Nov. 26, 2001, 11:30PM

Sizable staff of 245 lawyers in merger limbo
By MARY FLOOD
Copyright 2001 Houston Chronicle

Whether troubled Enron Corp. merges, falls or stays the course, it is likely
to deeply affect one of Houston's largest law offices: the one within the
embattled company.

"We've always regarded them as one of the big law firms in Houston," said
Howard Ayers, managing partner of Andrews & Kurth, one of the city's largest
firms with about 240 lawyers in Houston alone.

Enron has about 245 lawyers worldwide, company spokesman Vance Meyer said.
That's a large legal stable even for a company with more than 25,000
employees. With about 145 lawyers in Houston, if it were a private firm it
would have been the city's sixth-largest, according to the Chronicle 100
survey released in May.

Energy trader Enron's internal law office has burgeoned along with the huge
trading firm, now set to merge with a smaller but stronger local competitor,
Dynegy. As Enron's stock plummeted further, Dynegy last week denied rumors
it might drop out and leave Enron to face a possible bankruptcy.

Whatever the company's fate, there are rough waters ahead for Enron lawyers.


Although most lawyers interviewed said they hope everybody remains employed
and that it is premature to discuss the fate of Enron's legal staff,
speculation in the legal community runs the gamut from rumors that dozens of
lawyers could be laid off as early as this week to the idea that Enron will
hold on tightly to its talent.

"My guess is they'll need their lawyers while they get things in a more
steady state. There's a lot of legal work to go through," said Joel Swanson,
a senior partner at Baker & Botts, a Houston law firm with about 265 lawyers
here.

Not only does Enron have a large cadre of lawyers inside its company, but it
also has hired just about every large firm in Houston over the last few
years. Several of the biggest Houston firms are working on the merger for
either Enron or Dynegy, and others are standing by wondering which outside
firms will get the biggest pieces of legal work when the new company is
created.

Enron's legal department has siphoned talent from Houston's top law firms
over the years. Heads of law firms said they have seen plenty of promising
lawyers lured away by Enron's competitive pay combined with stock options,
which were a lucrative draw until recently, as shares have lost 95 percent
of their value.

"Enron has one of the premier legal departments in the country," said Jeff
Love, managing partner of Locke Liddell & Sapp, a Houston-based firm with
about 175 of its lawyers here.

Enron has hired a lot of what are called "laterals," or lawyers who have had
a couple years training, often at a big firm.

Although jobs in corporate counsel offices are generally considered easier
than big-firm life, that's not the reputation of Enron's legal eagles.

As with the company itself, the general counsel's office has been known as
innovative and hard driving.

"I don't think anybody lateraled into Enron with the expectation of an
ordinary life," Ayers said.

In the Houston market, where big-firm first-year lawyers start at around
$110,000 a year, the advantages of going to an expanding company like Enron
were the stock options and the opportunity to grow with the company.

If heavily anticipated layoffs occur at Enron, top Houston lawyers expect
casualties to land on their feet. Looming recessions are not always bad for
job-hunting lawyers. Bankruptcy, litigation and mergers all can boom in
rough times.

Several Houston-based law firms said they have recruited a slightly larger
starting class of lawyers for 2002, meaning they don't expect to scale back
their business in the immediate future.

Should the merger succeed, Enron's 245 lawyers will join Dynegy's 43.

"The question of how you integrate the two staffs, as with a lot of things
associated with the merger, won't be worked out for some time," Dynegy
spokesman Steve Stengel said.