Who is Bill Gates Sr.?
Why should we be taking instruction in the dynamics of inheritance from the father of the world's richest child?

By Neal B. Freeman, chairman of the Foundation Management Institute.
April 10, 2001 10:30 a.m.

espite its success in the House last week, repeal of the death tax is looking like anything but a slam-dunk. Indeed, White House nerves were showing earlier in the week when, in an interview with USA Today, Bush economic adviser Larry Lindsay opined that estate-tax repeal "might be something you might want to delay." Why, pray tell, might it be something you might want to delay, Mr. Lindsay, when death-tax relief can't happen fast enough for your small business-farm state-investor class base?

Well, it might be because you just got your clock cleaned in a public debate with a charming old guy named Bill Gates Sr.

Virtually invisible two months ago, Bill Gates Sr. has become a media omnipresence in the early months of the Bush administration. In a grand tour of uptown D.C. outlets, he has made his quiet argument in forum after forum: The estate tax is a good thing, he says, an American thing, even an obligatory thing. As he summed up his views for the New York Times, "If society has been exceptionally good to you, then it's incumbent on you to make a larger contribution to the welfare of society." Coming from a nice man whose name is synonymous with world-class wealth, this statement seems to have had the effect of a paralyzing dart. The death-tax-cutting movement, which attracted more than 60 Democratic votes in the House last summer, has become a dead-even, pick 'em contest this year.

This is a neat political trick, which begs the question: Who is Bill Gates Sr.? For openers, yes, he is the Gates of Preston Gates Ellis & Rouvelas Meeds, a medium-big presence along Washington's legal/lobbying frat row. Preston Gates is not a white-shoe firm. You wouldn't think of them first to craft your Supreme Court brief. But it has become in recent years a hive of fix-and-favor activity in the classic Beltway style. Busy beavers on the Hill and at the regulatory agencies, doing the careful public business of private interests. Preston Gates is near the top of the second tier, very much on the make.

Gates Sr. is retired now, but he played a large role in the history of the firm. The original partnership, started by the eponymous Mr. Preston in 1883, grew slowly through a series of mergers to become, by the end of the 1960s, a respected, mid-sized Seattle firm with 13 lawyers. Then the real growth began, powered in significant part by the firm's lead client, a little software company called the Microsoft Corporation based in nearby Redmond. Business was good for Gates Jr.'s start-up, and then it was better, and then, by the mid-90s, it became a breathtaking, paradigm-shifting blowout. The fortunes of Preston Gates rose briskly as well, not at the same exponential rate, of course, but fast enough for the firm to boast today that it employs 350 lawyers.

The quick take here might be that Bill Gates Sr. is one of those demographic oddities — a parent who, in effect, inherits great wealth from his child. But that would make the story too pat. The older Gates could then be portrayed as the little man in The New Yorker cartoon who presents himself to the desk sergeant at the police station and announces, "I'm a white liberal and I'm here to turn myself in." No, this story has another wrinkle.

It turns out that Bill Gates Sr. did not specialize in antitrust work or Internet issues or any legal esoterica of special value to the Microsoft Corporation. No doubt he dispensed as much fatherly advice as his supremely self-confident son was willing to absorb. But according to Preston Gates's authorized history, one of Gates Sr.'s strong suits down at the office was … personal estate planning. Another, straighter way of saying the same thing would be to note that Gates Sr. deployed his considerable legal skills to helping people avoid estate taxes.

So, to double back and parse that crowd-stunning admonition to America's well-off that it is "incumbent on you to make a larger contribution to the welfare of society," it would appear that Gates Sr. was addressing himself only to you and me and the rest of the suckers — not to the well-cared-for clients of Preston Gates. It was incumbent on them to avoid the damn tax.

Mr. Gates, remind me, please: Why should we be taking instruction in the dynamics of inheritance from the father of the world's richest child?