Auditor's celebrity lawyer
By Sandra Jones
January 28, 2002
Crain's Chicago Business
Houston - A Texas lawyer who has represented sports celebrities like Scottie Pippen and stymied Playboy model Anna Nicole Smith's quest for her late husband's riches now is trying to save Andersen.
The buttoned-down accounting firm hired celebrated Houston trial attorney Russell "Rusty" Hardin Jr. last November after shareholders began suing executives of Houston-based Enron Corp. and its auditor Andersen for alleged violations of federal securities laws.
Mr. Hardin's job: keep Chicago-based Andersen from having to pay hundreds of millions of dollars to Enron shareholders and employees, many of whom lost their life's savings when the energy trading giant's stock collapsed late last year and the company filed for protection from creditors in Chapter 11 bankruptcy.
For the 60-year-old Mr. Hardin, who, as an eager young state prosecutor, once told a courtroom that he was "doing the Lord's work" by going after criminals, this could be the challenge of his career.
While Mr. Hardin is no expert in securities law, Andersen no doubt is counting on his familiarity with the Houston court system and the judge to bolster its case, say legal experts. Companies frequently seek out a good local trial lawyer when facing the possibility of a jury trial away from home.
Good help doesn't come cheap. Top trial attorneys charge up to $750 an hour. Andersen is also paying dozens of lawyers at New York-based Davis Polk & Wardwell for their expertise in securities law.
Davis Polk is managing a legion of both criminal and civil investigations by the Department of Justice, the Securities and Exchange Commission, state accounting boards and several committees in both houses of Congress. But it is in Houston that Andersen's financial fate will play out. An Andersen spokesman declined to comment on Mr. Hardin's role in its legal strategy.
"Andersen is hanging out there as the only one with deep pockets for people to go after," says Mr. Hardin, speaking to a small group of reporters in Houston last week. (Enron is protected from lawsuits as long as it is in Chapter 11.)
Win some, lose some
In his first test for Andersen in federal court last week, Mr. Hardin had mixed results.
He was able to keep Andersen documents in the firm's control, instead of handing them over to an independent watchdog, by reaching an agreement with the lawyers for shareholders that requires Andersen to report, among other things, what steps it is taking to recover and preserve the evidence. U.S. District Judge Melinda Harmon approved the agreement late last week.
But Mr. Hardin lost a crucial argument over whether the shareholders' lawyers could conduct depositions of key Andersen partners, including David Duncan, the Houston-based lead partner in charge of the Enron audit who was fired earlier this month for his role in destroying records. Mr. Duncan declined to speak at a congressional hearing on Thursday, invoking his Fifth Amendment right not to incriminate himself.
Mr. Hardin, renowned for his skill at cross-examining witnesses and winning over juries, will be hard-pressed to paint Andersen as a victim against the Enron workers who lost their jobs and retirement savings and the Enron shareholders who say they've been duped by greedy executives.
But, if anyone is up to the task, Mr. Hardin is the man, say Houston lawyers who know him. "He's the best cross-examiner I've ever seen," says David Berg, a corporate lawyer who has watched Mr. Hardin work for years.
After 15 years as a prosecutor at the attorney general's office in Houston, the North Carolina native left the government to form Texas People Against Crime, a political action committee that tried to get judges who were soft on crime off the bench.
Soon after, he set up a private practice and began forging new territory by litigating civil cases for crime victims. In one such case, Mr. Hardin won $65 million from a nursing home for the family of an elderly woman who'd been molested while living there.
The affable lawyer (courtroom opponents have called him a "delightful adversary") has also defended a roster of sport celebrities, including former Chicago Bulls star Mr. Pippen when he played for the Houston Rockets, New York Yankees third-baseman Wade Boggs and Minnesota Vikings quarterback Warren Moon. In a sensational trial last year, he thwarted efforts by Ms. Smith of Playboy fame to gain half the fortune left by her late octogenarian oil-tycoon husband.
In the early days of the Whitewater scandal, Mr. Hardin assisted independent prosecutors Robert Fiske Jr. and Kenneth Starr. And he appears as the relentless prosecutor in a true-crime novel — "Daddy's Girl" by Clifford Irving — about one of Texas' most famous murder trials.
Mr. Hardin made his first public courtroom appearance for Andersen in Houston last week when the federal judge presiding over the high-stakes shareholder and employee class-action lawsuits held a hearing to determine who should have control of the potentially millions of Enron-related documents in Andersen's possession.
Southern showdown
Just minutes before Judge Harmon took her seat at the front of the warehouse-size courtroom, Mr. Hardin strolled calmly across the front of the crowded hall, surveying the three tables of attorneys, each jockeying for position as the lead attorney in the consolidated class action. (The judge has yet to name a lead plaintiff, the most lucrative client for a class-action attorney to represent.)
Arms folded authoritatively across his cool-gray suit and a pleasant smile fixed below his shaggy silver bangs, Mr. Hardin took his position, standing, above the dark-suited array of New York attorneys.
And there he remained, calmly, for well over an hour as lawyer after lawyer representing big and small shareholders, state pension funds and Enron employee retirement funds bickered over how to ensure that Andersen and Enron will comply with orders not to destroy documents.
When the grand speeches subsided, Mr. Hardin walked to the podium and told the judge in his lilting drawl that a good dose of down-home hospitality was needed in the courtroom.
Andersen "regrets what happened to shareholders" and has "no quarrel that a tremendous amount of harm has been done to these people," Mr. Hardin said. "This thing would go along a lot better if we all got along."
©2002 by Crain Communications Inc. |
