The contract that Ken Feinberg’s law firm signed to run BP PLC’s oil spill claims operation calls for BP to set the firm’s pay every three months. That stipulation is causing concern that the company could pressure Feinberg into keeping a lid on claims payments.
The contract, signed Jan. 6 -- nearly six months after Feinberg was hired to operate the Gulf Coast Claims Facility -- also calls for Feinberg to turn over all claims documents to BP after his operation shuts down in August 2013.
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To get the money claimants must agree not to make additional claims or sue parties involved in the spill.
Two other options are available: final settlements, which cover all present and future damages and also require a lawsuit waiver; and quarterly interim payments, which don’t require a waiver. Both options require claimants to document their damages.
The lawsuit waiver has become controversial. Trial lawyers have argued that it is too broad. Attorneys general from Gulf Coast states have warned people to be cautious before signing it. Alabama Gov. Bob Riley has asked that the waiver be removed from the process altogether.
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The 46-page contract between BP and Feinberg became public on Jan. 7, when it was filed in U.S. District Court in New Orleans as part of multi-district spill litigation against BP.
According to the contract, BP paid the Feinberg Rozen firm $850,000 a month to administer the claims process through Saturday. Now, the Washington-based firm’s fee will be "mutually agreed to by the parties on a quarterly basis in advance of the first day of each successive calendar quarter."
Joanne Doroshow, the executive director for the Center for Justice & Democracy in New York, a group that promotes the right to jury trials in civil cases, suggested that BP could tie the amount of its payments to Feinberg Rozen’s success in limiting BP’s liability.
Gulf Shores Mayor Robert Craft said it wouldn’t be fair to claimants on the coast if that were the case. "If there’s some type of performance program for how much he saves BP, he can’t be our advocate," Craft said.
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