Plaintiffs’ lawyers in the BP litigation are embroiled in a battle over whether to rein in Kenneth Feinberg, who manages BP’s $20 billion oil-spill victims’ compensation fund. According to the Insurance Journal, the 17-member plaintiffs’ steering committee wants a judge to oversee Feinberg and order him to modify the release form claimants must sign before accepting a final payment from the fund to notify victims of their option to sue. Another group of plaintiffs’ lawyers contend that monitoring Feinberg will interfere with settlement negotiations and slow claims payments. This group of plaintiffs’ lawyers recently moved to redirect dozens of its clients to make claims to the $20 billion fund. This move, as discussed in the Wall Street Journal, will benefit BP by saving it money on attorneys’ fees and allowing it to settle claims quietly outside the public arena.
If U.S. District Court Judge Carl Barbier decides to monitor Feinberg and order him to modify the release form, BP’s defense will be enormously impacted. A modified release informing victims of their option to sue will likely increase the number of people bringing suit, which consequently results in BP expending more resources in defending lawsuits and negotiating settlements through the litigation process. Judicial involvement will also impact how Feinberg and BP run the fund, resulting in greater time and financial resources spent on apprising the judicial system of developments in claims to the fund. Some of BP’s primary reasons for establishing the fund were to avoid litigating victims’ claims and save time and money in settling claims. Judicial involvement will undermine this purpose. A decision to monitor the fund will also impact companies’ handling of the aftermath of inevitable future disasters. Companies will be on the defensive – thinking twice before establishing a fund, being more conservative in deciding the amount of money to set aside in the fund, and determining how to handle claims to the fund.