A recent Reuters news story, “Legal Fees in Gulf Oil Spill Deal Stir Conflict,” reports that the estimated $7.8 billion settlement reached between BP and attorneys for victims of the Gulf of Mexico oil spill left many details unresolved, including the attorney fees.  At the moment, there’s nothing yet to battle over.  It’s unknown how many plaintiffs will participate in the deal and what their claims are worth.  But with the pot for lawyers likely to reach into the hundreds of millions of dollars, one set of attorneys who negotiated the deal with BP are seeking to allay fears that the fees will come out of the pocket of claimants.  Meanwhile, another set of attorneys are concerned the money will go to lawyers who don’t deserve it.

As is typical in such cases, the presiding judge, U.S. District Judge Carl Barbier, appointed a Plaintiffs’ Steering Committee (PSC) of about two dozen lawyers to gather evidence and prepare witnesses on behalf of the plaintiffs.  Given the lucrative nature of mass tort litigation – attorneys in leadership positions can collect between around 5 percent and 30 percent of a settlement’s value – there was fierce jockeying for the seats on the PSC.  PSC lawyers Stephen Herman and James Roy sought to position the committee as not taking fees “out of the claimant’s pocket” and stated that BP has agreed to pay their legal fees on top of what is paid to victims. 

But lawyers who had been pursuing their clients’ claims with Kenneth Feinberg, administer of the Gulf Coast Claims Facility, and were not part of the settlement discussions with BP, worried that PSC attorneys will receive fees that don’t belong to them.  “We have clients who have offers on the table that have either been accepted or are probably going to accept,” said non-PSC attorney Tony Buzbee, who said he has settled about $150 million worth of claims.  “If we accept these offers, lawyers who had nothing to do with it will claim they’re entitled to some of the money.”

Finally, last year, the court case lawyers asked Judge Barbier to hold back 6 percent of Feinberg’s settlements for “common benefit fees” to be paid to the PSC.  The PSC argued it deserved the fees because its work had benefited fund claimants.  Barbier initially granted the PSC request, but amended his order in January to exempt settlements to fund claimants who never had or didn’t currently have claims pending in the mass tort.