US indictment threatens legal network as key members poised to sever links
The Andersen Legal network is in danger of collapsing following the US Department of Justice (DoJ) indictment of Andersen LLP on obstruction of justice charges. One key member is close to pulling out of the network and others are considering whether to do so. Spanish member Garrigues made the decision in principle last Friday to quit the global organisation in the wake of the announcement. It is believed that the firm is close to quitting the network formally. Key Scottish member Dundas & Wilson, which was already considering a separate future in the event of an Andersen merger, is now considering its options. The Manchester branch of UK firm Garretts is currently in negotiations to move over to Addleshaw Booth & Co. Andersen Legal refused to comment on the possible departure of Garrigues or any other network member. Garrigues is one of Spain's most highly regarded firms and by far the largest, with over 900 lawyers, almost double that of its nearest rival. Together with Dundas and Rajah & Tann, it is one of the most high-profile members. Garrigues told The Lawyer in a statement: "The Spanish branches of Andersen have initiated a process to rescind the agreements that link them to the global Andersen organisation." Partner Fernando Mantilla-Serrano told The Lawyer that the decision was a direct response to the US DoJ indictment of Andersen LLP. The firm said in its statement: "This decision was taken to maximise the guarantees and establish the maximum defence of the activities and interests of their clients and employees, given the US Department of Justice ruling." Mantilla-Serrano added: "The situation is that we need a majority of our partners to agree to leave the Andersen Legal network. There has been no vote yet, but separation is now on the table." Dundas, with an annual turnover of £40m, is another key Andersen member. Managing partner Chris Campbell said: "Clearly, we were shocked by the allegations before the US courts. We're now considering all our options." Campbell refused to rule out the possibility that Dundas would pull out of the Andersen Legal network. However, he did say that he was in close consultation with the other Andersen Legal firms and would take their positions into account. Should another key member, such as Singapore firm Rajah & Tann, decide to pull out, the global network could collapse. Rajah & Tann declined to give any indication of its intentions as The Lawyer went to press. Despite the reasons given by Garrigues for disassociating the firm, Mantillo-Serrano claimed that his firm was not concerned about exposure to the Enron litigation. "On our current legal advice, we believe there's no risk of legal liability for other firms of the Andersen network," he said. Although the London office is now allegedly implicated in the shredding of documents, Andersen Legal's partners are not exposed to Enron-related liability. Most of the key Andersen Legal partners are also partners in Andersen Worldwide, an umbrella organisation for all of the Andersen organisations. Andersen Worldwide has not been made a party to any of the Enron litigation and it appears that both it and Andersen Legal have ring-fenced liability. However, it is believed that Andersen Legal and Andersen's European accounting firms have instructed long-term legal adviser Herbert Smith on partnership liability issues.