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Justice Department opposes fees awarded to oil spill lawyers

NEW ORLEANS — The fees a judge awarded lawyers fighting BP discourage people from settling oil spill claims out of court, the Justice Department says.

In a court filing, the Justice Department opposed U.S. District Judge Carl Barbier’s decision to set aside up to 6 percent of claims payments after Dec. 30 for trial lawyers affiliated with a steering committee helping people sue BP PLC. Under the order, fees would be garnished from people and businesses settling their claims outside of court.

The question of lawyers’ fees is contentious with millions of dollars at stake. State attorneys general in Florida and Louisiana, as well as lawyers working to settle clients’ claims out of court, claim Barbier’s fee structure unfairly rewards trial lawyers.

The fees would go to a steering committee of lawyers and their associates working on a civil case against BP in federal court. The steering committee is made up of about 340 lawyers from 90 firms on behalf of more than 120,000 people. The plaintiffs’ lawyers said they have spent 230,000 hours and $11.5 million on the case, and that an escrow account should be set up to pay them.

Barbier’s fee structure — established in a Dec. 28 ruling — has provoked a strong reaction and was appealed. Following the ruling, the Gulf Coast Claims Facility — a $20 billion fund handing out BP damage claims — froze payments for a couple of days and Barbier agreed to reconsider his ruling. The judge has not set a date for a new hearing on the fees. He could also rule without a hearing.

In its filing, the Justice Department contends the ruling goes against the intent of the Oil Pollution Act and discourages people from settling. Federal lawyers said the claims process under the Oil Pollution Act — passed after the 1989 Exxon Valdez oil spill in Alaska — was designed to allow people harmed by a spill to avoid costly litigation by settling and avoid court. But federal lawyers said Barbier’s order “encourages litigation, and puts at risk some portion of the settlement proceeds of claimants who followed OPA’s directions.”

Florida’s attorney general, Pamela Jo Bondi, echoed those concerns in a similar filing and charged that the plaintiffs’ steering committee had done little to help settle claims.

Meanwhile, BP said in a separate filing that Barbier’s order could apply to other claims the company is seeking to resolve, such as payments to fishermen and other boat owners who worked for BP to clean up the spill. It could also apply to governmental claims, BP said.

The plaintiffs’ lawyers said their work to establish BP’s liability and fault in the spill has helped even those claimants who are seeking payment before the case goes to trial. In the claims process, people are only compensated for the damage they suffered. For example, the time a restaurant was forced to close or a shrimper was unable to go to work.

Also, they argue that setting aside a fee to pay plaintiffs’ lawyers in cases like this one — spanning various states and jurisdictions — is routine. They also argue that BP would be unwilling to settle many claims if they didn’t face a trial.

The oil spill began after the April 20, 2010, explosion aboard the BP-leased drilling rig Deepwater Horizon off the southeastern Louisiana coast. The explosion and fire that burned for two days killed 11 workers aboard the rig that sank after two days. More than 200 million gallons of oil flowed from the well a mile below the Gulf surface before it was capped in July, soiling coastal habitat, fouling fishing grounds and causing a near-panic for Gulf Coast businesses reliant on tourism.

BP set up the $20 billion fund to compensate victims. So far about $6 billion in damages has been paid.

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