TaxProf Blog reports that while Harriet Miers was managing partner of Locke, Liddell and Sapp in Dallas, the firm provided dubious legal opinions supporting the legality of sleazy tax shelters offered by Ernst & Young. They did this not once, not twice, but seventy times, earning a total of $3.5 million. "Abusive tax shelters" like these spurred the Senate to launch an investigation into the professional firms (including accountants like E&Y and law firms like Locke, Liddell) that made them possible. Here is the Senate’s report, which discusses the work of Locke Liddell at pages 86-92.
So, under Harriet Miers’ leadership, Locke Liddell got investigated by the feds for sleazy tax shelters, and shelled out millions to settle charges that it aided and abetted a client running a Ponzi scheme. No doubt there’s more out there as folks keep digging into what the firm was up to in the Miers years. When you add all of that to Arlen Specter’s recent comment that Miers could use a "crash course in constitutional law," these are shaping up to be truly excellent confirmation hearings. Warm up the TiVo!
You don’t need TiVo. You can watch it all on c-span with streaming video, but, yes, I agree that it’s going to be great.
Now, I am neither an attorney, accountant, nor a fan of Miers, but given that Locke Liddell is an LLP, I believe she is not legally or otherwise responsible for what happened there unless she had a direct hand in it, even as managine partner. The problem with LLPs, as I understand them, is that there is no incentive to keep your partners honest as long as they’re bringing in business, and in fact there’s a disincentive to look into shady dealings of your partners, lest you get caught up in it.Am I wrong?
sco: interesting questions. First, I don’t know how Locke Liddell was organized Miers was running the firm – many big law firms started out as true partnerships and changed their legal status to LLPs in recent years. Second, and more importantly, I don’t think anyone is suggesting that Miers would be legally responsible for her firms’ misdeeds (assuming she had no direct hand in them). It’s more a leadership question: was “Kenny boy” Lay “responsible” in a broader sense for what happened at Enron, even if he wasn’t directly involved?