BusinessBusiness RecoveryLaw firm pays millions to Enron’s estate

Law firm pays millions to Enron's estate

Texas law firm avoids court action by paying millions to settle potential malpractice claims over Enron advice

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

Law
firm’s Enron settlement is $18.5 million

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