Brief Fact Summary. The 10th Circuit considers the participation of two law firms in the events leading to the collapse of Enron, and finds that only one of them should be subject to suit.
Synopsis of Rule of Law. See Part Two for a complete discussion of the rule of law ultimately adopted in this case.
Issue. Which, if any, of the two law firms retained by Enron should be held liable as primary actors in this suit?
Held. Vinson & Elkins is held to be liable, while Kirkland & Ellis is not.
Vinson & Elkins: Vinson & Elkins was directly responsible for many of the worst securities violations alleged to have been committed by Enron. It not only facilitated the establishment and structuring of a series of highly illegal business transactions, but then frequently made public statements regarding Enron’s financial situation in order to influence the market and keep Enron’s credit high which it knew to be untruthful and in violation of Section:10b-5. Briefly stated:
a. “Vinson & Elkins chose to engage in illegal activity with its client in return for lucrative fees.”
Kirkland & Ellis: While Kirkland did represent Enron through a variety of questionable activities-and probably breached a number of ethical obligations in the process-no allegations made against it would tend to prove that it acted in any way that was not within the bounds of the attorney-client relationship or participated in any of the activities that harmed the plaintiffs in this action.
Discussion. The court suggests that V+E, despite its highly illegal activities on its client’s behalf, might not have been liable if it hadn’t made a series of public statements that it knew to be false in violation of Section:10b-5. Wh