In the Enron shareholders' civil lawsuit against Enron executives, banks and law firms, we know how the two Enron defendants emerged.  Kirkland & Ellis was dismissed early on by their own motion, and Vinson & Elkins will probably be voluntarily dismissed by a motion from plaintiffs, who have decided on a post-PSLRA "deep pockets" strategy.  But there were Houston law firms involved in other litigation -- the bankruptcy litigation.

Enron's bankruptcy estate has been pursuing those claims that the company otherwise would have had.  Well, if you see all your nice transactions being shot down by the DOJ, and you knew those transactions were blessed by outside counsel, then that smells like malpractice.  Vinson & Elkins, who may escape liability to Enron shareholders in one federal court, has already paid in $30 million to settle malpractice claims against them.  Today, Andrews & Kurth (who was never formally sued) has settled similar malpractice claims after court-ordered mediation for $18.5 million.  Regardless of whether law firms escape primary liability under securities laws (as was the hope and promise of the PSLRA), the Enron tale is still a cautionary one for outside counsel.

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