Skilling Lawyer Could Be Key for Lay, Too

Lawyers for Jeffrey K. Skilling arrive at court. Skilling's lead lawyer has done the bulk of defense cross-examination. (By Dave Einsel -- Getty Images)

HOUSTON, March 30 -- Daniel M. Petrocelli is no stranger to the national stage. But he's more at home representing entertainers such as Lisa Marie Presley and John Travolta than defending former corporate executives trying to stay out of prison.

The California attorney is acting as a criminal defense lawyer for the first time, on behalf of former Enron Corp. chief executive Jeffrey K. Skilling, accused of leading one of the most complicated white-collar conspiracies in history.

And as the defense prepares to begin its case Monday, Petrocelli has emerged as perhaps the most potent factor on behalf of both his client and former chairman Kenneth L. Lay. Both men face multiple fraud charges that could send them to prison for decades.

There are two teams of defense lawyers, but during the prosecution's case, Petrocelli dominated the cross-examination of the government's witnesses, in part because Lay's top lawyer had health problems.

Defense lawyers are engaging in careful choreography in a trial where their clients' interests sometimes converge and sometimes conflict. In the course of the nine-week-old trial, the defendants have displayed a few subtle disruptions in their alliance. But to the surprise of some legal experts, Skilling and Lay have stuck together for the most part, despite acute differences in their personal styles and in the evidence against them.

The critical question is whether they will point fingers at each other when they each take the witness stand in coming weeks. Of the approximately two dozen witnesses the defense expects to call, the defendants are far and away the most important. In a real sense, their lives are in their own hands.

The 52-year-old Skilling, who led day-to-day operations at Enron for years, will testify as soon as the week of April 10. Lay, 63, will take the stand shortly thereafter, defense lawyers said. In between, their defense teams will call lesser-known Enron employees to support their arguments that Enron was not a "house of cards" but rather a "shining star," as Petrocelli argued in opening statements.

"We're looking forward to getting on the stand and getting our case out there, get the positive case out," Lay told reporters earlier this week. His lawyer, Michael W. Ramsey, predicted Thursday that Lay will be his own star witness in a performance that "will win the case for us."

Skilling has remained silent, on the advice of his lawyers. They said they would do nothing to alter the demeanor of their client, who is known for his bluntness, in advance of his turn on the witness stand.

On cross-examination, prosecutors are likely to press both men about their knowledge of Enron's financial troubles in August 2001, as Skilling departed and handed the reins to Lay. Skilling probably also will face questions about inconsistencies in more than 2,000 pages of sworn testimony he gave to the Securities and Exchange Commission and to Congress, including the reasons he sold a half-million shares of Enron stock that September.

The defendants say they are operating at a disadvantage because important potential witnesses, including former retail unit leader Lou Pai, former treasurer Jeffrey McMahon, onetime vice chairman Lawrence "Greg" Whalley and former trading chief John Lavorato, have signaled they will invoke their Fifth Amendment right against self-incrimination rather than testify.

That leaves defense lawyers relying on documents and on such figures as Joannie Williamson, a former subordinate in the investor relations unit who went on to work for Lay. Williamson, who is scheduled to be the defense's first witness Monday, is likely to tell jurors that she heard her friend Mark E. Koenig say he did nothing wrong at the company but pleaded guilty anyway under government pressure.