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Lawyers who worked on transactions for Enron Corp. were clearly paid handsomely, but it turns out investigating those transactions pays much better. The investigation headed by Neal Batson, the examiner appointed by the court overseeing Enron Corp.’s Chapter 11 bankruptcy, has resulted in billings to the Enron estate of more than $100 million since it started in the summer of 2002. By comparison, Houston law firm Vinson & Elkins billed Enron about $42.8 million in 2000, its most lucrative year as regular outside counsel to the former energy trading giant. The investigation, which produced more than 4,000 pages in four reports, is almost certainly the most expensive inquiry of its nature in U.S. history. In October alone, more than three dozen partners and counsel, 33 associates and four contract attorneys at Batson’s firm, Alston & Bird, billed Enron more than $5 million for more than 11,000 hours of work. “$100 million is a phenomenal amount of money for doing just about anything,” said Stuart Hirshfield, a bankruptcy partner in the New York office of Ropes & Gray. “You have to start out with that idea in determining whether it was ultimately to everyone’s benefit.” The role of an examiner in a bankruptcy is twofold: to identify causes of action that may lead to recoveries that enlarge the estate to the benefit of its creditors, and to provide an account of what went wrong in a corporate failure so as to preserve the integrity of and public faith in the economic system. Whether Batson and Atlanta-based Alston & Bird advanced either goal enough to justify the enormous expense they incurred are questions that are likely to cast a continuing shadow on the course of the Enron bankruptcy, especially now that Batson is trying to close the door on the matter himself. He and his firm submitted their final report last month. Also last month, Batson, who did not return a call seeking comment, filed a motion seeking to have himself discharged as Enron examiner. As part of that motion, he also sought unprecedented protection from future discovery and liability, as well as the court’s permission to destroy many of the documents he has obtained in the course of his investigation. Batson’s motion was greeted with objections from many quarters, including Enron itself and the Official Unsecured Creditors’ Committee. Calling Batson’s requests “aggressive and unwarranted,” Enron’s lawyers at Weil, Gotshal & Manges asked Southern District Bankruptcy Judge Arthur J. Gonzalez to reject Batson’s requests for broad immunity, noting that the company may need documents in Batson’s possession in continuing litigation. “[D]espite their voluminous nature, the Reports do not stand on their own,” Enron argued in its objection to Batson’s motion. In a hearing Wednesday, Gonzalez signaled his likely approval of Batson’s discharge, but adjourned a hearing on the immunity and document retention issues until Dec. 18. A significant amount of the material Batson accumulated will be off limits to litigants in any case because it was obtained subject to confidentiality agreements. In a hearing also held Wednesday, Gonzalez granted a protective order preventing the release of transcripts of interviews Batson and his staff had conducted with executives at several banks that had dealings with Enron. The transcripts had been sought by plaintiffs in the shareholder class action suit now pending in federal court in Houston. The bankruptcy judge agreed that granting the plaintiffs access to the transcripts would be more cost-efficient than having them seek information through their own discovery efforts, but said the court’s interest in protecting confidentiality agreements was higher. Many of the suits that Enron itself, its creditors and shareholders have filed against the company’s former executives, its investment banks and its professional services firms have referenced Batson’s investigations. It is unclear, however, how much they have relied on his findings to date, as opposed to their own investigations or discovery. Several actions were filed before Batson issued any of his reports. It is clear, however, that Batson has acquired enormous expertise on the subject of Enron, said Larren M. Nashelsky, a bankruptcy partner in the New York office of Morrison & Foerster. He added that he thought Batson had a responsibility to continue to play a role in the process, and not to “wash his hands” of the matter. “There really is an obligation to make himself available to explain his findings,” said Nashelsky. “If it was a $5 million examiner’s report, we should expect the same thing,” he added. “Throwing it out there and running away is not fair to anyone.” COMPLEX CASE Nashelsky said the cost of the investigation was certainly high and could make courts in the future think twice about giving an examiner such broad latitude. “I think there’ll be much higher scrutiny in the future,” he said. But there was also never a case quite like Enron before, Nashelsky noted. “In fairness, it’s probably the most complicated [bankruptcy] in terms of scope and the fraud involved that’s ever taken place,” he said. “I’m not sure [the costs were] unreasonable given the complexity of the matter and the lack of forthcoming of the people involved.” Hirshfield agreed that the case was extraordinary in its complexity, and that any investigation would have proven expensive. He also noted that the extraordinary public focus on Enron early on most likely gave added weight to the public-service aspect of the examiner’s role. “There’s a benefit and then there’s a cost benefit,” he said. “Is it more important to bring comfort to the public? There are no good answers.” The question has only become more complicated as Enron has faded from the headlines, replaced by WorldCom Inc. and Tyco International Ltd. While Batson’s early reports received a large amount of media attention, his final report received scant coverage in major news outlets. “The longer it takes, the more indifferent people become,” said Hirshfield. “The quicker you can respond to unanswered questions, the more benefit there is.”

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