Plaintiffs’ Lawyers in BP Litigation Fighting Over Claims Fund

By Moira Herbst | January 18, 2011

Plaintiffs’ lawyers battling BP Plc in the oil-spill litigation may be united in the desire to make the company pay, but they’ve started fighting over whether to try to rein in Kenneth Feinberg, who runs BP’s $20 billion oil-spill victims’ compensation fund.

One group of lawyers, comprised of the 17-member plaintiffs’ steering committee, appears to be concerned that Feinberg will draw many more claimants into his fund — thereby reducing the number of potential plaintiffs these lawyers can represent in their multi-district litigation. Anyone who accepts a final settlement with Feinberg gives up the right to sue in court.

The plaintiffs’ committee wants a judge to oversee Feinberg, who currently is not subject to judicial scrutiny, by monitoring his communications to prospective claimants.

In a motion filed last month, the committee asked U.S. District Court Judge Carl Barbier of the Eastern District of Louisiana to order Feinberg to modify the release form — which claimants must sign before accepting a final payment from the fund — so that it notifies victims they have the option to sue and recommends they talk to a lawyer before giving up the right to do so.

These lawyers also want Feinberg to stop calling the fund “independent,” since he is paid by BP.

The other group of lawyers, comprised of six plaintiffs’ firms, essentially wants to leave things as they are.

Some of the firms have clients in the multi-district litigation, but they also represent thousands of victims seeking redress through the fund — clients from whom they could get a cut of any claims distribution.

If the judge begins monitoring Feinberg, these lawyers argue in court filings, it could interfere with settlement negotiations and slow claims payments.

Fewer than 3 percent of the 470,000 businesses and individuals who have filed claims with Feinberg’s fund have lawyers helping them negotiate, according to fund statistics.

QUESTIONING MOTIVES

In recent days, members of the second group have urged the court to reject the steering committee’s motion. Their legal arguments center on the contention that Feinberg’s fund is not a party to the litigation, so the District Court doesn’t have authority over the claims process.

BP also filed a response to the steering committee’s motion, arguing that any effort by the court to control how Feinberg and the fund communicate would amount to ‘an unconstitutional prior restraint on speech.” Judge Barbier has not set a date for a hearing on the issue. Feinberg and BP declined to comment for this story.

The opposition to the steering committee’s motion is being led by two prominent plaintiffs’ lawyers — Daniel Becnel Jr. and Anthony Buzbee — who last fall unsuccessfully sought positions on the very committee they’re now battling.

Becnel, in an interview with Reuters Legal, questioned the motives of the committee. ‘The reason they want Feinberg supervised is that they want a larger fee,” he said.

Becnel argues that the plaintiffs’ lawyers directing strategy in the BP litigation are trying to ‘disrupt and delay” the claims process, so that more people end up in litigation, which of course holds out the prospect of hefty contingency awards.

The steering committee’s Brian Barr declined to address how the committee’s move could affect legal fees, but said he is surprised that some plaintiffs’ lawyers are resisting the committee’s efforts.

‘This motion simply seeks to ensure that [the BP fund] works as well for claimants as it does for BP,” he wrote in an e-mail to Reuters Legal. ‘Why anyone would not want the release changed to ensure claimants are protected is completely baffling,” said Barr, whose firm is based in Pensacola, Florida.

‘WANT MONEY NOW’

Becnel does not deny that he, too, is acting at least in part out of self-interest. ‘I want my money now and my clients want their money now,” said Becnel, who said he keeps 10 to 12 percent of his BP fund clients’ awards — significantly lower than the typical contingency fee.

‘I’m 66 years old and can’t wait another 20 years to resolve this,” said Bencel, whose 21-lawyer firm is based in Reserve, Louisiana. ‘A lot of my clients live paycheck to paycheck and can’t afford to wait. They want closure.”

Becnel’s ally Buzbee, a partner in the Buzbee Law Firm in Houston, mounted a different argument against the committee’s motion in a separate brief.

He said that the court ‘should not interject itself” into private negotiations between parties, especially when both are represented by counsel.

In an interview with Reuters Legal, Buzbee said he has already negotiated millions of dollars’ worth of claims for his clients, and that he wants to continue that strategy before pursuing litigation.

He acknowledged that the committee’s motion has created “tension” between lawyers who have cast their lot with the multi-district litigation and those who have a bigger stake in the claims process.

‘I don’t need or want another group of lawyers who may have their own motivations interfering with efforts to get my clients paid,” he said. ‘It’s none of their business what I do with my client and BP. The overwhelming majority of my clients have made it clear to me that they first want to see if this claims process works.”

(Reporting by Moira Herbst of Reuters Legal; Edited by Eric Effron and Amy Stevens; Contact: moira.herbst@thomsonreuters.com)

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Latest Comments

  • January 18, 2011 at 4:28 pm
    Tom says:
    There's oil in the water and the sharks are circling and about to feed on their clients and their other vacant eyed swimming buddies.
  • January 18, 2011 at 3:35 pm
    caffiend says:
    Sharks smelling blood in the water... circling & biting each other for a bigger piece of the claims fund.
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