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24 Jan 2007
A law firm in Texas is to pay Enron's estate $18.5 in settlement over potential malpractice claims pertaining to legal advice the firm allegedly offered the company over asset transactions.
The settlement follows a report by a court-appointed bankruptcy examiner, which stated that the firm may have committed malpractice in approving 28 transactions that involved asset transactions, alleged to have been disguised as sales. The classification of the transactions in such a manner could have allowed Enron to falsely boost its cash flow.
The firm, Andrews Kurth, denied any culpability regarding the advice they gave Enron. 'We have continuously denied wrongdoing and culpability with respect to our work for Enron,' managing partner Howard Ayres said in a statement.
'We felt, though, after the passage of five years, that it was expedient to enter into the settlement to put this matter behind us,' he added.
The Enron estate has not officially sued the law firm for allegedly signing off improper deals.
However, Houston-based firm, Vinson & Elkins, settled bankruptcy-related litigation for $30m last year, after a bankruptcy examiner alleged the law firm may have committed malpractice for failing to respond to red flags about Enron's accounting practices.
A federal bankruptcy judge is still to approve Andrews Kurth's deal.
Further reading:
Enron accountant jailed for five and a half years
Andrews Kurth Negotiates Proposed Settlement With Enron, Unsecured Creditors
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