Project Stanley - Blakes Account

----- Forwarded by Richard B Sanders/HOU/ECT on 09/17/2000 09:35 AM -----

Peter Keohane
09/14/2000 01:01 PM

To: Richard B Sanders/HOU/ECT@ECT
cc: Mark E Haedicke/HOU/ECT@ECT
Subject: Project Stanley - Blakes Account

Got your voice mail. My thoughts are the following:

1. I always insist that there is a breakdown of accounts by lawyer name,
hourly rate and task description. If it is not in this account I do not know
why and I think it is appropriate that you ask for it and receive it.

2. I would have expected the account to be large and that there are a number
of people involved. I lost involvement (at the direction of Delainey and
Milnthorp) early in this project after the initial crisis management stage,
but my observations of the number of people and resources involved are the
following:

At the outset we needed a number of people to manage the search and related
technical and legal issues in the short term. Over the longer term, staffing
requirements ought to be greatly reduced and it seems that since the original
crisis management stage the file has been over staffed. At the same time, in
fairness, I believe Blakes feels that the are responding to the requirements
of Enron to throw al ot of resources at the project. If it has not already
happened, I believe you should speak to Dan Fournier to confirm our
expectations and to discuss rationalizing resources. As I say, I was asked
to step back from this project, but I am happy to have this discussion with
Dan Fournier if you prefer.

Also, I did not receive a copy of the account, but it seems to me that at our
direction Blakes hired a number of economic and political consultants which
will also be greatly expensive and which will as I understand be billed to
Blakes and included in Blakes accounts as disbursements to maintain
privilege. If it has not already happened, I also believe the use of the
consultants also needs to be rationalized.

I also expect that VE will have a not insignificant account.

In summary, since the initial stage I have had limited involvement, but I am
not surprised (and would have expected) that the account is large and I
expect that larger accounts are coming once consultant accounts start to roll
in. I believe that detailed account breakdowns are appropriate but also that
the use of all consultants including Blakes needs to be rationalized. I also
believe that Blakes has done an excellent job and that a lot was be asked of
them in the early stages and therefore they were throwing a lot of resources
to the project.

Lastly, in anticipation that this would be expensive and that there would be
a number of people involved, Rob Milnthorp initially spoke to John Lavorato
about setting up a separate Houston RC for the project which John agreed to.
The RC number I gave you may have been a Canadian RC and I need to confirm
with accounting. In any event, I will be sending a subsequent e-mail to all
internal groups to make sure that all expenses, internal and external, are
billed to that separate RC.

Peter.

Please let me know if I can be of any help.