Magic circle firms ensnared in Enron fallout

All five magic circle City firms could this week face a subpoena from the US to release any documents relating to work they have done involving bankrupt oil company Enron.

As part of his investigation into the cause of the company's failure, court-appointed examiner Neal Batson - a partner at Atlanta law firm Alston & Bird - has filed with the US bankruptcy court in New York for permission to subpoena relevant files from 45 law firms.

Firms listed by Legal Times in the US include the New York offices of Slaughter and May, Linklaters, and Clifford Chance; the New York, London and German offices of Freshfields Bruckhaus Deringer; and Allen & Overy's associated firm in Luxembourg - Beghin & Feider.

Any firms that knew of Enron-related deals designed to mislead investors or unjustly benefit company employees, could face action by shareholders, creditors and the government.

However, there is no suggestion that any of the 45 firms did know of such deals.

David Frank, practice partner at Slaughter and May, said: 'We are waiting for the court order to be made, but if it is then our policy will be to co-operate fully with the examiner as far as the laws of client privilege and confidentiality allow.

We are currently taking advice on these issues from [US firm] Covington & Burling.'

A spokeswoman for Freshfields, also advised on the issue by Covington & Burling, said; 'We are one of a number of law firms which have advised Enron in the past and therefore are one of the many organisations that have been asked to produce documents.

We are co-operating fully with the examiner in this exercise.'

A Linklaters spokeswoman said: 'We are sympathetic to the desire of the US court to get to the bottom of what happened within Enron and will of course comply with any orders that the court make.

However, the client documents that we hold are subject to confidentiality and legal privilege, so we are working with our advisers and the examiner to ensure that the rights of our clients are protected.'

Linklaters is being advised by New York firm Sullivan & Cromwell.

A spokesman for Allen & Overy said: 'We can confirm that we have not received a subpoena in connection with the Enron affair.

We have received a request from the examiner to provide information relating to work performed by our Luxembourg office and are cooperating with that request in those matters where our Luxembourg office acted for Enron and or subsidiaries thereof.'

Clifford Chance declined to comment, saying simply: 'We are a very big firm, with many, many clients.'

Andrew Towler