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Brobeck, Phleger & Harrison, suddenly a peripheral player in the Enron Corp. debacle, has been distancing itself from the energy trader ever since the company declared bankruptcy late last year. The firm dropped Enron as a client almost immediately after the Chapter 11 filing on Dec. 2, and the partner handling its energy-related business left Brobeck to start his own firm at about the same time. The partner kept Enron as a client. Brobeck’s relationship with Enron came to light earlier this week when the Federal Energy Regulatory Commission released internal Enron memos on the company’s controversial trading practices. Two memos written by an in-house Enron attorney and a lawyer at Portland, Ore.’s Stoel Rives outlined company strategies that may have been designed to manipulate California’s energy market. Former Brobeck attorney Gary Fergus was the primary author of a third, undated draft memo that put a positive spin on these practices. Karen Johnson-McKewan, a senior Brobeck partner and former managing partner of the San Francisco office, said Wednesday that Fergus’ energy work for Enron was done largely on his own. Fergus specialized in product liability cases that involved “a high level of problem solving,” Johnson-McKewan said. “It was not a huge leap to go to Enron.” Fergus referred questions about Enron to Robert Bennett, a partner in the Washington, D.C., office of New York’s Skadden, Arps, Slate, Meagher & Flom. Skadden is representing Enron in investigations being conducted by Congress and the U.S. Justice Department. Bennett said he was “not entirely clear” about Fergus’ representation of Enron and the evolution of the memo. But the company’s management decided to leave it to the government to interpret the Fergus and Stoel Rives documents. “Enron decided to release the memos, because the current board and management has taken the position of cooperating with the government,” Bennett said. “We don’t know what the facts are, which memo is right, which parts of the memos are right.” Fergus, a 21-year Brobeck veteran, left the firm at the end of December and opened a solo practice in the same building as Brobeck’s San Francisco headquarters. It’s not immediately clear whether the firm’s decision to no longer represent Enron played a role in his departure. Johnson-McKewan said Brobeck began withdrawing from Enron work in the fourth quarter of last year. Brobeck would not reveal if it’s owed fees by Enron. Fergus’ undated memo has raised eyebrows among investigators because it seems to contradict earlier memos that describe potentially damaging trading practices in the California energy market. The initial December 2000 memos describe practices that Enron dubbed “Death Star,” “Fat Boy” and “Get Shorty” that appeared to be designed to manipulate the market. They include getting paid to move energy to relieve congestion on the power grid without actually moving any energy; submitting unrealistic energy schedules with the California Independent System Operator; and creating and “relieving” phantom congestion in the market. Stoel Rives issued a statement Wednesday saying it had been asked by attorneys at Enron to “learn about power trading practices of the Portland, Ore., trading operations employed in the California markets.” “We understood that one purpose of our work was to attempt to determine if any of Enron’s traders were engaging in inappropriate trading practices,” Stoel Rives said. “We advised that certain power trading practices under review should be discontinued.” But Fergus appears to have given Enron different advice. In his memo he implies that Stoel Rives misunderstood the company’s actions. “From time to time, the understanding of and interpretation by the lawyers interviewing the same traders about the market and the trading practices were inconsistent,” he wrote. “In fact, we learned during this process that some of the information contained in the preliminary memorandum, which resulted in some erroneous assumptions and conclusions, cannot be supported by the facts and evidence which are now known. In other instances, some statements in the preliminary memorandum understandably mixed trading strategies and schedules.” As to why the memo is undated, Johnson-McKewan said Fergus might have chosen to exclude the date since it was a draft. The date field in the memo doesn’t automatically change, she said, so keeping the date blank was “probably just a function of the word-processing system.” Fergus got the Enron work following a referral from a Brobeck partner in New York who represented Enron in commercial litigation over a coal shipment. That case has been resolved. As for the Fergus and Stoel Rives memos, they may have an impact on ongoing litigation over Enron’s trading practices. The California attorney general’s office is investigating Enron, and although it has not filed suit against the company, it has several cases pending against other energy companies. Two suits seeking civil penalties were filed in San Francisco Superior Court, and an antitrust suit was filed in San Francisco federal court. The FERC is also attempting to get refunds from power suppliers.

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