Fee
Enron lawyers claim record $700m legal fees
A class action law firm is claiming almost $700m (£340 million) in legal fees for its work helping investors recoup losses from the collapse of Enron. If approved, it would be the largest legal payday in US history.
Coughlin Stoia Geller Rudman & Robbins says that it has helped claimants recover almost $7.3 billion, mostly from financial institutions that investors say played roles in the accounting fraud that led to Enron's 2001 collapse.
In court papers filed this week, the firm asked a federal judge in Houston to award fees equal to 9.5 per cent of the money recovered from the Enron fraud so far, or about $687 million. The payout must be approved by a judge which can force lawyers to take a lower fee.
A spokesman for the San Diego-based firm, which has separate cases ongoing against GlaxoSmithKline and BAE Systems, said the fees were “fair”.
"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,” the spokesman said.
As lawyers to the Regents of the University of California investment fund, the lead claimants in the Enron banks litigation, Coughlin Stoia has done the bulk of the legal work.
Since it offers its clients no-win, no-fee terms and litigation is often unsuccessful or dismissed, the firm has also put a substantial amount of its own capital at risk.
Rod Jordan, a former Enron project manager who stands to benefit from the firm’s work, said the fees were acceptable.
"When you look at the lawyers on their team and the number of years they've spent, my opinion is they probably earned it," said Mr Jordan, chairman of the Severed Enron Employee Coalition.
Although the overall fee request dwarfs previous payouts, at 9.5 per cent of the total amount recovered it is modest by US standards. Class action law firms, including Coughlin Stoia, routinely take 20 per cent or more of the money they recover in fees.
Coughlin Stoia Geller Rudman & Robbins was previously called Lerach Coughlin Stoia Geller Rudman & Robbins. It rebranded earlier this year after co-founder Bill Lerach pled guilty to conspiracy over his role in a scheme that bribed claimants to sign up to class action lawsuits.
Coughlin has helped recover almost $7.3 billion from financial institutions including Bank of America, JPMorgan Chase and Citigroup.
The money was secured as 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, Credit Suisse and Barclays which have all denied wrongdoing.
Enron, once the US’ seventh-largest company, entered bankruptcy proceedings in December 2001. Its subsequent 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 nullified after he died of heart disease last year.
(Published by Times Online, November 23, 2007)
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