Friday, June 2, 2006

Vinson & Elkins Pays the Piper $30 Million

Houston-based law firm Vinson & Elkins agreed to pay $30 million to settle claims filed by its former client Enron over the firm's legal advice on various transactions that later turned out to a bit problematic when they came to light, causing the company to declare bankruptcy.  The firm achieved significant notoriety after Enron's collapse when its investigation of Sherron Watkins' claims of accounting fraud delivered a clean bill of health to the company.  The firm was criticized for accepting the assignment because of the restrictions placed on the investigation by Enron, then one of its largest clients, and the conclusion that Watkins' claims were little more than a public relations problem turned out to be wrong.  The liability claims by Enron were not based solely to the investigation sparked by Watkins, although V&E's report would have been an important piece of evidence if the case had gone to trial.  An AP story (here) quotes Harry Reasoner, the firm's managing partner from 1992 to 2001, discussing the settlement: "V&E met its professional obligations in its representation of Enron, and we could have demonstrated that at trial. Vinson & Elkins decided to settle the matter in order to avoid the burdens of protracted litigation." (ph)

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