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8 Stan. J.L. Bus. & Fin. 9 (2002-2003)
Lawyers, Ethics, and Enron

handle is hein.journals/stabf8 and id is 15 raw text is: Lawyers, Ethics, and Enron Deborah L. Rhode* and Paul D. Paton* I. Introduction The fall of Enron, once the seventh largest corporation in America with revenue over $100 billion, is more than the story of individual misconduct, greed, and deceit. As Senator Fred Thompson has rightly noted, the real scandal here may be from not what is illegal, but what is totally permissible .... The system is clearly not designed with the interest of the general public or the investor in mind.1 Various Congressional and Senate investigations are exploring the misconduct of Enron employees, directors, and auditors; attention is also focusing on conflicts of interest, offshore tax havens, and insider trading. AU of these inquiries are essential for creating greater awareness of the structural features that permitted the Enron debacle to take place, and to ensure meaningful reform.2 However, scrutiny of lawyers' conduct is equally critical. Too many members of the legal profession were part of the problem, rather than the solution. This essay seeks to understand why, and what might be done to address it. Only by more clearly identifying the limitations of formal rules and informal practices can we develop an appropriate agenda for reform. The stakes in clarifying these issues are self-evident. With the collapse of the former energy giant, more than 4000 employees lost their jobs; thousands of * Ernest W. McFarland Professor of Law and Director, Keck Center on Legal Ethics and the Legal Profession, Stanford Law School. B.A. (Yale University), J.D. (Yale Law School). Fellow, Keck Center on Legal Ethics and the Legal Profession, and JSD Candidate, Stanford Law School. B.A. (University of Toronto), M.Phil (Cambridge), LL.B (Toronto), J.S.M (Stanford). I wish to acknowledge financial support provided by a George P. Shultz Grant from the Institute of International Studies, Stanford University. 'The Fall of Enron: How Could This Have Happened: Hearing Before the Comm. on Governmental Affairs, 107th Cong. (Jan. 24, 2002), (Statement of Sen. Fred Thompson, Senate Governmental Affairs Comm.), at http://www.senate.gov/-gov-affairs/ 012402thompson.htm (last accessed July 29,2002). 2 See J. Michael Anderson, Enron: A Select Chronology of Congressional, Corporate and Government Activities, C.R.S. Report for Congress, Apr. 9, 2002 [hereinafter CRS Chronology]; see also The Fall of Enron: How Could This Have Happened: Hearing Before the Committee on Governmental Affairs, 107th Cong. (Jan. 24, 2002), (Statement of Sen. Joe Lieberman), at http://www.senate.gov/-gov-affairs/012402lieberman.htm (last accessed July 29,2002).

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