Spill Deal’s Big Winners Shouldn’t Be Plaintiffs’ Lawyers

In recent weeks, plaintiffs’ lawyers have published opinion pieces in Gulf Coast newspapers attacking BP for identifying grave problems with the administration of a settlement we reached with them last year.The plaintiffs’ lawyers say the settlement –which is supposed to compensate people and businesses that suffered actual losses as a result of the Deepwater Horizon spill–is being administered "exactly" as it should and helping "families and businesses.”

But it turns out that many of the “families and businesses” really being helped are the lawyers’ own. We offer the following facts in response to the plaintiffs’ lawyers’ op-eds so readers of this publication can make an informed judgment about the settlement and whether it’s working “exactly” as intended.

Because of what we believe is a misinterpretation of the settlement agreement, law firms filing claims on behalf of themselves with the Court Supervised Settlement Program (CSSP) have received more in offers than restaurants, bars, hotels and seafood processors.  These law firms have found ways to exploit the misinterpretation and receive awards even as they reap huge fees for every payout made to their clients.The average offer made to law firms since the start of the settlement program is $807,000 – more than three times the average offer made to all other businesses.

And the jackpots for law firms are only getting bigger. Offers to law firms themselves have nearly doubled since May to an average of $1.3 million per claim.In fact, one law firm just won itself a nearly $15 million payout.  Law firms are on such a roll these days, they account for more than 15% of the largest business economic loss awards made by the claims program. And one of the firms on the court-appointed committee leading the litigation against BP, as well as individual partners in another committee law firm, have filed business economic loss claims on their own behalf.

Interestingly, less than 12% of the more than 300 law firms that have now received offers from the CSSP filled out the simple, three-page form required to join this litigation, or otherwise filed a claim against BP before the settlement was signed in April 2012.  Over 100,000 other parties did just that in the nearly two years between the accident and the announcement of the settlement. One would think that the lawyers, with their legal knowledge,would have signed up back then if they truly believed they had suffered compensable losses.

As noted, these law firm payouts are on top of the huge fees that many law firms are also earning for representing businesses and individuals with economic loss claims. Under a court order,lawyers are allowed to take up to 25% of the compensation their clients are awarded by the settlement program.  The total payout from the facility thus far is over $4 billion. Not surprisingly, some of the lawyers who have most vociferously defended the claims administrator’s interpretation arguably have the most to lose: they rank first, second and third among all law firms in terms of the total dollar value of offers made to clients on business economic loss claims.

In addition, under the settlement agreement, lawyers who are members of the court-appointed committee could potentially share up to $600 million for their work in connection with the agreement.

To be sure, huge payouts for plaintiffs’ lawyers in class action settlements are nothing new. But the potential windfalls in this case are so large that, according to reports in the New York Times and other outlets, there are at least three plaintiffs’ lawyers who have claimed to represent people without their consent or knowledge.One attorney on the court-appointed committee– Mikal Watts –had his offices raided by the Secret Service, as reported in the San Antonio Express-News. The paper reported that the government is investigating the legitimacy of Mr. Watts’ client list.  Mr. Watts subsequently resigned from the court-appointed committee.

The Deepwater Horizon settlement could have been a model for resolving lawsuits after industrial accidents.  Instead, it’s turning into a monument to plaintiffs’ lawyers’ greed.

Geoff Morrell is BP’s Vice President and Head of US Communications.