Oil spill steering committee cites espirit d'corps and positive morale; Seeks escrow for millions in settlements

By Steve Korris | Nov 15, 2011

Lawyers anticipating hundreds of millions in fees from litigation over the Deepwater Horizon explosion propose to start raising it right away with a six percent assessment on settlements.

On Nov. 7, a plaintiff steering committee asked U.S. District Judge Carl Barbier for an escrow account that would "hold back" six cents of each settlement dollar.

"Without a hold back order in place, the PSC will have expended many millions of dollars in upfront assessments to fund the necessary work for the common benefit of all plaintiffs which this court has designated and directed them to undertake, without any system for equitable reimbursement," committee lawyers wrote.

"There is no public or private source of funding for their work on an ongoing basis, other than their own resources," they wrote.

"Thus, while their service benefits the court, the public, all plaintiffs and indeed the defendant as well, at least indirectly, none of the beneficiaries is compensating the members of the PSC and other common benefit attorneys, or defraying their expenses, on an ongoing basis," they wrote.

They wrote that they operate a document depository occupying an entire floor of a building near federal court, with computers for 70 lawyers and researchers.

"The experience of centralizing common benefit work at the depository has created an esprit d' corps and positive morale that has made the relocation sacrifice more than worthwhile," they wrote.

They wrote that 340 lawyers from 90 firms have worked about 230,000 hours.

The hours would equal about 111 lawyers working 40 hours a week for a year.

They wrote that they spent about $12 million out of pocket, with another $1.5 million in process of payment.

They wrote that they contributed $1.8 million to an account for sharing expenses.

They offered millions of their own cash for a first deposit, but it wouldn't compare to the hundreds of millions that defendants would deposit.

Their motion doesn't make clear whether they want six percent of settlements already in place or six percent of settlements with BP's $20 billion Gulf Coast Claims Facility, but they floated both balloons in one sentence.

"While a common benefit award may be owed with respect to settlements or other payments previously made through the GCCF or otherwise, that is an issue left for another day," they wrote.

They also left for another day a choice among five methods Barbier could employ to require deposits from defendants.

"The form of this request cannot be known at the present time, because the format for the structure of any global verdict, judgment, or other final resolution is not presently known," they wrote.

They wrote that they would prefer for defendants to pay the ultimate award, rather than subtract it from plaintiff recoveries.

"In the alternative, the PSC would suggest that such common benefit fees, if any, be taken first out of the contingency attorney fees, if any, as opposed to the net recovery," they wrote.

They wrote that a multi district court can exercise jurisdiction over defendants to compensate and reimburse designated counsel for the common benefit.

"This is accomplished by ordering the defendants, who are properly before the court, to hold back a percentage of the funds, or an amount equivalent to such percentage, they pay to claimants to settle MDL related claims," they wrote.

"This hold back frequently does not diminish the plaintiffs' recovery, or increase their attorneys' fees," they wrote.

They wrote that some defendants have paid it in addition to awards to plaintiffs, under statutory provisions or as a term of settlement.

"This is the PSC's goal and preference here," they wrote.

They tossed a discount to Louisiana and Alabama, offering a four percent charge in light of their cooperation with the committee.

They exempted the United States from the escrow plan.

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