May 14, 2009 12:17 PM

Microsoft Drops K&L Gates as Preferred Provider

Posted by Nate Raymond

Update on 5/14/09 at 3 p.m. - A comment from Microsoft has been added to the last paragraph.

Microsoft Corporation has a new list of preferred legal providers--and K&L Gates, the firm named for Bill Gates's father, is nowhere on it.

Microsoft carried over to the firm after Seattle-based Preston Gates & Ellis merged with Kirkpatrick & Lockhart Nicholson Graham in 2007. At the time, Microsoft general counsel Brad Smith welcomed the merger as a positive step for both firms and its clients. Yet following an extensive review of the firms it uses, Microsoft announced a new list of legal providers sans K&L Gates and others, including Sullivan & Cromwell and Arnold & Porter.

"We have had a preferred provider program in place for several years to consolidate a portion of our legal work and manage our legal costs efficiently," Microsoft spokesman David Bowermaster said in a statement. "We recently decided to refresh the program. We solicited competitive bids from a number of firms and conducted an extensive review. That led to a selection of ten firms across the country."

Microsoft began its preferred provider program in 2005, though this is the first time it has refreshed the list, a source familiar with the selection process says. The previous list had 16 firms, this source says.

The new list includes: Cadwalader Wickersham & Taft; Covington & Burling; Davis Wright Tremaine; Fish & Richardson; Orrick, Herrington, & Sutcliffe; Munger, Tolles & Olson; Perkins Coie; Shook Hardy & Bacon; Sidley Austin; and Weil, Gotshal & Manges. The list goes into effect July 1.

Microsoft declined to provide the names of those firms previously deemed preferred, though it did confirm that a partial list published in The National Law Journal last July was accurate. Of the seven named in that article, three are missing this time around. Heller Ehrman dissolved, explaining its drop. Also left off as preferred providers apparently are Arnold & Porter and Sullivan & Cromwell.

But the most notable omission is K&L Gates, whose disappearance from the list was first reported in the Seattle Times. Microsoft had been one of Preston Gates's top clients. The firm got its name from Bill Gates, Sr. It took the company public in 1986 and assisted Sullivan & Cromwell during Microsoft's epic antitrust battle of the 1990s.

But ties may have been shifting. Former Microsoft general counsel William Neukom, who rejoined Preston Gates in 2002, left K&L last year to become managing general partner of the San Francisco Giants.

K&L chairman Peter Kalis and a firm spokesman did not return calls seeking comment. But Bowermaster says the firm will still get some work from the company, despite not being on the provider list.

“K&L Gates remains a valued and longstanding partner and a significant contributor to our success,” he said in a statement.

Additional reporting by Leigh Jones, The National Law Journal

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