Vinson defends itself against Enron report

Vinson & Elkins has come out fighting in response to criticism levelled at it in a report by Wilmer Cutler & Pickering partner William McLucas on behalf of a special committee of the Enron Corporation board

The report asserts that the Houston firm was instrumental in a number of Enron's more controversial deals. But in an interview with US publication the Legal Times, an anonymous Vinson partner argued otherwise.
Enron is understood to have contributed to nearly 10 per cent of Vinson's $455m (£318.8m) turnover last year. McLucas's report is explicit in its criticism of the firm's lack of “objective and critical professional advice”.
Taking an adversarial position to the report, the Vinson partner said: “We're confident that, when all the facts are known, it will be understood that we fulfilled our professional obligations.”
On assessing the formation and subsequent activity of Enron's partnerships, the report is censorious in its conclusions. It states: “Many of the most significant transactions apparently were designed to accomplish favourable financial statement results, not to achieve bona fide economic objectives or to transfer risk.”
It goes on to tell of Vinson's role in providing advice and documentation for many of the partnership deals and in preparing disclosures. It states that Vinson should have offered a more objective stance to the disclosure process. Vinson disagreed.
Vinson's representative partner said that, although the firm assisted in some documentation and disclosure work, it was not the Enron partnerships' counsel. Chicago's Kirkland & Ellis acted for some of the partnerships, including LJM1 and LJM2, originally developed by Enron's then chief financial officer (CFO) Andrew Fastow.
The partner added that the report overemphasises the firm's involvement in Enron's business. He argued that the company's large in-house team handled much of Enron's legal work.
The partner also takes umbrage with the notion that Vinson was insufficiently robust in venting critical concerns at some of Enron's antics. He said the firm recommended disclosing the fact that Fastow sold his interest in LJM2 to another former Enron employee, Michael Kopper.
Enron chose not to take the advice and filed a 10-Q statement that read: “A senior officer, who previously was the general partner of these partnerships, sold all of his financial interests.” Fastow is understood to have made about $30m (£21m) from LJM deals done with Enron while he was the company's CFO.
The partner concluded his response to the report with the following: “When clients ask us, 'Is there a legal way to do something?', our job is to take the facts given to us and figure out if there's a legally appropriate way to do it. That's what we do. And so does every other law firm in America.”