The Negotiator No one doubts that Richard Posner is a brilliant judge and antitrust theoretician. Is that enough to bring Microsoft and the government together?
(FORTUNE Magazine) – It's rare and more than a bit cheeky for a federal appeals judge to declare a controlling U.S. Supreme Court precedent to be "wobbly," "moth eaten," and "unsound." It's rarer still for the Supreme Court to respond by bowing deeply to its critic, quoting him at length, and unanimously overruling the 29-year-old precedent in question. But that's what happened in 1997 when the nation's top court last reviewed an antitrust opinion by Richard Posner. At the time, you probably had never heard of the Chief Judge of the U.S. Court of Appeals for the Seventh Circuit. But the Supreme Court justices had--and when he talks antitrust, they listen.
Of course, now that Microsoft trial judge Thomas Penfield Jackson has assigned Posner to mediate the government's case against Microsoft, everyone has heard of Richard Posner. And his legal opinions are suddenly intensely fascinating to people well outside the usual circle of antitrust specialists.
The two most interested new observers, Microsoft and the Justice Department, both have reason to like what they see. Gates & Co. have to be delighted to find that their peacemaker is a libertarian conservative who has harshly criticized overzealous antitrust enforcement. Posner, 60, has favored abolition of the Federal Trade Commission, elimination of prison sentences for antitrust offenders, and repeal of triple damages awards for most types of antitrust violations. Even so, the government also readily welcomed the new mediator--an indication of how confident assistant attorney general Joel Klein and his team are after their success at trial. In Posner the feds get a jurist who is pro-business enough to win Microsoft's trust yet committed to following legal precedent even when he disagrees with it. In the case mentioned above, for example, Posner denounced the since-abandoned Supreme Court precedent in his written opinion but still dutifully ruled in accordance with it. Who better to persuade Microsoft to stop fighting and settle?
Posner, naturally, is playing his cards close to the vest, turning aside all press inquiries since becoming involved in the case in mid-November. He has already convened three highly confidential meetings with the parties in Chicago--sometimes jointly, sometimes caucusing with one side alone--and was trying to schedule at least one more set of meetings before the end of the year, according to a lawyer familiar with the situation. Though Posner does not appear ever to have mediated before, his appointment has been praised as a brilliant move by a wide array of attorneys, academicians, judges, and professional mediators. It had better be. Posner now represents the last, best hope for a negotiated peace in the government's first major police incursion into the new economy.
Whatever Posner's leanings may be in the case, neither side can help but respect his intellectual qualifications. For sheer intimidating cerebral megahertz, Posner has few rivals on the bench--or anywhere else, for that matter. "His mind just works faster than anyone else's," says one appellate lawyer who has appeared before him. The lawyer is not exaggerating. Posner has generated 31 books, 221 scholarly articles, and 1,714 published opinions--probably the most prolific output by any federal judge ever. His books and writings make him, by a wide margin, the most frequently cited legal scholar of the past half-century, according to databases kept by Fred Shapiro, editor of The Oxford Dictionary of American Legal Quotations.
Unlike most judges, moreover, Posner drafts all his own opinions. Though his clerks describe him as a relaxed family man who likes to dally at lunch and keeps unremarkable hours, Posner magically assumes the productivity of J.S. Bach when he sits down at the keyboard. "He has the ability to write final prose in his first draft," says Harvard Law professor Lawrence Lessig, who clerked for Posner in 1989. "He could go home in the evening and produce two 30-page, single-spaced opinions, with citations, in one evening. They were good enough to be published without any editing." (Coincidentally, Lessig, a cyber-law expert, has been tapped to write a brief for the court addressing one of the legal issues in the case.)
Posner's productivity is fueled by confidence, observes professor Randal Picker of the University of Chicago, another former clerk: "Knowing what you think makes it easier to put it out." That formidable self-assurance has not always endeared him to the appellate lawyers who must appear before him. "He's hard to argue in front of," says one who does not wish to be identified. "He tends not to respect what the attorneys are saying."
Off the bench he is a different person. Students, professors, and clerks describe him as low-key, charming, dryly witty, and open-minded. "He's a wonderful listener, with an ability to separate the wheat from the chaff in his critics' views," says Anthony Kronman, the dean of Yale Law School. "He's one of the most rational human beings I've ever met."
Though Posner's brilliance was apparent early on, he came by his conservative legal views later in life. In fact, after graduating first in his class at Harvard Law School in 1962, Posner went to work for a series of prominent liberals: as a clerk for Supreme Court Justice William Brennan, as an assistant to a commissioner on the Federal Trade Commission, and then as a staffer for Solicitor General Thurgood Marshall.
It wasn't until he began teaching at Stanford Law School in 1968 that his politics turned right. There he came under the influence of Aaron Director and George Stigler, two conservative economists and towering intellects who had spent most of their careers at the University of Chicago. Posner himself moved to the University of Chicago the next year and soon became a leading apostle of what has come to be known as the Chicago school of law and economics. In essence, followers of that school believe that a key aim of legal rules and institutions is--or should be--the efficient allocation of resources and the maximization of wealth. In 1973, Posner published his first book, The Economic Analysis of Law, which showed how economic principles could be fruitfully applied to many legal problems. "It revolutionized the field," dean Kronman says of the book. "More than any single text, it established law and economics as a field that professors could understand and affiliate themselves with and begin to teach."
Three years after that Posner published Antitrust Law: An Economic Perspective, a blistering critique of the antitrust laws as they were then enforced. There he explained his view--music today to Microsoft's ears--that breaking up monopolies is not always either necessary or appropriate. The costs that society incurs from monopoly pricing will frequently be outweighed, he argued, "by the economies of centralizing production in one or very few firms."
Together with Robert Bork's 1978 book, The Antitrust Paradox, Posner's work changed the course of antitrust policy. Both books trenchantly critiqued the aggressive, economically uninformed antitrust policies of the 1960s (in which the young Posner, during his early years in government, had played a bit part). During the '60s antitrust regulators tended reflexively to see big as bad and to view themselves as the protector of small business. Posner and Bork argued that many of the policies were, perversely, causing higher rather than lower prices for the consumer--the latter being, in their view, the only legitimate goal of antitrust laws.
Posner has penned some rulings over the years that have delighted the business community. When a federal appeals court threw out the controversial Castano class action against the tobacco industry in 1996--the enormous, nationwide class action on behalf of the tens of millions of Americans who had ever been addicted to cigarettes--that court relied heavily on a Posner opinion in which he had refused to certify a class action against the pharmaceuticals industry brought on behalf of several thousand HIV-infected hemophiliacs.
Not all of Posner's opinions, however, fit a predictable conservative mold. In October, when the full Seventh Circuit upheld two state laws that banned so-called partial-birth abortions, he was the only one of five Reagan appointees who dissented. And in 1995 he tartly dissented from an opinion written by his own erstwhile protege Judge Frank Easterbrook, who saw no reason to forbid female prison guards from monitoring male inmates, even when they are in the shower or on the toilet. Easterbrook's ruling, Posner wrote, rested on a world-view that regards inmates as "members of a different species, indeed as a type of vermin, devoid of human dignity and entitled to no respect.... I do not myself consider the 1.5 million inmates of American prisons and jails in that light."
Still, Posner remains most respected for his antitrust scholarship. Many of the fundamental criticisms he and Bork leveled at antitrust enforcement in the 1970s have become the prevailing views, not only on the bench and in academia but inside the Justice Department itself. "We are all law and economics people now," says Harvard Law School antitrust scholar Einer Elhauge. While regulators and corporations may still disagree about whether a certain commercial behavior helps or hurts consumers, no one disagrees that the consumer's interest is the key issue. Indeed, A. Douglas Melamed, deputy to assistant attorney general Klein in the Microsoft trial, was himself a law and economics heavyweight in academia before he entered practice. The feds would never have brought the case had they not thought it passed muster under a law and economics analysis.
Which gets back to why Judge Posner may truly be the person best qualified to push the government and Microsoft into an agreement. Currently the Justice Department lawyers have little reason to compromise in the wake of their success at trial. No one is better qualified than Posner, with his intimidating intellect and godlike stature on antitrust law, to impress on them how easily the conservative District of Columbia federal appeals court could overturn that victory. After all, that same court already signaled its skepticism about aspects of the government's case in overturning a 1998 ruling against Microsoft. By the same token, no one but Posner has both the antitrust expertise and the conservative credentials to convince Microsoft that it can't bank on being rescued by the appeals court this time. In other words, Posner's greatest peacemaking contribution may be his ability to shake each side's confidence in its legal prospects.
That's the good news. The bad news is, no matter how much Microsoft's attorneys may defer to Posner, the lawyers are not empowered to settle the case. There's an additional step: Someone will still have to persuade Microsoft's CEO. And that may require a force greater even than Posner.
ROGER PARLOFF is a senior writer at The American Lawyer and the author of The Triple Jeopardy.