By MICHAEL KUNZELMAN/The Associated Press
NEW ORLEANS (AP) — The deal is all but done. Now it’s time to sell it.
Days after they announced a multibillion-dollar settlement, BP PLC and a committee of plaintiffs’ attorneys are working out details of an agreement to resolve more than 100,000 claims spawned by the 2010 oil spill in the Gulf of Mexico.
They must persuade a federal judge that the settlement is fair and equitable, but the sales job doesn’t end there because the deal already has its critics.
Some attorneys who didn’t participate in the settlement talks but represent thousands of plaintiffs question whether the court-supervised claims process offers a better bargain for their clients than the $20 billion compensation fund BP established in 2010. They can urge their clients not to participate in the settlement, though pursuing a claim separately in court could involve years of costly litigation.
Anthony Buzbee, a Houston-based attorney who represents about 12,000 clients with claims against BP, said he received a phone call Monday night from a Plaintiffs’ Steering Committee member who briefed him on some of the terms of the deal. Buzbee had initially expressed doubt that the settlement could benefit his clients, saying it was “hard to keep an open mind when you’re not getting any information” from the PSC.
His tone had softened by Tuesday, however. Buzbee said the PSC member assured him the court settlement’s terms are “much more generous” than the Gulf Coast Claims Facility’s claims processing formula.
“I’m going to withhold judgment on it and wait and see what the final protocols are going to be,” Buzbee said.
Daniel Becnel Jr., a Reserve, La.-based attorney who represents about 1,500 clients with claims against BP, said he doesn’t need to read the fine print of the deal to know he will advise his clients to opt out of the settlement. One of Becnel’s concerns is that he says the settlement doesn’t account for tens of thousands of people and businesses that haven’t filed claims yet.
“They’re starting to catch a lot of flak from a lot of people,” Becnel said. “How do you settle a case without knowing what the universe is of the entire client population?”
Rig owner Transocean and cement contractor Halliburton also may challenge the deal in part because it seeks to assign certain claims BP has made against those companies to the PSC. Halliburton lead trial lawyer Donald E. Godwin said Tuesday that Halliburton is not currently in settlement discussions with BP or the PSC and that the company is preparing for trial.
Kenneth Feinberg, who administered BP’s $20 billion fund, is expected to leave the post soon. Lynn Greer, a partner at a Richmond, Va.-based law firm, will fill in for Feinberg during the transition from the Gulf Coast Claims Facility to the court-supervised settlement program. Patrick Juneau, a Lafayette-based attorney, will take over for Greer and serve as the court-appointed administrator for economic loss claims if U.S. District Judge Carl Barbier gives his preliminary approval to the settlement.
All of the paperwork that applicants submitted to the GCCF will be transferred to the court, so those claimants won’t be starting from scratch under the new system. During the transition, individuals and businesses with pending settlement offers from the GCCF will be able receive 60 percent of the existing offer while they consider whether to participate in the court settlement. If they opt out, they must sign a release to get the remaining 40 percent. If they opt in, the court-supervised process will decide if they are entitled to more than what the GCCF offered.
“I would say Mr. Feinberg did the best he could under very challenging circumstances, and he played the cards he was dealt to the best of his ability. But now we’re starting with a new deck,” said Steve Herman, one of the lead plaintiffs’ attorneys in the litigation.
Herman expressed confidence that the settlement’s architects can convince skeptics that a court-supervised claims process is a better vehicle for resolving claims than the GCCF has been.
“It recognizes more claims than were recognized under the GCCF,” he said. “It gives the claimants more flexibility in establishing their losses and offers more security as to future risks.”
Herman said the GCCF formula for calculating a claimant’s economic losses compared 2009 revenues with post-spill 2010 revenues. The settlement program would allow a claimant to compare 2010 revenues against a broader time period, looking at revenues between 2007 and 2009, according to Herman.
Claimants will have a right to appeal any settlement offered though the court-supervised process to a neutral party or panel of up to three people. BP also can appeal any award over $25,000, but the company would have to pay a 5 percent penalty to the claimant if it loses, according to Herman.
Barbier appointed the steering committee’s members in 2010 to take the lead in preparing for a trial that is now on hold indefinitely. Most of the claims that have been filed before the court are by people who don’t have a lawyer or are represented by committee members and other attorneys who worked on trial preparations. Still, the lawyers who aren’t involved in the deal have the ability to steer many plaintiffs away from the settlement.
David Uhlmann, a University of Michigan Law School professor who served as chief of the Justice Department’s environmental crimes section, said that if the judge approves the agreement, he isn’t likely to be in any rush to hold a trial for plaintiffs who refuse to participate in the settlement.
“There will be billions of dollars available to victims to receive full compensation for their losses under a process supervised by the court. Class members will have the ability to opt out of the settlement, but they may wait a long time to have their claims heard by the court if they opt out,” Uhlmann said.
BP says it expects to pay an estimated $7.8 billion to settle the claims by businesses and individuals. Still unresolved are claims by the federal government and the Gulf states, which could cost the company billions more.
Tony West, head of the Justice Department’s civil division, wouldn’t comment Monday on the possible terms of a settlement between BP and the government entities.
“There’s no question that all the parties have been talking with one another — about what, I won’t go into. But clearly there have been conversations involving all the parties to the lawsuit,” said West, who is preparing to take over as the Justice Department’s No. 3 official next week.