Class action lawyers who went after the various deep pockets in the Enron Corp. collapse — the team was led by now-disgraced William Lerach — want what may be a world record fee for an action of the sort. Highlight: Columbia lawprof John Coffee, whom lawyers often bring in to testify for fee requests, says courts’ eventual rejection of the lawyers’ claims against banks and investment companies — after some had paid fortunes to avoid the risk of trial — is actually a reason to pay the lawyers more, ’cause it shows that they were being creative and taking risks:
The Columbia professor, who was hired to submit a declaration supporting the award of legal fees, said it was a testament to Lerach’s skills that he convinced large corporations to pay billions in a case that turned out to be fatally flawed. “We now know it was an extraordinarily high-risk case because, ultimately, you lost it,” he said.
Texas Attorney General Greg Abbott is among those objecting to the fees as excessive. (Josh Gerstein, “Judge To Mull $695 Million Legal Fee”, New York Sun, Feb. 29; “Texas Objects To Enron Fees”, Mar. 13).
5 Comments
Chutzpah
The Sarbanes-Oxley Act was enacted on July 30, 2002 in part as a reaction to the collapse of Enron.
The recent Bear Sterns collapse indicates that SOX was ineffective. The American Public loves witch trials, but hysteria is a poor basis for law making.
Both Enron and Bear Sterns were runs on the bank caused by factors beyond the control of the respective corporate managers.
I pray that we avoid more SOX type nonsense and take account that lack of regulation of mortgages let “little guys” game the system to enjoy housing beyond their means and “levered” profits from flipping houses.
um, wow William. Enron and Bear Stearns aren’t even in the same ballpark and Sarbanes wasn’t intended to prevent a corporate collapse. Enron collapsed b/c it was a house of cards built on deceptive business practices and fraud on the market. Bear Stearns is a very leveraged business, but that is well known.
Yes, Sarbanes is a mess and it horribly expensive for public companies to comply with, but please understand that it was not meant as a way to prevent a corporation from failing.
I have sent the following email to Professor Coffee:
Subj: Enron attorney fees
Dear Professor Coffee,
I saw you referred to and quoted in a March 17, 2008 entry in overlawyered.com as being supportive of the Enron attorney fees request and to the effect that you often testify for fee requests.
Do you have any writings in electronic form that you could send to me, or are there any books or articles you have written not in electronic form that you could cite me to, in which you lay out your positions and arguments relative to tort reform and plaintiffs’ lawyers?
For what it is worth, I am squarely in Walter Olson’s camp and have my own blog to show for it. I am interested in finding cogent statements of the case on the other side from Mr. Olson and myself, but have not found much yet. I hope you can help me out.
Thank you.
Sincerely,
Robert Shattuck
[…] class action critic” to spell out a little more explicitly that, you know, Coffee was hired by the plaintiff’s lawyers in this case to defend their fee request? Doesn’t that make it less surprising that Patrick Coughlin “welcomes the positive […]