Vinson & Elkins, Texas,
Bush and Enron
.abcnews.com/wire/ap
HOUSTON (AP) Vinson & Elkins' reputation took 80 years to
polish and one client to smudge.
The largest law firm in Houston and the most profitable in
Texas, Vinson & Elkins has been stung by accusations it
showed poor judgment or worse in work for Enron Corp.
An Enron insider claims Vinson & Elkins blessed
partnership deals that hid the energy trading company's shaky
financial situation until it collapsed into bankruptcy.
Outside lawyers say the firm violated
ethical standards by reviewing the accusations itself
instead of demanding an impartial, outside review.
V&E has worked for Enron since the energy company's
founding in the mid-1980s and Enron is now its biggest client,
accounting for $35 million of its $450 million in billings last
year.
Vinson & Elkins' work for Enron might not have attracted
much attention but for an Enron executive's letter written in
August to chairman Kenneth Lay.
The executive, Sherron Watkins, fretted that Enron could
"implode in a wave of accounting scandals," and urged the company
to hire a law firm to investigate murky accounting and
partnership deals that helped keep billions in debt off Enron's
books.
"Can't use V&E due to conflict they provided some true
sale opinions on some of the deals," Watkins wrote. Lawyers write
true sale opinions on the legality of transactions.
Enron ignored Watkins' plea and turned back to Vinson &
Elkins. In October, V&E partner Max Hendrick III wrote to
Enron's general counsel James Derrick Jr., a former V&E
partner, that Watkins' charges could prove embarrassing but
merited no further investigation.
Lawyers who specialize in suing other lawyers say Vinson &
Elkins left itself open to attack by angry shareholders and
ex-employees by not insisting that another firm be hired to
investigate Watkins' claims.
"When you've got someone asking you to review your own
conduct, there's a bias," said Sean Jez, who represents
shareholders suing Enron officers and directors.
A legal malpractice specialist, Valorie Davenport, said big
law firms fight over clients Enron's size and tend to gloss over
problems to get and keep that business.
Vinson & Elkins won't say what role it played in approving
the controversial Enron partnerships.
Watkins, the Enron executive who raised the accusation against
the law firm, doesn't have documentary proof but "reliable
sources communicated to her that the work was done," said her
lawyer, Philip Hilder.
A spokesman for Vinson & Elkins, Joe Householder, said the
firm couldn't discuss its work for Enron because it still
represents the company.
"We are fully confident that everything we've done for Enron
is to the highest professional and ethical standards," he
said.
Founded in 1917, the firm specialized in working with banks to
provide legal advice and financing to Texas' then-young oil
industry, and it grew rapidly as the energy sector boomed.
"They did very good work, much of it humdrum work, like
checking land titles. Attention to detail," said Harold Hyman, a
retired Rice University history professor who wrote a book about
the firm.
Vinson & Elkins partners, who once included former Texas
Gov. John Connally, grew rich.
But the firm also developed a progressive reputation for doing
pro bono work on civil-liberties cases and for hiring female,
black and Jewish partners in the 1970s, before many other Texas
law firms did.
The law firm has forged close ties with many Texas
politicians, especially President Bush.
Two of its partners and a third who recently left were among
the "pioneers" who raised at least $100,000 for Bush's
presidential campaign. White House counsel Alberto Gonzalez
sometimes mentioned as a possible Bush nominee to the Supreme
Court is a former Vinson & Elkins attorney.
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