Enron attorneys are to get $688 million dollar jackpot

Just to point out that there are a lot of important issues today that are not getting enough press coverage, this story about Enron is a good example.

For those few who might not know about the Enron scandal, it can be summed up this way: Enron was a hugely successful energy company until 2001, when someone discovered that accountants had been cooking the books for years to hide huge losses. As a result the company folded into one of the costliest bankruptcies in history. Investors lost hundreds of millions of dollars, and criminal indictments followed. Not surprisingly, lawsuits by investors followed as well.

Their lawyers have now secured a whopping $688 million dollar payday skimmed off of investor's losses - money that could have been better spent helping those who lost their life savings after investing in Enron stock. It is the largest such payout in history in a securities fraud case.

They claim they spent 280,000 man hours working on the case, and chalked up $45 million in expenses (that's some expensive typing and filing!). But even taking those figures at face value, it translates into a net fee of $2,296 an hour. You can assume that all the senior partners at those law firms will get at least $10 million apiece - enough money that they, and even their children, can live in luxury for the rest of their lives without ever needing to work again a day in their life.

For another comparison, to put that in salary terms, working 40 hours a week at that rate translates into an annual salary of $4,8 million dollars!

The attorneys will argue that they deserve this payout because they recouped $7.2 billion for their clients, resulting in a payout of less than 10 percent of the take (normally trial lawyers take 40%).

But this underscores the problem with America's system of rewarding attorneys with commissions; exceptionally large cases lead to obscene paydays - with payouts that surpass those of even the corrupt Enron CEOs.

The USA desperately needs tort reform, and unfortunately, it's an issue that is not even on the table this election season.

More on this case at Overlawyered.