,900 patents around the world and has more than 18,000 pending.
Navigating International Waters
“One of the most challenging parts of my job is navigating the legal regimes of all the countries of the world, some of which are not particularly well developed,” said Drummond, who joined Google in 2002 from Wilson Sonsini. “The level of regulation varies from place to place, so you try to learn as much as possible, and you get strong local expertise.”
One of Google’s more controversial interactions with regulators in another country occurred in 2002, when the Chinese government shut down the country’s access to Google to prevent its citizens from accessing banned sites. While other search engines brayed defiantly about resisting censorship, Google remained quiet, and Google China was soon back online, although the results were filtered to exclude results on topics sensitive to the Chinese government. “We made no changes to our service, and any filtering scheme was, as far as we know, implemented by the Chinese government,” said Drummond. “We didn’t feel that we were subject to their laws which would require us to filter our results, because at that time we didn’t have any Chinese presence. Our approach is certainly that we’re going to comply with the laws of the countries that we’re in. The interesting thing is that the question of when you’re doing business in a particular country is not so clear-cut.”
For Cisco’s Mark Chandler, the general counsel’s toolkit has to combine law with statecraft and an eye to the way the company’s actions will be perceived. Chandler faced his own China-based challenge in 2003, when Cisco alleged that Shenzhen-based Huawei Technologies was using Cisco source code in its routers, specialized computers that move data across networks. “Our salespeople around the world were happy to compete with companies who developed their own products,” said Chandler, “but they felt they were being asked to compete against our own development team’s results.”
If the offending company had been based in the United States or Europe, Cisco could have initiated an intellectual property lawsuit against it in a traditional and aggressive manner. But since China’s burgeoning technology industry is relatively young and the country’s business climate more defensive than in some countries, Chandler knew that he had to tread carefully—and that, in the long run, diplomatic success would be every bit as important to Cisco as winning the case in the courts.
“We have customers in China who were concerned about our litigating with a competitor in China,” said Chandler. “We had to make sure that our customers in China knew that what we were doing was not an attack on Chinese industry, but a dispute over a legitimate issue between two enterprises, one of whom happened to be Chinese.”
In the end, Huawei agreed to modify its products, Chandler said. In June 2004, a year and a half after Cisco sued Huawei in the United States, the companies reached a resolution that Cisco characterized as a victory for intellectual property rights. Huawei agreed to revise source code and technical documentation that Cisco objected to, and to stop selling products based on patents Cisco said had been infringed. The deal allowed Huawei to save face and let Cisco stop competing against its own products while still preserving its image and relationships with its Chinese customers.
“Cisco believes in standards-based approaches, and generally does not take an aggressive intellectual property stance,” said Chandler. “For instance, we offer to license, with no royalty, any Cisco patent that relates to a standard. From an overall strategy perspective, therefore, the key was making sure it was understood that we were doing what any company in a similar position would do to protect itself.”
As a company’s resident arbiter of regulations and corporate conduct, general counsels have a significant impact on the company’s culture. That’s especially true at tech startups, where it’s not unusual for everyone on the senior management team to be under 40, and where general counsels tend to be viewed as the token adult, the ultimate “suit.” A surprisingly easygoing bunch, our field generals tend to defy that stereotype.
In 1994, two years after John Place left the now-defunct Brobeck, Phleger and Harrison LLP to work in Adobe Corp.’s legal department, Adobe’s general counsel asked him to do some research into something called the World Wide Web and figure out what it might mean for the company’s legal strategy. “I was struck by the democratizing potential of the medium,” said Place. “Almost immediately, I had complete passion for it. After my first day online, I got home and told my wife, ‘My life has changed.’”
Place left Adobe to join Yahoo! in 1997, when Yahoo! consisted of founders Jerry Yang and David Filo and 170 employees. “I was the first lawyer they hired,” Place recalled. “Jerry said that having to hire an in-house lawyer was the scariest moment he’d faced.” The scary part: adding an “adult” to the mix at a young-thinking startup. Yang and his cohorts were understandably worried that having a “suit” on the scene might alter the high-energy chemistry and enthusiasm that had powered Yahoo!’s rapid growth. But Place, who rarely wore anything more formal around the office than jeans and denim shirts, made sure he didn’t mess with the easygoing vibe—at least not much.
“In my demeanor and approach, I tried not to reinforce the stereotype of a typical authoritarian lawyer. I made sure I could communicate with them on a more collaborative level,” Place said. “I tried to approach it not as a top-down, policy-making role, but more as one member of a team trying to collectively decide what the smart thing to do was. So instead of saying ‘You have to do this,’ I’d say, ‘This is what might happen if you don’t do this.’”
One powerful motivational ally: Yahoo!’s soaring stock. “In those days, any hiccup in the business meant a large shift in market cap,” Place said. It was important that all the employees use their best judgment in the myriad circumstances no one could predict. It would be impossible to make “rules” to cover all these situations. “So the way I’d put it was usually something like: ‘I’d hate to be the person whose poor judgment was responsible for making my colleagues’ net worth drop by one-third in a day.’”
Working collaboratively and exercising good judgment are traits that these eight general counsels have demonstrated throughout their careers. In doing so, they’ve blazed highly unconventional paths, using the background and analytical skills they honed at Stanford Law School to get their companies to the top of the tech industry and keep them there.
One additional trait each of the field generals cited when reflecting on his or her successes: thinking on one’s feet while handling a continuous stream of legal challenges that are, in the majority of cases, unprecedented. While the law school has changed with the times, adding a raft of intellectual-property and business-focused options for students, the core emphasis on thinking creatively to solve problems for clients—and most of these general counsels still refer to their companies as clients—has been part of the curriculum since the beginning.
“There may have been an intellectual property course when I was there, but if there was, it didn’t get much attention from the students,” said Neukom. “It was my impression that Stanford Law School was not in the business of preparing people to be prosecutors, senators, CEOs, M&A specialists, or trial lawyers—we could be any of those things—but rather that the mission was to graduate people who would be imaginative problem solvers.”
Josh McHugh is a contributing editor at Wired. The San Francisco–based writer’s articles have also appeared in Outside, Fortune Small Business, and Slate.