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Damage payments from the compensation fund for BP's massive oil spill in the Gulf of Mexico have been stopped temporarily because officials need time to comply with a court order to set aside money to pay hundreds of lawyers.
The Gulf Coast Claims Facility, which was set up to handle claims against BP PLC, said Tuesday that payments would be halted to comply with a Dec. 28 order by U.S. District Judge Carl Barbier. The order requires that 6 percent of payments approved on and after Nov. 7, 2011, go to lawyers affiliated with a steering committee approved by the federal court to spearhead oil spill litigation for plaintiffs.
A statement from the claims facility said the fund needs time to reformulate payments.
Fund officials have asked the judge to clarify his order. For now, the claims facility said it would assess the 6 percent fee against settlements reached after Dec. 29 but asked Barbier whether it should assess the fee for thousands of settlements paid between Nov. 7 and Dec. 29.
The claims facility faces the prospect of asking 9,000 people who received a payment between November and December to pay for attorneys' fees. About $260 million has been paid to claimants since Nov. 7, the claims facility said. Also, the ruling might affect 40,000 settlements under negotiation since Nov. 7, the date when plaintiffs' attorneys first asked the court to establish a fund to cover fees.
At the same time, the Louisiana attorney general and lawyers not affiliated with the steering committee say they plan to appeal Barbier's ruling.
It's uncertain how long the payment process might be held up.
The steering committee and its associates are made up of about 340 lawyers from 90 firms who are working on the sprawling legal case against BP on behalf of thousands of claimants. In court filings, the lawyers say that 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 for their work.
Separately, lawyers not affiliated with the steering committee said Barbier's order unfairly compensates those lawyers who are part of the steering committee.
Daniel Becnel, a Louisiana lawyer not with the steering committee, questioned how much work the steering committee lawyers have done. He said much of the legal work against BP was done during Coast Guard and congressional hearings and investigations. He said the plaintiffs' steering committee has duplicated work already done.
"You have to do something to get your attorneys' fees," Becnel said. "We're all beside ourselves."
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. The Deepwater Horizon sank on April 22. Millions of gallons 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 a $20 billion fund to compensate victims of the spill that so far has paid about $5.8 billion in damages.
Meanwhile, BP, Transocean Ltd., Halliburton and other companies involved in the spill have blamed each other in lawsuits. Civil and criminal investigations into who is responsible for the nation's worst offshore oil spill are ongoing.