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  Joel Klein, Hanging Tough

By David Segal
Washington Post Staff Writer
Tuesday, March 24, 1998; Page C1

Nobody came right out and called him a corporate shill, but when Joel I. Klein was nominated to head the Justice Department's antitrust division last year, a few politicians came pretty close.

"We've got an antitrust fellow here who rolls over and plays dead," intoned Sen. Ernest F. Hollings (D-S.C.) in July, arguing that Klein wouldn't take tough stands against consumer-unfriendly mergers.

Nine months later, the book on Klein is being rewritten. In many circles he's considered a corporate cop with an attitude, the guy taking on Microsoft Corp. in a precedent-setting showdown over the software industry's future. And he is demonstrating that the department is taking a tougher line on defense mergers, too, yesterday hauling Lockheed Martin Corp. into court over its proposed $12 billion purchase of Northrop Grumman Corp.

Though flattered, Klein says his new tough-guy persona makes him squirm. He bristles at the notion that he's an ideologue hoping to thrust the government's hand into the economy. His sole guiding principle, he argues, is that each case is different and must be appraised on its merits.

That's the key to understanding the mixture of thumbs-up and thumbs-down he has given to key mergers. He moved against Microsoft for narrowly cast reasons, he said: because the software titan has a monopoly in a hugely important industry and because the company broke a 1995 promise to the government not to bundle its Internet browser with new versions of its Windows operating system.

On the other hand, he approved last year's controversial merger of Bell Atlantic Corp. and Nynex Corp. In that case, the department rejected the philosophy, championed by more interventionist thinkers, that companies should be prevented from combining if they might compete at some future point.

"The public notion of tackling giants, that's a mistake, too," Klein said during a recent interview in his expansive office on the Justice Department's third floor. "You have to look at the particular facts of a case. I'm not here to tackle big corporations or get in the way of economic efficiencies."

Soft-spoken and with leftover traces of working-class Queens in his voice, Klein seems both an intellectual and a street-wise bantam. During a long career as a Washington corporate lawyer, he earned a reputation as an abrasive and occasionally arrogant hard charger with more than his share of enemies. Colleagues and department watchers now describe him as a savvy strategist who picks his battles carefully and for maximum effect.

George Cary, a private antitrust lawyer who was deputy director of the Federal Trade Commission's Bureau of Competition, called Klein a "very, very smart lawyer" who wants a "very sound analytical position" before bringing a case.

"He's a guy to be taken seriously," Cary said.

Some consumer activists, however, maintain that Klein hasn't come close to proving his bona fides as a trust buster. They say he makes decisions with a keen eye toward his audience -- the press and politicians on Capitol Hill. Their argument is that approving the Bell Atlantic-Nynex merger was a way to curry favor with Republicans while Klein was acting division chief and lobbying for his present job.

They add that his actions in the Microsoft case hardly show guts. One of Microsoft's rivals, Novell Inc., is based in Utah, the home state of Sen. Orrin G. Hatch (R), who heads the powerful Judiciary Committee overseeing the Justice Department and antitrust matters. And the activists point out that credit for the consent decree that's vexing the company belongs not to Klein but to his predecessor, Anne Bingaman.

"The jury is still out as to whether he has the stomach to take on major industries that may be violating competition laws," said Gene Kimmelman, co-director of the Consumers Union's Washington office.

Still, with well-honed political radar and a megawatt mind, Klein has proven to be talented at making headlines, a gift some lawyers contend is doing more than just raising his profile.

"The best thing you can do as an antitrust enforcer is shoot for deterrence, and the way you deter is by bringing big cases," said Steven C. Sunshine, who overlapped with Klein at Justice and is now an attorney with Shearman & Sterling. "For every case that Joel brings, there are 50 of us in the bar cautioning our clients about their next deal."

Klein has had a long career in Washington, primarily as an appellate lawyer in private practice. When he isn't studying billion-dollar mergers, he's often playing tennis or rushing home to spend "quantity time" with his wife and 13-year-old daughter. For kicks, he reads biographies of famous jurists.

"He's just about the only lawyer my wife likes," said Lloyd Cutler, a friend and former colleague in the White House counsel's office. "He can communicate feelings and read other people's feelings."

The son of a postman, Klein was raised in public housing near Archie Bunker's neighborhood in Queens, N.Y., and won a scholarship to attend Columbia University. There, he earned a degree in economics and went off to Harvard University Law School. Later, he landed a coveted spot clerking for Supreme Court Justice Lewis F. Powell.

He moved to Washington in 1973, and after clerking and stints in public interest and corporate firms, he and several friends founded Onek, Klein & Farr, a boutique firm specializing in complex litigation and appeals work. Klein made numerous Supreme Court appearances, attracted a long list of corporate clients and joined the varsity squad of Washington attorneys.

"He's very wry, and he likes to josh and spar," said former deputy attorney general and longtime friend Jamie Gorelick.

In 1993, Klein was asked to prepare Ruth Bader Ginsburg, then a nominee to the Supreme Court, for her hearings before Congress. Having impressed attorneys at the White House counsel's office, he was offered – and accepted – the job left open by the suicide of Vince Foster.

Klein won't boast about what was arguably his most impressive achievement during his 16-month stint in the White House. One of his duties there was handling Whitewater matters and he managed to depart for the Justice Department in 1995 without even a whiff of subpoena about him.

He also has kept his distance from the Monica Lewinsky matter, though he made a brief and incidental cameo in that drama. It was Klein who suggested to Linda Tripp, the woman who secretly taped Lewinsky, that she look for employment outside the White House after Tripp complained that she felt bored and underused.

Klein won't comment on the episode because, he said, it would be inappropriate for a Justice Department official to discuss events being investigated by an independent counsel. People familiar with his account say that Klein suggested Tripp leave for less than mysterious reasons. Her boss, Bernard Nussbaum, had returned to private practice, and both Klein and Nussbaum's replacement, Lloyd Cutler, brought with them their longtime secretaries.

At the White House, Klein reportedly hoped for the solicitor general's post, but instead ended up in the No. 2 job at the antitrust division. Some legal sources speculate he was sent as a pro-business ballast to then-antitrust chief Anne Bingaman, whose activism had begun to make some administration officials uneasy.

After Klein in 1996 replaced Bingaman, another former Onek, Klein & Farr partner, he hardly turned out to be the corporate cheerleader that many had expected. Nor was he the brash autocrat anticipated by detractors. Instead, he studied up on the applications that antitrust law might have for the rapidly expanding high-tech industry.

There is plenty these days to keep him busy. Justice and the Federal Trade Commission got more than 3,700 pre-merger notifications in 1997, nearly double the number from five years ago. Justice investigated 220 of those, up from just 52 in 1992.

"He's picked a great time to be antitrust chief because the level of merger activity is spectacular and that department has reached rock bottom in the past few years," consumer activist Ralph Nader said.

Violating antitrust law isn't like breaking the speed limit – reasonable people can disagree about what constitutes market domination or unfair trade practices. So Klein must draw lines in this somewhat arbitrary realm of the law.

"My thinking is mainstream economic thinking," he said, citing mainstream economic thinkers as his great influences. Bent on engaging the courts and sparking some debate about antitrust matters, Klein said he'd rather fight than settle cases, preferring to go to trial over quietly negotiating financial penalties.

"Where I think there is a case, I want to litigate," he said, wearing a blue suit and sitting cross-legged in an armchair. "I'm not looking for seven cents on the dollar, or something like that."

As maneuverings in the Microsoft case continue, he has resisted getting into a personal war of words with Microsoft chairman Bill Gates, though at times he seems sorely tempted.

Gates has "had some fun at my expense," he said. "I don't think that I want to regulate the software industry. I don't think that's a fair rap. I do believe that there are certain rules that a monopolist must abide by."

From the get-go, Klein has cautiously plotted his case. Though he oversees more than 300 lawyers, he recruited New York super-litigator David Boies to the cause. And right before he filed suit, Klein invited a dozen or so reporters who cover Justice to his house for a get-acquainted dinner and a little pre-media blitz schmoozing. Over wine and hors d'oeuvres, he gave only the faintest of hints that he was readying one of the splashiest antitrust cases in the department's recent history.

Nader and others say it's too early for definitive opinions about Klein. The true tests of his tenure will come with looming mergers in the pharmaceutical and airline industries, they say.

But he has already won over at least one doubter. Last week, at a reporter's request, Sen. Hollings released this one-sentence appraisal: "So far, Joel Klein has done a fine job."

– Staff writer Tim Smart contributed to this report.

© Copyright 1998 The Washington Post Company

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