Enron's law firms, banks targeted

By Edward Iwata
USA Today

SAN FRANCISCO — The lead attorney for a shareholder class-action lawsuit against Enron plans to file an amended complaint today that may name law firms and investment banks with deeper pockets than ailing Arthur Andersen.

The original lawsuit — filed late last year in federal court in Houston by Milberg Weiss Bershad Hynes & Lerach on behalf of Enron investors — accuses Enron and former auditor Arthur Andersen of securities and accounting fraud. Attorney William Lerach, who represents the University of California Regents, the class action's lead plaintiff, is expected to announce the amended complaint today.

Enron's law firms, Vinson & Elkins in Houston and Kirkland & Ellis in Chicago, are expected to be named in the updated lawsuit, according to legal experts.

Investment banks also expected to be named in the amended complaint include Goldman Sachs, Salomon Smith Barney, J.P. Morgan Chase and others that helped with Enron's financing, advised the Houston-based energy firm on its allegedly fraudulent accounting practices or underwrote its securities offerings.

Attorneys for Kirkland & Ellis said last week there is no legal reason to include their firm in any Enron-related complaints.

"There is no basis for liability," says Laurence Urgenson, a partner at Kirkland & Ellis. "Any effort to include us would seek to use guilt by association."

Attorneys for Milberg Weiss in San Diego declined last week to discuss the lawsuit.

One legal expert says there's no point in winning a lawsuit against a potentially insolvent defendant, so it's wise for Lerach and the regents to go after firms with more assets than Andersen.

Andersen, one of the Big Five accounting firms, faces possible bankruptcy, a criminal indictment by the Justice Department and several federal investigations.