Ethics

We previously blogged about the interesting ethics issues associated with Kenneth Feinberg's administration of the BP compensation fund (here and here).  Not surprisingly, Mr. Feinberg sought out legal advice regarding some of these issues and hired NYU Professor (and co-blogger) Stephen Gillers to provide an opinion letter, which was recently released (here).  

The scenario seems entirely uncontroversial, but questions have been raised in an AP story (here) and in a statement by Joanne Doroshow, Executive Director of the Center for Justice & Democracy (here) regarding Stephen's payment.  In essence, the question is whether there is something improper about him getting paid by BP to write the letter. 

Mr. Feinberg's conduct as a lawyer has been questioned by the Louisiana AG and has been criticized in court by class counsel, so it seems reasonable for Mr. Feinberg to seek legal advice on these matters. It is unlikely that he'll get pro bono legal advice, so his lawyer has to be paid. Who should pay the lawyer? The fairest source of payment would be BP itself, which is what is happening.  Moreover, there is no reason to think that the advice that Mr. Feinberg receives would be more independent or candid if he paid for the legal advice himself as opposed to the payment coming from BP.

To be clear, Stephen is getting paid from BP and not from the compensation fund money (as originally reported), so the cost is not coming out of claimants' pockets.  And given the lack of any adversity between BP and Mr. Feinberg and given the task that Stephen was asked to perform, there is nothing problematic about BP paying Stephen to give advice to Mr. Feinberg. So this seems like much ado about nothing.

The statement from Ms. Doroshow suggests that there needs to be transparency regarding how much Stephen is getting paid, but Stephen's hourly rate is expressly mentioned in the news stories.  (The stories indicate that Stephen hasn't even submitted his final bill.)

The statement also questions Stephen's reliance on information that Mr. Feinberg told him, but the news story makes clear that Stephen examined underlying documents, so the implication that Stephen's opinion relied only on what Mr. Feinberg said is incorrect.  Moreover, the statement misunderstands the lawyer's role in this sort of situation; Stephen was hired to provide an opinion letter, not to conduct an independent investigation.

When you mix oil, politics, and ethics, I suppose it's not surprising that there is controversy.  But the controversy is not always justified.