June 18, 2006

After the Enron Trial, Defense Firm Is Stuck With the Tab.

That’s Carrie Johnson’s Washington Post headline and it makes me chuckle as I drift down through the article, for a couple of reasons. First, it’s kind of a jolt to be led to believe that Jeff Skilling’s lawyers won’t get paid, only to find they have already cashed in to the tune of $40 million and are merely whining about more.

We are a more society.

Johnson’s opener,

“To the list of employees, investors and businesses who suffered financial misfortune in Enron Corp.'s demise, add this one: the law firm defending former chief executive Jeffrey K. Skilling.”

Oh, be still my heart, for their financial misfortune.

Anatole France famously said,

“The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”

I don’t know a whole lot about Anatole, but I absolutely love that quote. He was so piercingly correct in that startling observation that they named a country after him and threw in a Nobel Prize.

In a shameless example of journalistic hand-wringing, Johnson reports that

“Even before the trial began in January, Skilling's team of more than 20 lawyers, paralegals and support staff burned through those funds, leaving the law firm holding the bag for "multiple tens of millions" of dollars in unpaid fees and expenses racked up during the four-month trial, Skilling's lead defense lawyer said.”

Burned through is an interesting term, given that Skilling was found guilty. But guilty (for a rich man) is a long way from behind bars. Which may give you some idea of why we have prisons that are clogged with the recipients of France’s ‘majestic equality.’

If you have forty mil to shove across the desk at some avaricious and well-connected law firm, you’re damned unlikely to be shuffled off to Sing-Sing in anything this side of natural death from old age, before the appeal process eventually runs out. Thus, the problem is not one for The Firm, but for Skilling—where to come up with more. In our more society, without a constant flow of more, The Firm won’t even file a motion.

A look at the numbers is simply astounding. The Firm’s claims are (so far as we know) for twenty employees. Let’s be rash and make some assumptions; 1 partner, 2 associates, 5 paralegals, 11 support staff and a partridge-in-a-pear-tree.

• Partner @ $500/hr.
• Associates @ $200/hr
• Paralegals @ $100/hr
• Support staff (secretaries, typists, etc.) @ $75/hr

In order to get an hourly number, let's assume they all worked full-time, which is admittedly an error factor, because partners seldom work full time on a single client.

Anyway, the hourly number is (including the partridge), $2,300. Weekly, that’s $92,000 and at a steady march downfield toward the goal-line, The Firm doesn’t run out of funds for 435 weeks. I know there’s nothing in there for phone-calls and power-lunches, but 435 weeks is eight years and four months.

The Firm claims rates almost double these, but that's window-dressing. Law firms kill to get high-profile clients like Skilling, although they hope not to bobble the ball and get them sent to prison. Deals are always made on rates.

Ooooooookaay. Now if I read this correctly, the additional $25 million being whined about is supposed to have been incinerated in the four-month trial, which called some 56 witnesses and “some of the most sophisticated business deals ever to make their way into a courtroom.” Uh-huh, fourteen million a month, $446,428.57 per witness.

Which is a lot of money to say,

“Ladies and gentlemen of the jury, my client denies that fact and disremembers that detail, one of many in his complicated and stressful career.”

That single and oft-repeated statement would likely have been as effective (and certainly more memorable to a jury already drowning in detail) than what, by its excruciatingly detailed rebuttal, came off as the nit-picking and grabbing-at-straws of a guilty man.

Just as we have been sold the lie that only a CEO earning $20 million a year can run a company, so have we been sold the falsity that only a law firm combusting its way through tens of millions can represent a client.

The stupidity, clumsiness, prevarication and greed of men like Skilling, Lay, Bernie Ebbers and John Rigas proves the former. Off the wall record billings by high profile law firms, who lose cases and get their clients sent to jail, proves the latter.

The small man who knows he is right, pitted against a rich man (or even medium corporation), is soon aware of the truism that justice prevails no further than the distance to the end of a wallet. Justice has become a commodity, like all others. The law may be equal for rich and poor, but we have made access to law a matter for the rich alone.

It's a small but significant solace that thieves are still thieves and occasionally they go to jail.

“For O'Melveny (The Firm), the work is not yet done. Several members of the trial team, with help from Washington-based former acting solicitor general and O'Melveny partner Walter Dellinger, now are gearing up for an appeal.

"We've just got to keep fighting a good fight," said Petrocelli.”

And as they say at partners meetings, you can take that to the bank.

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