Consumer Law

Why All Mass Tort Victims Should Be Concerned About the BP/Feinberg Claims Set Up

By Joe Consumer

Yesterday we covered  the ruling by Judge Carl Barbier, the judge in the BP oil spill litigation, which slammed BP?s claims administrator, Ken Feinberg, finding him to be an agent of BP and not ?independent? as he had repeatedly claimed.  As renowned legal ethics expert Monroe Freedman put it, ?The opinion therefore confirms that Feinberg has been engaging in unethical conduct that has been misleading claimants and posing a serious threat to the administration of justice.?

We all need to breathe a sigh of relief that Judge Barbier ruled as it did.  But there is more to this story, even aside from the expected additional rulings from Judge Barbier.  Earlier, Monroe Freedman discussed the wide-ranging implications of the BP and Feinberg set up:

The BP-Feinberg matter raises an issue that goes well beyond that case.  That is, the use of a ?Claims Facility? to permit a law firm to avoid otherwise applicable ethical rules.  This device can be used in any case in which a defendant is potentially liable for multiple causes of action and/or a class action ? e.g., for an oil spill; an airplane crash; a pharmaceutical that causes disability, death, or birth defects; etc.  Here?s how it works.

1.  The defendant retains a law firm.
2.  The defendant decides, unilaterally, the maximum amount for which it is willing to settle all claims against it.
3.  The law firm creates a Claims Facility to administer the defendant?s settlement fund.
3.  The law firm, having been retained, then enters a contract with the defendant that expressly provides that, in administering the Claims Facility: (a) The law firm will provide its professional services in administering the fund, and that all employees will act in a professional manner; (b) The law firm has no conflicts of interest with the defendant with regard to its administration of the Claims Facility; (c) In administering the Claims Facility, the law firm will hold all client information in confidence, subject to specific exceptions, such as information that becomes generally known; (d) Before the law firm reveals any confidential information relating to the Claims Facility, e.g., in response to a statutory requirement or court order, the law firm will give timely notice to the defendant so that the defendant can seek a protective order; (e) All information gathered by the law firm from the claimants will ultimately be turned over to the defendant, with no restrictions as to its use; (f) Nevertheless, the law firm is an independent contractor and is not in a lawyer-client relationship with the defendant in its administration of the Claims Facility.
4.  The law firm obtains an expert opinion saying that (a) There are no lawyer-client duties owed to the defendant by the law firm in the administration of the Claims Facility, such as loyalty and confidentiality; (b) There is no lawyer-client relationship between the law firm and the defendant in the administration of the Claims Facility; (c) Therefore, the law firm is not bound by ethical rules, such as MR 4.2, which forbids a lawyer in representing a client to unilaterally bypass an adverse party?s lawyer and communicate directly with that party, or MR 4.3, which (i) forbids a lawyer in representing a client to state or imply to an unrepresented party that the lawyer is disinterested; (ii) requires a lawyer to correct misunderstandings in that regard on the part of the unrepresented party; and (iii) forbids the lawyer to give legal advice to the unrepresented party other than advice to secure counsel.

It seems to me that this kind of device can effectively nullify applicable ethical duties, as well as seriously impair access to justice on the part of claimants.  Shouldn?t something be done about this?

Fortunately, the Judge did something.  Now there are some ethical restrictions on Feinberg?s conduct.  But we wonder if that?s enough? 

Full post as published by ThePopTort on February 04, 2011 (boomark / email).