BATON ROUGE – The attorney fees paid out of the $20 billion settlement with BP over the Deepwater Horizon spill is "absurd," the executive director of a lawsuit abuse watchdog group recently told the Louisiana Record.
"Without question, $38 million in legal fees for a small group of well-connected trial lawyers is absurd," Louisiana Lawsuit Abuse Watch Executive Director Melissa Landry said in an email interview. "What is more, this $38 million pot is just for the lawyers who represented the state. Billions more in legal fees will be paid to thousands of personal injury trial lawyers involved in other aspects of the case."
Landry cited an estimate that attorneys serving on the Plaintiffs Steering Committee (PSC) could receive more than $2.5 billion from client and negotiating fees by the end of the process.
"That translates to an average of more than $138 million for each of the 18 law firms on the PSC, which represented private plaintiffs in a massive class-action lawsuit," Landry said. "These kind of excessive fees undermine public confidence in the legal profession and in our courts because they reinforce the public’s perception that the system is set up to benefit the lawyers more so than the victims."
Louisiana Lawsuit Abuse Watch is a non-partisan, non-profit, citizen watchdog group that focuses on civil justice issues in the state. Since Landry became executive director in 2008, the LLAW's numbers have swelled to more than 6,000 who work to raise awareness about the costs and consequences of lawsuit abuse.
Approved last week, the settlement with BP -- the largest settlement paid by a single entity in federal law enforcement history -- stems from the April 20, 2010 explosion on the Deepwater Horizon Macondo oil well drilling platform that unleashed the largest marine oil spill in U.S. history. A sea-floor gusher that had been tapped by the platform, operated by Transocean under contract for BP, flowed for 87 days with federal government estimates of 4.9 million barrels released into the Gulf of Mexico. Eleven people were killed in the initial explosion.
A consent decree entered by a federal court in New Orleans on April 4 is expected to resolve civil claims against BP. The settlement resolves the U.S. government’s civil penalty claims under the Clean Water Act, as well as claims about damages to natural resources claimed under the Oil Pollution Act. The settlement also covers Gulf states' and local governments' economic damage claims. Altogether, the settlement comes to more than $20 billion.
Landry said she doubted Louisiana got its money's worth.
"Do these astronomical figures make sense? Are they justified?" she asked. "I suspect the answer depends on whether or not you got part of the $38 million. But it is worth noting that the team of private lawyers hired by former Attorney General James “Buddy” Caldwell to represent the state were given highly lucrative legal contracts through a secret no-bid process. In fact, eight of the 11 law firms supposedly working on the state’s case were Caldwell’s campaign contributors."
Some of those attorneys, Landry said, were caught sleeping in court while others submitted invoices that suggested they worked 13 hours a day, every day for three months straight.
"There’s no question that it was an unseemly arrangement," Landry said.
Landry praised Louisiana's new Attorney General Jeff Landry for ending "the old buddy system" earlier this year. The new AG canceled all legal contracts Caldwell made with outside law firms that had charged the state rates as high as $600 an hour, Melissa Landry, who is not related to the AG, said.
"The remaining legal work to finalize the state’s $18.7 billion settlement with BP was handled by in-house staff attorneys, a move that likely saved the state thousands if not millions of dollars in unnecessary legal fees," Landry said.
Many lessons can be learned from this outlay over the disaster, Landry said, counting off only a few.
"This episode should discourage policymakers from supporting the use of private attorneys in future government-sponsored litigation," she said. "It should also put on notice the dozens of parish and other local governments across Louisiana that awarded contingency contracts to private lawyers in the Deepwater matter. As of this writing, dozens of personal injury trial lawyers are reaping millions of dollars from local governments for their 'work' in obtaining BP settlements."
Landry cited the situation in Jefferson Parish, where almost $12 million of the parish’s $53 million BP settlement is earmarked for attorneys, a result of a contingency fee contract.
"In New Orleans, the city will pay a team of attorneys nearly $8 million in contingency fees," she said. "In St. Tammany, lawyers will take more than $4 million of the parish’s award.
Unfortunately, the list goes on. Too often, personal injury lawyers charge exorbitant legal fees that have no basis in reality. This should be avoided, particularly when it’s taxpayer money at stake. Allowing attorneys to grab big chunks of public legal settlements undermines public confidence in the legal profession and in our civil justice system as a whole."