Rod Dreher

Rod Dreher


Kenneth Feinberg: BP’s man?

posted by Rod Dreher

Said Kenneth Feinberg, appointed a short while ago by President Obama to oversee the $20 billion BP compensation fund:

Pledging his independence from the federal government and BP, Feinberg said he plans to establish a centralized claim center, beef up a staff of adjusters and be a constant, visible figure for Gulf Coast residents.
“This is an independent, private program,” he said. “I’m not beholden to the Obama administration. I’m not beholden to BP. I’m an independent administrator calling the shots as I see them.”

A New Orleans lawyer friend writes to say that the word on the street down there is somewhat different. He writes:

BP Fund $20B administrators Feinberg and Rozen, who handled the 911 Compensation Fund on a pro-bono basis, are reportedly traveling by BP-funded (or BP-owned) private jets, being paid by BP and refusing to disclose how they’re paid, what their incentives are, etc.
Local bar is up in arms. Consider: Feinberg’s a BP-paid lawyer, pretending to be neutral, acting with authority granted by the President, talking to spill victims and suggesting that they deal directly with him and not their own lawyers. At best, he’s on very thin ethical ice.
For cover, I’m sure he’s doing the work through a special-purpose company and not wearing his lawyer hat. But that hat-changing game doesn’t get you around the ethical rules.

These are allegations, not proven facts. If anybody can shed light on this, one way or another, check in.



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public_defender

posted July 21, 2010 at 6:33 am


As I understand it, this whole fund is so far outside the normal tort processes that it’s hard to apply the normal rules in any meaningful way. As I understand it, applying to this fund is a supplement to the applicants’ normal tort rights. So to be fair to Feinberg and Obama, if you want to follow normal tort rules,claimants should get lawyers, file in court, prove their claims with admissible evidence, and spend years in the process.
Also to be fair to Feinberg and Obama, part of the reason the victims can’t practically use the tort system is that conservatives have created so many procedural and substantive hurdles to relief that it’s very difficult for truly injured people to get real relief. If the victims in this case were anyone else, conservatives would be crying “junk science,” “frivolous lawsuits,” and “McDonald’s cup of coffee.”
All that said, Feinberg should disclose his compensation and reimbursements from BP.



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Indy

posted July 21, 2010 at 6:45 am


Rod, that BP is paying for a chartered jet, just as it is being asked to pick up the tab on some of the clean up costs, is no secret, Feinberg has made no attempt to hide it. A story bylined Jly 16 in The New York Times mentioned it. See
http://www.nytimes.com/2010/07/17/us/17feinberg.html?_r=1&emc=eta1
In DC, it probably was not anticipated that this would raise eyebrows, which explains the opennness with which it is being done. The alternatives would be that the government pay (taxpayers dime), that Feinberg’s private law firm pay (he’s not working on their behalf, no billable hours in this work to the law firm), or that he pay out of pocket as an individual.



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Indy

posted July 21, 2010 at 6:49 am


PS Feinberg did his 33 months of work as special master of the 9/11 fund on a pro bono basis.



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public_defender

posted July 21, 2010 at 7:30 am


Indy,
Fair points, but that only makes it silly if Feinberg and Rozen don’t fully disclose the details of the compensation and reimbursement that BP is providing.
This whole fund is based on a sense of moral duty, so it’s critical that the arbitrators act morally and transparently.



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Indy

posted July 21, 2010 at 7:42 am


I agree that the more transparency, the better. I do think that DC-NY based people sometimes operate in too great a bubble, losing touch with how things look outside their usual orbit. Even ones who specialize in mediation and have worked with other big compensation funds (Agent Orange, 9/11 fund), etc. Feinberg Rozen does not address this on its website. http://www.feinbergrozen.com/ However, Feinberg has been open in stating to interviers (most recently one for Bloomberg) that he is being compensated by BP for his work with the fund. This was been debated on a number of law blogs. Give me a few minutes, I’m getting ready to go to work and dealing with a little bit of ordinary family chaos. I’ll post the links soon.



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Indy

posted July 21, 2010 at 7:49 am


Some thoughts recently by a law professor on the Feinberg compensation issue:
http://tinyurl.com/24j28ye
And by a Forbes blogger aT Forbes’ legal blog:
http://blogs.forbes.com/docket/2010/07/19/feinbergs-bp-pay-should-it-be-disclosed/#more-1316



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Indy

posted July 21, 2010 at 8:07 am


PS When I put up my first post this morning, I thought Feinberg was doing this pro bono, as he did the 9/11 fund. I should have checked around more before posting. Of course, the money in this fund comes from a different source than the 9/11 fund. Duties call, that’s all I have time for.



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Anon for this

posted July 21, 2010 at 9:41 am


Feinberg could put this whole thing to bed by disclosing his compensation, which I hope is his usual hourly rate. (And I’m betting that hourly rate will boggle the minds of folks in the Gulf. Big city lawyers are paid really, really large hourly rates. His is probably more than $600 per hour. Maybe a lot more.) So Feinberg should disclose and move on.
That said, I’m not surprised the local bar is indignant. Of course they don’t want their clients to settle with BP through the fund. This disaster could mean years of business for local attorneys (via huge mass tort cases, with billions of dollars at stake), but that will largely go away if a significant majority of folks settle via the fund.
Also, local bars exists to keep outside lawyers out. Are there any lawyers anywhere in the Gulf with Feinberg’s level of expertise with settling mass tort cases? If so, they should step forward. Otherwise, Feinberg really is the man for the job.
Public defender is right, by the way — this outside-the-courts procedure is partly a result of “tort reform” and the hurdles genuinely injured plaintiffs need to jump to get relief through the court system.
I’d be interested in hearing the specific ethics rules your friend believes Feinberg is violating. I don’t like the idea of telling people to ignore their lawyers, if that’s what Feinberg is telling them. But this fund is probably Gulf residents’ best hope of getting any redress from this disaster.



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andy

posted July 21, 2010 at 12:23 pm


$600? Feinberg’s hourly rate is probably multiples of that amount.



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JD

posted July 21, 2010 at 12:45 pm


Feinberg is being paid by BP to decide how BP’s money will be awarded to claimants — that’s the role of a BP lawyer or claims adjuster. Clarification of his pay and any incentive structure might resolve some of the concerns regarding his motivations.
Even if those matters were clarified, there’s still an ethical issue: Feinberg has repeatedly stated that oil-affected parties should not hire lawyers, because he’ll give them a better deal than the courts or their own lawyers would. Here is one of several of the American Bar Association’s Model Rules of Professional Conduct that may apply:
Rule 4.3 Dealing with Unrepresented Person
In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.
Captcha: dred tropic



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Franklin Evans

posted July 21, 2010 at 1:21 pm


Unless and until someone shows up with the employment contract between BP and Feinberg, assuming one exists, the simplest explanation is usually the best.
BP is putting $20 billion in escrow, and Obama named the person to be in charge of disbursing it. Feinberg has logged a few thousand miles these past weeks, holding town hall-type meetings and doing press conferences. How simple it is to assume that BP needs all the good will it can get, and facilitating Feinberg’s job is a straw about which I’d have been surprised had they not grasped it.
Besides, the collusion-conspiracy hysterics are missing the boat if they don’t focus on a BP-Obama connection… or maybe that’s so old hat by now, they are trying to blaze new “trails”. ;-)



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public_defender

posted July 21, 2010 at 8:13 pm


I see the arguments that Feinberg may be violating the rule about dealing with unrepresented litigants or about failing to disclose his real duties. Lawyers have to be careful to be clear and honest about whom they represent, especially when dealing with unrepresented parties. But I just don’t know enough about his real duties to make a judgment. He may be paid by BP, but what words on what piece of paper delineate his authority? Without knowing that, I can’t say more, so I won’t.



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Indy

posted July 21, 2010 at 9:05 pm


Franklin Evans and Public Defender, i don’t think there is an employment contract between him and BP. He is in a weird sort of quasi official position where he is working on behalf of the government to administer the escrow fund of an entity which still can be sued by the people affected. He’s a governmental appointee. By its very nature, that means he cannot be “working for” BP. BP is compensating him for some of his work, but that sounds as if it is different from being his client. I don’t think it is a lawyer-client situation between Feinberg and BP, any more than the banks are his clients in his administration of the TARP fund as a special master.



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Indy

posted July 21, 2010 at 9:16 pm


Franklin Evans and Public Defender, i don’t think there is an employment contract between him and BP. He is in a different sort of quasi official position where he is working on behalf of the government to administer the escrow fund containing the money of an entity which still can be sued by the people affected. He’s a governmental appointee. By its very nature, that means he cannot be “working for” BP in terms of having a traditional lawyer-client relationship with it. Any more than the financial institutions are his clients in his administration of the TARP fund as a special master type official(somewhat different, I know, but he’s still supposed to be a third party administrator).



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