American Legal Eagles Vie for an Enron Bonanza; A FORMIDABLE WOMAN HOLDS THE CARDS AS LAW FIRMS BATTLE TO LEAD THE RECORD FRAUD CASE
Chambliss, Lauren, Hart, Joanne, The Evening Standard (London, England)
Byline: LAUREN CHAMBLISS;JOANNE HART
TEXAS Judge Melinda Harmon is expected soon to hand the Holy Grail of class action legal assignments to one law firm - consolidating control of the dozens of class-action lawsuits against Enron, its board members, former executives and accountants Andersen.
The judge will probably pick one of three teams of powerhouse law firms currently vying to be the lead plaintiff in the largest business fraud case ever assembled against a single corporation.
In all, 60 investor suits are seeking more than $60 billion ([pound]42 billion) in damages from bankrupt Enron and the others involved in the most spectacular corporate collapse in US history.
Even if only a fraction of that is eventually recovered, the potential reward to the lead law firm co-ordinating the legal charge could be off the charts, easily surpassing the $262 million awarded to lawyers for their work in the Cendant case, which settled for a record $3.5 billion.
The three law firms - Milberg Weiss Bershad Hynes & Lerach, Lieff Cabraser Heimann & Bernstein and a team combo of Chitwood & Harley and Grant & Eisenhofer - are top dogs in the rough-and-tumble world of classaction litigation, the big-money cases where numerous plaintiffs are rolled into one giant claim.
Milberg Weiss has filed almost half of all shareholders' class-action suits in the US and its flamboyant attorney William Lerach is greatly feared in Silicon Valley, where he has tied up hi-tech companies with collapsed share prices in contentious legal battles for years. Milberg Weiss represents the University of California's activist pension fund, CALPERS, which lost a whopping $144 million when Enron's share price collapsed just before its bankruptcy filing in early December.
New York City and Florida pension funds, which lost $440 million between them, are represented by Lieff Cabraser, a San Franciscobased firm that has won high-profile awards for clients in automobile, tobacco and other consumer classaction cases.
Judge Harmon will consider several factors in merging the 60 shareholder suits and picking a lead firm. The resources of the plaintiffs, how much they lost and the experience of their counsel will all guide her decision. In 1995 Congress passed a Tort Reform Act giving Judges the power to pick the firm best suited to the job - not necessarily the one that first filed a case.
Another factor the judge may consider is whether the lawyers are willing to accept lower fees, given the potential enormity of the amounts involved.
Attorneys typically take anything between 10% and 25% plus expenses, substantially reducing the payoff to the victims they represent. Pressure is mounting in America to keep the lawyers from walking off with a mountain of cash intended for the institutional investors and millions of individual shareholders who lost real money in Enron's share-price collapse.
President George Bush's stepmother lost about $ 8000 when Enron imploded, and she is among the lucky ones. There are countless stories of investors who lost more than half of their savings tied up in stock in a company that Wall Street analysts routinely touted as a new-economy star.
Institutions are particularly keen to limit the lawyers' slice of the classaction pie, says Meredith Miller, assistant treasurer with the State of Connecticut, the lead plaintiff in a case against Waste Management that was also tried in Judge Harmon's courtroom.
"We have made it priority to get the lawyers' fees down below 6% to increase our recovery of assets," says Miller. "We want shareholder suits in which lawyers aren't seen as gobbling everything up."
How much there will be to recover is an open question. Even if the shareholder suits prevail, recovery of damages could be limited because Enron is in bankruptcy and there is a long line of creditors with a claim to Enron assets. …