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Joel Brown |
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A Modest
Proposal: Firm Suggests By Juan A. Lozano A law firm is asking a federal judge to approve nearly $700 million in attorney fees for its efforts to help Enron Corp. shareholders and investors recoup billions they lost after the once-mighty energy company collapsed. San Diego, Calif.-based Coughlin Stoia Geller Rudman & Robbins said that it has helped plaintiffs recover almost $7.3 billion so far, mostly from financial institutions that investors claim played roles in the accounting fraud that led to Enron's 2001 unraveling. If approved, the attorney fees would be the largest in a securities fraud case. The law firm, in court papers filed Tuesday, asked a federal judge in Houston to award attorney fees equal to 9.5 percent of the moneys recovered so far, or about $687 million. The fees are fair, said Dan Newman, a spokesman for the law firm, which represents the Regents of the University of California, the lead plaintiffs in the litigation. "Millions of defrauded Enron victims will receive billions of dollars. It is the largest recovery in history and the most complex and successful securities case in history," he said. "It's so substantially above any recovery that's been obtained for victims of fraud." To Rod Jordan, a former Enron project manager waiting to see if he will get money from the settlement, the fees sound reasonable. "When you look at the lawyers on their team and the number of years they've spent, my personal opinion is they probably earned it," said Jordan, chairman of the Severed Enron Employee Coalition. "It would be nice to get a lawyer to do it pro bono, but you're not going to get that." The nearly $7.3 billion plaintiffs have recouped has come mostly from such financial institutions as Bank of America, JPMorgan Chase & Co., Citigroup and Canadian Imperial Bank of Commerce. The money recovered was part of a $40 billion lawsuit that alleges financial institutions that worked with Enron participated in the accounting fraud that led to the company's bankruptcy. Remaining defendants in the case include Merrill Lynch & Co., Credit Suisse First Boston and Barclays PLC, as well as former Enron CEO Jeffrey Skilling, who is now in prison. The banks and firms have denied wrongdoing. The suit was put on hold earlier this year by a federal appeals court ruling. Attorneys appealed to the U.S. Supreme Court. But the court neither accepted nor rejected it, instead deciding to hear another case that has similar issues related to setting boundaries in stockholder lawsuits for securities fraud. The court has not made a ruling in that case. Tuesday's court filings also asked that U.S. District Judge Melinda Harmon begin reviewing the plan for how the nearly $7.3 billion will be distributed. Investors and shareholders will be given a chance to give their formal input about the proposed plan. But the distribution of funds won't begin until Harmon gives final approval to the plan, which won't be until sometime next year. To be eligible for the settlement, investors and shareholders needed to have bought Enron or Enron-related securities between Sept. 9, 1997 and Dec. 2, 2001. Jordan said he is concerned about what shareholders will get. "The bottom line is, will stockholders see any significant amount? If it was 10 percent of what we lost, I would feel pretty happy. But shareholders usually get somewhat less than that," he said. Enron, once the nation's seventh-largest company, entered bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans. Enron founder Kenneth Lay and Skilling were convicted last year for their roles in the company's collapse. Skilling is serving a sentence of more than 24 years. Lay's convictions for conspiracy, fraud and other charges were wiped out after he died of heart disease last year.
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A Feast
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