Texas law firm Andrews Kurth will pay Enron's estate $18.5 million to settle potential malpractice claims stemming from legal advice the firm allegedly offered concerning the energy giant’s asset transactions.
"We have continuously denied wrongdoing and culpability with respect to our work for Enron," Andrews Kurth managing partner Howard Ayres said in a statement. "We felt, though, after the passage of five years, that it was expedient to enter into the settlement to put this matter behind us."
While the estate never officially sued the law firm for allegedly signing off on improper deals, a court-appointed bankruptcy examiner has written in reports that the firm may have committed malpractice in approving 28 transactions that involved asset transactions allegedly disguised as sales. Classifying the transactions in such a manner could have allowed Enron to falsely boost its cash flow.
Last year, another Houston-based law firm -- Vinson & Elkins -- settled bankruptcy-related litigation for $30 million. The bankruptcy examiner had alleged that Vinson & Elkins may have committed malpractice by failing to respond to red flags about Enron’s accounting practices.
Both law firms neither admitted, nor denied, wrongdoing or liability in agreeing to the settlements.
A federal bankruptcy judge must approve Andrews Kurth’s deal.
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