It was a holiday gift ten years and billions of dollars in the making.

On Dec. 16, 2009, Microsoft Corporation’s legal department settled the company’s longest and most expensive antitrust legal battle. In a major concession to European regulators, the software giant agreed to open its Windows operating system to rival Web browsers.

Microsoft’s general counsel, Brad Smith, and his legal team spent months last year hammering out the details of the 61-page settlement with the European Commission, the European Union’s executive body. By fall, Microsoft’s legal department had held 24 videoconferences and 34 conference calls with E.C. lawyers. “We wanted to be seen as a company that would work with regulators,” said deputy general counsel David Heiner, who heads the antitrust group and led much of the negotiations.

Some have called the settlement one of Smith’s crowning achievements. He and his legal team ended more than a decade of close scrutiny by European regulators. The software colossus can keep doing business across the Atlantic, and the stage is now set for better relations with Brussels. “There could have been an endless succession of slug-it-out battles to the death, and instead Microsoft elected to make some perhaps unwelcome but nonetheless significant concessions,” said Ian Forrester, a partner at White & Case who represented Microsoft in Brussels. The case, he said, is “a really extraordinary piece of legal history.”

The settlement was also symbolic for the company’ s legal team, which has set out to prove that it can resolve disputes amicably, despite Microsoft’s reputation for aggressively fighting legal disputes to their bitter, final end. And much of that effort has focused on building relationships and listening to what the other side wants, and fears. “We have tried to make that a defined part of how we train people to negotiate — in any context,” Smith said. “That is not always successful, but has been widely successful for us.”

Since Smith took the helm of Microsoft’s in-house legal department in 2002, he’s led a campaign to recast his company’s pugnacious image and come to terms with both regulators and Redmond’s fiercest competitors. Last year, for example, along with resolving the Brussels imbroglio, the department helped put together a friendly partnership deal with Yahoo! Inc. after months of acrimonious takeover discussions. The E.C. agreement was the culmination of Smith’s diplomatic offensive.

That’s not to imply that Microsoft has gone all touchy-feely. It remains a formidable legal opponent, especially when it comes to protecting the company’s most valuable asset — its intellectual property. Last year the legal department won two precedent-setting patent defense victories on appeal. Meanwhile, it stopped several consumer lawsuits from getting class certification.

Those litigation successes are among the many reasons we have awarded Microsoft’s lawyers the accolade of Best Legal Department of 2010. It's the fifth time we’ve given out the award, and, as usual, the competition was extremely tight. Corporate Counsel’s writers and editors spent days debating, arguing, and exchanging sometimes heated e-mails. After sending reporters to interview the finalists, we confirmed our ultimate choice.

via Law.com – Microsoft Wins Best Legal Department of 2010.