|
 |
| 2002 News and Press Releases |
|
|
HEADLINE:
Kirkland Protected By Silence In Enron Unlike Vinson & Elkins, Firm Made No Disclosures
By: Anthony Lin
New York Law Journal, Vol. 228; Pg. p. 1, col. 5. December 30, 2002
_________________________________________________________________________
EXCERPT: VINSON & ELKINS and Kirkland & Ellis both provided legal advice necessary for Enron Corp. executives to allegedly orchestrate a fraudulent scheme to enrich themselves at the expense of Enron shareholders, and both were named as defendants in the shareholders' class action against those executives and their advisors in federal court in Houston. But Kirkland has been dismissed from suit; Vinson & Elkins has not. The difference was that Kirkland was able to keep quiet, Judge Melinda Harmon of the U.S. District Court for the Southern District of Texas ruled in a controversial 307-page decision that may also point out a loophole in efforts to police the legal profession. In her Dec. 20 ruling on motions to dismiss by "secondary actors" in the Enron class action, Judge Harmon concluded that professionals - including lawyers and accountants - who made public statements about their client's financial condition had a duty to third parties "not to knowingly or with severe recklessness issue materially misleading statements on which they intend or have reason to expect that those third parties will rely." The judge, who also denied most of the demurrers filed by the nine banks named as defendants in the class action, found that lawyers at Houston-based Vinson & Elkins and accountants at Arthur Andersen fell into the category of professionals who had made public statements. Lawyers at Chicago's Kirkland &
Ellis did not. "[H]ad Vinson & Elkins remained silent publicly, the attorney-client relationship and the traditional rule of privity for suit against lawyers might protect Vinson & Elkins from liability to nonclients for such alleged actions on its client's [and its own] behalf," the judge wrote. "But the [shareholders'] complaint goes into great detail to demonstrate that Vinson & Elkins did not remain silent, but chose not once, but frequently to make statements to the public about Enron's business and financial situation," she continued. The public statements Vinson & Elkins is charged with making were primarily the disclosure statements prepared on Enron's behalf to the U.S. Securities and Exchange Commission. The drafting of such statements, quarterly and otherwise, would be one of the primary responsibilities of any law firm regarded as regular outside counsel to a public corporation.
|
|
|
