Enron Investors' Lawyers Get Record $688 Million Fee
By Laurel Brubaker Calkins and Jef Feeley
Sept. 9 (Bloomberg) -- Lawyers for Enron Corp. investors will get a record $688 million in legal fees for recovering more than $7.2 billion from the failed energy trader's lenders, auditors and directors, a U.S. judge ruled yesterday.
The fee is the largest ever in a U.S. securities-fraud case, according to data compiled by Bloomberg. The judge said it was justified in light of the record-setting amount the lawyers recovered for Enron investors, who sued for more than $40 billion in losses.
The court ``finds no `windfall''' in fees awarded to Coughlin Stoia Geller Rudman & Robbins, ``but a reasonable fee earned by an extraordinary group of attorneys who achieved the largest settlement fund ever despite the great odds against them,'' U.S. District Judge Melinda Harmon wrote.
The lawyers spent more than 280,000 hours preparing for trial and negotiating out-of-court-settlements with Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Canadian Imperial Bank of Commerce, Lehman Brothers Holdings Inc., Arthur Andersen LP, Kirkland & Ellis, Enron's former outside directors, and others, according to Harmon's ruling.
The attorneys created a document depository for millions of Enron documents and deposed more than 420 witnesses. They paid more than $45 million in out-of-pocket expenses to fund the litigation, which began in late 2001.
Harmon called the fee ``fair and reasonable,'' and said the lawyers' 9.52 percent rate was ``substantially lower'' than in comparable class actions, or group suits, at the time Coughin Stoia negotiated its representation for the University of California regents, the lead Enron plaintiff. The judge also awarded interest on the fee.
``We worked so hard and long on the case it feels good the court recognized all the hard work,'' Patrick Coughlin, lead lawyer in the Enron case, said in a phone interview today.
Harmon also approved the settlement distribution plan, so the law firm expects to begin distributing settlement money to plaintiffs by the end of the year, the attorney said.
Enron was the world's largest energy-trading company, with a market value of as much as $68 billion, before it collapsed amid allegations of accounting fraud in December 2001. The company's bankruptcy, the second-largest in U.S. history after WorldCom Inc., wiped out more than 5,000 jobs and at least $1 billion in retirement funds.
The case is Newby v. Enron Corp., 01-CV-3624, U.S. District Court, Southern District of Texas (Houston).