Now maybe the Gulf-oil-spill circus can finally end. The attorneys are settling. At the same time, Kenneth Feinberg, administrator of the victim-compensation fund, has proposed final terms that would govern all cases, including those involving victims who don’t have lawyers.
At least 30 law firms representing thousands of clients — including big hotels and condos in Florida — are considering dropping federal lawsuits and cutting deals for a share of Feinberg’s $20 billion fund. Although lawsuits, particularly by the states, will no doubt continue, the sheer size and number of the cases in play, as well as the clout of the attorneys backing them, may lure clients from the smaller group of lawyers that a federal judge selected to lead the litigation.
This is potentially good news. Protracted litigation — it’s been 20 years and the Exxon Valdez case still hasn’t wrapped up — is the last thing the people of the Gulf need. Even though the worst effects of the spill are behind us, environmentalists, journalists, and some politicians are still crying catastrophe, chasing away the tourists and scaring customers for Gulf seafood, hotel rooms, and real estate. Lawsuits and the accompanying propaganda would continue this travesty for years and encourage our wobbly president to duck the tough decision to push for more drilling.
Feinberg has commissioned a couple of reports that back up the idea that it’s possible to settle now. One, by marine biologist Wes Tunnell, predicts Gulf fisheries will completely recover by 2012, except for the oyster beds, which were damaged when Louisiana officials released fresh water from the Mississippi to push oil out of wetland areas. The fund would pay double 2010 losses to most, with oyster businesses getting four times their 2010 losses. Another report, on tourism, puts worst-case losses in excess of $20 billion but says a $500 million advertising campaign to correct misconceptions about the Gulf could mitigate those losses substantially.
The leader of the settlement faction, Daniel Becnel Jr. of Louisiana, tells National Review that not only did he broker the deal between the attorneys and Feinberg, but he earlier pressed President Obama to set up a compensation fund and special master à la Feinberg (an old friend) in the first place. In other words, despite the bluster, this is the endgame some attorneys sought all along — including the arrangement that gives lawyers who settle 10 to 12 percent of the take rather than the more typical 30 to 40 percent that will go to the ones who will run the litigation.
What do you call 30 law firms that would rather settle on the cheap than litigate? Forget jokes about bottom feeders’ fleeing oil litigation; simply say, hey, it’s good start. Conservatives are rightly concerned at the potential for abuse and the extralegal nature of the Feinberg operation, coming as it did after the constitutional abomination of the auto bailouts. We have courts to decide questions of liability, but also an oil-spill law that bypasses the courts to compensate victims directly and quickly. The Republican Congress has to keep a close eye on this one: Even if the suits are settled equitably, there remains the potential for the leftovers to turn into an enviro-community-activist slush fund.
Still, it’s hard to fault Becnel’s reasoning on the independent special master and the ultimate settlement: Close to half a million individual cases would overwhelm the court system and make the Exxon Valdez case look like a model of efficient jurisprudence. BP, which under oil-spill law normally would pay off claimants directly just as Exxon did, is not seen as an honest broker in a case that’s stirred passions across the Gulf. Even Feinberg is taking heat from the trial judge, some victims, and lawyers the judge has named to run the suit.
It’s important to keep in mind, though, that the claims process is legitimate. It is modeled on President Bush’s compensation panel for 9/11 victims, which has withstood a number of challenges to its constitutionality.