Skilling's white-shoe lawyer

His top-tier firm sees payoff in these trials

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May 24, 2006|By MOLLY SELVIN | MOLLY SELVIN,LOS ANGELES TIMES

LOS ANGELES -- Daniel M. Petrocelli and his law firm probably won't get fully compensated for their work defending Jeffrey K. Skilling, as the former Enron Corp. chief executive appears to have exhausted his defense fund.

But the payoff down the road could be well worth it, even if Skilling is convicted.

The decision to defend Skilling is seen as a calculated business move by Petrocelli and his Los Angeles law firm, O'Melveny & Myers LLP, to burnish their reputation and expertise in white-collar criminal defense.

White-shoe firms such as O'Melveny, which long shunned criminal work as distasteful, have come to see defending alleged corporate wrongdoers as a potential growth business.

Enron's collapse, other corporate scandals and passage of the Sarbanes-Oxley law tightening corporate accounting rules has fueled much of this growth, observers say.

"Law firms are finding that criminal law practice is lucrative," said Charles D. Weisselberg of the University of California, Berkeley's Boalt Hall School of Law. Added Bryant D. Garth, dean of the Southwestern Law School in Los Angeles: "Firms are competing really aggressively to get the bet-the-company or bet-your-career cases."

White-collar defense is one element behind booming revenues at law firm giants. Revenues at the seven top U.S. law firms last year topped $1 billion, according to The American Lawyer magazine. Skadden, Arps, Slate, Meagher & Flom LLP in New York topped the list with $1.6 billion. O'Melveny ranked 15th with gross revenue of $808 million.

To sustain that cash flow, top-drawer firms fiercely compete for Fortune 100 corporate clients. That competitive pressure means the decision to take on a corporation or officer in trouble may mean weighing a near-term loss of fees versus the possibility of future work from that client or other corporations, legal experts say.

After a 3 1/2 -month trial - on top of years of preparation - Skilling likely has blown through the $23 million he set aside for his defense before the government froze about $55 million of his assets. The former Enron executive, who faces 28 counts of conspiracy, fraud and insider trading tied to Enron's collapse, acknowledged in trial testimony that he owes quite a bit more - millions of dollars, according to a source in his defense camp.

Even with full payment in doubt, O'Melveny has fielded a deep bench in Houston for Skilling's defense. Petrocelli is one of at least four O'Melveny attorneys who have been in the courtroom throughout the trial.

They are backed by a team of attorneys, jury consultants, experts and support staff on the 25th floor of the Bank of America Center in downtown Houston.

The criminal defense bar has long included stars such as Thomas A. Mesereau Jr. and the late Johnnie L. Cochran, whose Perry Mason-like courtroom style have made them the first call for celebrities in distress.

Until Petrocelli took on Skilling's defense, he did not have much criminal experience. But the former University of California, Los Angeles band trumpeter is hardly a stranger to the legal spotlight. His take-no-prisoners courtroom style helped him win a $33.5 million verdict for the family of murder victim Ron Goldman in a wrongful death suit against O.J. Simpson. Last year he prevailed in a decade-long legal battle on behalf of Walt Disney Co. over the merchandising rights to Winnie the Pooh.

Petrocelli, 52, declined to comment for this article, and representatives of O'Melveny would not discuss the Skilling case.

However, Seth Aronson, managing partner of O'Melveny's Los Angeles office, boasted of the firm's strong roster of former prosecutors. He noted its successful defense of Wen Ho Lee, a Los Alamos National Laboratory scientist accused of stealing nuclear secrets for China in 1999, along with other corporate defendants.

Enron and other high-profile corporate scandals of recent years convinced law firms this work is here to stay, he said.

Weisselberg, of Boalt law school, says firms now realize that "what begins as an in-house investigation by a corporation or a civil investigation by a regulatory agency might turn into a criminal investigation."

Molly Selvin writes for the Los Angeles Times. Times reporter Thomas S. Mulligan in Houston contributed to this article.

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