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Enron the 2008 version

Old 09-09-08, 11:39 AM
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Enron the 2008 version

my math gives me a billing rate of almost $2500 per hour

Enron Investors' Lawyers Get Record $688 Million Fee (Update1)

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.

`Hard Work'

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).
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Old 09-09-08, 12:13 PM
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If this is no windfall, then surely oil profits don't qualify either.
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Old 09-09-08, 12:34 PM
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Your math is wrong.

688 million - 45 million for expenses / 280,000 hours = $2296.42 per hour.

It's a lot but probably not unreasonable given that they've been working on this for 7 years (apparently) without any compensation. I'm not sure I can call it unreasonable.
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Old 09-09-08, 12:39 PM
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Since when isn't $2296.42 almost $2500?
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Old 09-09-08, 01:00 PM
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i didn't factor in the $45 mil so i got around $2457 and change per hour
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Old 09-09-08, 03:40 PM
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Originally Posted by wendersfan View Post
Since when isn't $2296.42 almost $2500?
Rounding that much is going to make me start to question your graphs.

I (rightly) assumed al bundy wasn't including the $45MM expenses because $2457 was really close to $2500.
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Old 09-09-08, 03:50 PM
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When you are talking 280,000 hours, I don't think $2457 is even really close to $2500. That's a difference of $12 million!
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Old 09-09-08, 04:16 PM
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Note that they spent 280,000 hours on preparing for the trial(s).
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Old 09-09-08, 05:05 PM
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And it's not like it's one lawyer charging a $2500 per hour fee. It's a whole swarm* of lawyers.

* I believe that's the correct collective noun for lawyers
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Old 09-09-08, 06:05 PM
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Originally Posted by Breakfast with Girls View Post
And it's not like it's one lawyer charging a $2500 per hour fee. It's a whole swarm* of lawyers.

* I believe that's the correct collective noun for lawyers
this is per hour billed, which is 1 lawyer doing 1 hour of work
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Old 09-09-08, 06:30 PM
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Billions to be shared by Enron shareholders
By JUAN A. LOZANO (Associated Press Writer)
From Associated Press
September 09, 2008 5:23 PM EDT
HOUSTON - Enron Corp. shareholders and investors will split about $7 billion from financial institutions accused of participating in the fraud that caused the once-mighty energy company to collapse.

The settlement amount was listed at $7.2 billion, a sum that has been accruing interest since 2002 and includes $688 million plus interest in attorneys fees.

The deal, approved late Monday by U.S. District Judge Melinda Harmon, and the attorneys fees are the largest in history in a U.S. securities fraud case.

"We're pleased that the court recognizes the tremendous amount of work, skill and determination required to overcome significant obstacles in this complicated case," said Patrick Coughlin, attorney for the regents of the University of California, the lead plaintiffs.

About 1.5 million individuals and entities will be eligible to share in the distribution under the settlement plan. The attorneys fees will go to San Diego-based Coughlin Stoia Geller Rudman & Robbins LLP, the law firm representing the university.

Besides the University of California, other plaintiffs who will share in the proceeds include pension plans from New York City and Hawaii, various investment firms and the Archdiocese of Milwaukee.

The distribution plan was part of a $40 billion lawsuit filed by shareholders and investors, who claim Bank of America, JPMorgan Chase & Co., Citigroup and others participated in the accounting fraud that led to Enron's downfall.

Calculating shares of the $7.2 billion will be determined by a formula that factors in such things as the stock's purchase price and the type of stock bought.

At its height, Enron's common stock sold for as much as $90 per share, before plummeting to as low as $1 right before the company declared bankruptcy.

Under the plan, investors will get an average of $6.79 per share of common stock and an average of $168.50 per share of preferred stock.

To be eligible for the settlement, investors and shareholders needed to have bought Enron or Enron-related securities between Sept. 9, 1997 and Dec. 2, 2001.

Attorneys for several investors objected to the distribution plan and the attorneys fees.

"This court reiterates that there is no way to allocate these proceeds that would not in some way favor or disfavor to some degree some of the class members," Harmon wrote in her order. "On the whole, the court finds that ... the chosen method is fair, adequate and reasonable."

Harmon also said the attorneys fees, which are 9.5 percent of the settlement, are "fair and reasonable."

Several financial institutions have not settled and remain as defendants in the Enron case, including Merrill Lynch & Co., Credit Suisse First Boston and Barclays Bank PLC. Several former Enron officers also remain as defendants, including former chief executive Jeffrey Skilling, now serving a criminal sentence of more than 24 years in federal prison in Minnesota.

But the lawsuit has been on hold since an appeals court last year ruled shareholders and investors could not sue as a class, which would have allowed them to sue as a group and have more leverage to settle the case out of court.

The U.S. Supreme Court in January refused to hear arguments in the lawsuit. The high court in a similar case gave a measure of protection from securities lawsuits to suppliers, banks, accountants and law firms that do business with corporations engaging in securities fraud.

Because of that ruling, Harmon is still deciding whether the financial institutions that remain as defendants will be dismissed from the lawsuit.

Enron, once the nation's seventh-largest company, entered bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable.

The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

Enron founder Kenneth Lay and Skilling were convicted in 2006 for their roles in the company's collapse. Lay's convictions for conspiracy, fraud and other charges were wiped out after he died of heart disease in 2006.
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Old 09-09-08, 09:18 PM
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The lawyers basically got 10% of the award. This is actually very low, when looking at it from percentages lawyers would normally take.

EDIT: D'oh. That's what they said in the article.
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