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Houston lawyer William Frederking made a big career change Oct. 1, 2001. He left Bracewell & Patterson, where he had been an associate for two-and-a-half years, to go in-house at Enron Energy Services. Frederking knew the job pretty well since he had been working at EES for a year on loan from Bracewell. Only two weeks later, Enron reported a $638 million loss for the third quarter and revealed a massive $1.2 billion reduction in shareholder equity. In short order, Enron’s stock price slipped precipitously, and the company agreed to be acquired by Houston’s Dynegy Inc., only to see Dynegy back out of the deal Nov. 28. By Dec. 2, only two months after Frederking moved onto Enron’s payroll, the formerly high-flying energy trading company filed for bankruptcy. Frederking is one of about 4,000 Enron employees laid off Dec. 3. He’s now calling his move to Enron’s payroll an “ill-fated decision.” It all worked out for Frederking, who landed a contract job at Houston’s Reliant Resources less than two weeks after he lost his Enron job and just accepted a permanent position as one of two in-house lawyers at HydroChem, a chemical cleaning company based in Houston. “I’ve been extremely fortunate. I certainly have no complaints in the scheme of things,” says Frederking, who started his career at the former Sheinfeld, Maley & Kay. But others may not land on their feet as easily as Frederking, or Sarah Dietrich, who also secured a contract position at Reliant Resources, or John Ale, the former general counsel of Enron subsidiary Azurix, who recently became a partner in the Houston office of Skadden, Arps, Slate, Meagher & Flom. The ex-Enron lawyers have been thrust into Texas, a job market that’s already suffering from the downturn in the nation’s economy, along with layoffs at Jenkens & Gilchrist and some California firms with Texas offices. “The competition’s tough, and the economy’s grim,” says one recruiter in Houston. “It’s a buyers’ market,” says one former Enron lawyer. Some lawyers are choosing to return to firms where they worked before they took in-house jobs at Enron. Two, for instance, have joined Bracewell & Patterson. Others are searching for in-house jobs. And jobs for some of the lawyers are coming from an unlikely source — Enron. Robert Williams, a vice president and assistant general counsel at Enron, says every lawyer who was laid off and hadn’t found other employment was asked to come back as of Jan. 22. Seven of them were rehired as Enron employees, and four others, who had been contract workers, were rehired on that basis, he says. They returned at their previous salary levels and retain seniority, he says. Williams, who was one of several litigation managers at Enron before litigation was put on hold with the company’s bankruptcy filing, says the lawyers are assigned to help Enron respond to subpoenas from Congress, the Securities & Exchange Commission and the U.S. Department of Justice. “We determined we needed a lot of lawyers to assemble those documents and review those documents. And instead of using outside lawyers that would cost a lot more, I asked for approval to rehire lawyers who had left the company,” he says. He says he received approval from James Derrick, Enron’s general counsel, and Robert Walls, deputy general counsel. “Most of them who have come back are transactional lawyers who are assisting in what is more akin to a litigation support effort,” he says, adding that legal and administrative assistants were also asked to return. Statistics on the number of lawyer layoffs at Enron were unavailable from the company’s corporate communications department by press time, but interviews with five current or former Enron lawyers reveal about one-third of the lawyers were let go in December. The company had about 245 lawyers in its in-house department. Williams says to his knowledge all the laid-off lawyers were asked to come back in January. He says it’s understood that many will continue to hunt for new jobs. Mark Evans, who has been general counsel at Enron Europe for about 18 months, says he is down to five lawyers. That compares to 30 lawyers in October. “December was a hugely depressing month because we all had been pedaling the bike as hard as we could, trying to turn it around,” he says. After the layoffs, “there were empty desks everywhere you looked,” he said. He predicts, however, that all the lawyers “will land on their feet.” Considering that most of the lawyers at Enron were experienced and had worked at good firms before they arrived, says one lawyer at Enron who does not want to be identified, “when the taint of Enron wears off, most will be able to find employment very easily.” “But there is a taint right now,” he says. THE SEARCH That leads to the big question: Are job prospects for Enron alumni tarnished along with the company’s reputation in the wake of investigations by congressional committees and government agencies, federal prosecutors and plaintiffs’ lawyers? One recruiter in the Houston market says any hesitancy to take on a former Enron lawyer may be more unspoken than stated. “Six months ago, an Enron attorney might have been a great commodity; they [prospective employers] aren’t excited any more,” the recruiter, who did not want to be identified, says. Larry Prescott of Prescott Legal Search says a couple of his recruiting firm’s corporate clients at first expressed some concerns about hiring lawyers from Enron “because they just weren’t sure that the Enron culture was something that would fit in with their company.” But he doesn’t believe any misgivings about hiring lawyers from such a risk-taking, push-the-envelope place is having an impact on whether former Enron lawyers get interviews. “I have yet to have any employer tell me that they weren’t interested in seeing a r�sum� of someone from Enron because of the Enron culture,” Prescott says. “It would have to be a very unenlightened employer that would blemish them. That would be really provincial thinking,” says Tracy Naftalis, of Counsel Source Inc. in Dallas. But one former Enron lawyer who is still in the job hunt says, “I’m hearing from a lot of firms that are keeping their hands off Enron attorneys right now.” “It’s not so overt … it’s been implied,” says the lawyer, who has kept busy working on projects for friends and relatives and searching for a job. “For one thing, they don’t want to conflict themselves out of juicy plaintiffs’ suits or lead positions in those suits. And also, two, it’s somewhat implied they don’t know what kind of liabilities [are out there], they don’t know,” the lawyer says. Houston consultant William C. Cobb says the lawyers may not be tainted in the sense of having drawn a paycheck from Enron but soiled in the sense that they worked as lawyers in that environment. “They may be somewhat tainted by the fact they might have treated some of their outside law firms like shit,” he notes. Cobb says lawyers could be shut out of firm jobs, even at their former firms where they might have easily returned, because of potential conflicts created by the crush of litigation that seeks damages not only from Enron, but also its officers, directors and former accounting firm, Arthur Andersen. He says firms could be conflicted out from hiring ex-Enron lawyers. That’s the case at Baker Botts, which represents Dynegy in litigation filed in bankruptcy court in New York by Enron over ownership of the Northern Natural Gas Co., a pipeline company. “Some of them, I’m sure, are very attractive prospects, unfortunately we aren’t in a position to be in the market right now,” says Richard Johnson, Baker Botts’ managing partner. “In this situation certainly Baker Botts would not feel comfortable trying to use the so-called Chinese wall. That whole procedure is being subject to so much criticism right now by regulators.” In contrast, Vinson & Elkins and Andrews & Kurth, two longtime major outside counsel for Enron, could be a potential source of employment for ex-Enron lawyers. Andrews & Kurth isn’t an option right now, though. Howard Ayers, the firm’s managing partner, says that in the wake of its merger in October 2001 with Houston’s Mayor, Day, Caldwell & Keeton, the firm is directing its lateral hiring efforts to other offices. “We don’t have a hands-off policy,” Ayers says about former Enron lawyers. “The only reason we aren’t hiring laterally in Houston now, from any source, is because we have so much to absorb in Houston now.” Andrews & Kurth is one of Enron’s bankruptcy counsel. Prior to its bankruptcy, Enron also was a major client for Bracewell & Patterson, accounting for more than 5 percent of its revenues. Patrick Oxford, the firm’s managing partner, says the firm has hired back two of its alumni from Enron, Andrew Edison, a litigation associate who returned to the Houston office, and Sarah Novosel, now a regulatory partner in the firm’s Washington, D.C., office. “There are others of ours there that we might end up talking to. It’s premature. They still have full jobs over there,” says Oxford. Former Enron lawyer Vincent Moreland is now of counsel in the business and international section at Vinson & Elkins. The bottom line is the laid-off lawyers at Enron say they are competing for jobs not only with each other, but also with lawyers still working at Enron. “Everybody is looking. Everybody knows everyone else is looking. But we don’t say more than that because everyone’s compensation is so different,” says one senior counsel at Enron who does not want to be identified. One former Enron lawyer who spends his days in the hunt for full-time work says, “That’s the thing that’s hardest to swallow — that the folks there are doing the exact same thing I’m doing.”

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