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In a year when links to the once-mighty Enron Corp. were transformed into shackles, Vinson & Elkins became a prisoner of the phrase “Enron’s law firm.” Thanks to its long history and close relations with the now-bankrupt energy giant, the 860-lawyer Houston firm found itself the object of withering scrutiny in the national media. Enron shareholders sued the firm. Congress hauled its senior lawyers up to the Capitol for a public humiliation. No other law firm has been associated — some might say tarred — with the corporate scandals of the past year the way Vinson & Elkins has been. Indeed, V&E had the kind of impact no law firm wants to have. Its alleged participation in Enron’s impenetrable financial schemes prompted calls for new regulation of corporate lawyers. The Securities and Exchange Commission is now laboring to produce those new rules — in the face of stiff resistance from some quarters of the bar. And in recent weeks Deputy Attorney General Larry Thompson, who leads the Justice Department’s corporate fraud task force, has signaled that he aims to prosecute lawyers and accountants as well as crooked executives. The angry focus on the part played by lawyers in Enron’s failure is hardly irrational. Investigations into the company’s implosion have laid much of the blame for it on a roster of exotically named financing vehicles that appear to have been designed to hide Enron’s financial losses, to boost reported gains, and to evade taxes. These elaborate structured finance deals smack of precisely the kind of deliberately complex and opaque trickery that many in the public associate with corporate law firms. And some sophisticated, and influential, observers share this view. Paul Volcker, a certified elder statesman and straight-talker on all matters economic, has derided the “financial engineering industry” — populated by investment bankers, accountants, and lawyers — as a fee-generating machine that serves little purpose other than to deceive. Yet Vinson & Elkins’ place in the post-Enron discussion has been exaggerated, says Harry Reasoner, a senior partner and designated spokesman on Enron matters. Reasoner has repeatedly said that his firm will be exonerated when all the facts about its Enron representation are adduced in the various official investigations now under way. “Unfortunately, our role was enormously overblown” in the first investigative report on Enron, Reasoner says. That Feb. 1 report, drafted by Wilmer, Cutler & Pickering on behalf of a committee of Enron’s board of directors, faulted Vinson & Elkins for an “absence” of “objective and critical professional advice” to Enron, and criticized the firm’s handling of several specific matters. Reasoner acknowledges that during the nearly 30 years since Vinson & Elkins plucked Enron’s predecessor, Houston Natural Gas, away from Fulbright & Jaworski, Vinson & Elkins’ revenue from the company mushroomed. Indeed, in 2001, Enron accounted for about 7 percent of the law firm’s $455 million in revenues. But Reasoner notes that V&E’s percentage share of the total amount of legal work spun off by Enron dwindled in recent years, as other law firms, such as Skadden, Arps, Slate, Meagher & Flom, competed hard for a piece of the booming business. “I think it’s understood by those who’ve paid a great deal of attention that a high percentage of the major firms in America were involved in these [Enron] deals,” Reasoner says. One of those firms, Kirkland & Ellis, represented several of the partnerships and other special purpose entities set up by Enron managers, including the now-indicted Andrew Fastow. Like V&E, Kirkland was sued by Enron shareholders. The case against Kirkland, however, has been dismissed. Reasoner says the negative publicity that has flowed from Enron has had “some negative effect” on life within the firm. But he says that V&E has not suffered from an unusual number of defections and has managed to close out the year with roughly the same gross revenues as last year. “We had to make up all of the Enron [revenue] since we stopped representing them,” he says. “While it hasn’t been pleasant,” he adds, “I think this [Enron scandal] has demonstrated the institutional soundness of this firm.”

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