KPMG's tax shelters leave Sidley exposed; Law firm's defenses erode as auditor seeks to avoid indictment.(News)(KPMG L.L.P. (New York, New York))(Sidley Austin Brown and Wood)

Crain's Chicago Business, July, 2005 by Strahler, Steven R.

Byline: STEVEN R. STRAHLER Big Four accounting firm KPMG LLP wants to avoid becoming another Arthur Andersen, killed by a criminal indictment. Some of its survival costs may fall on Sidley Austin Brown & Wood LLP. KPMG's admission of wrongdoing by former partners amid federal investigations of abusive tax shelters turns up the heat on Sidley, which has been sued by investors who say they relied on its written legal opinions that the tax deductions were legitimate.

The Chicago-based law firm and its 302 equity partners could suffer a steep financial penalty from pending civil litigation. Another law firm, Dallas-based Jenkens & Gilchrist P.C., produced roughly the same number of opinion letters as Sidley-more than 600 overall for clients of KPMG and other...

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