Vitter slams Feinberg over compensation from BP

Feinberg, a Washington lawyer who previously administered the 9/11 Victim Compensation Fund, and his law firm negotiated a contract with BP to be paid $850,000 a month for overseeing the Gulf Coast Claims Facility, which doles out compensation to victims of the oil spill. That salary comes up for review every three months, Vitter said.

“It would be like a judge not only being paid by one of the parties to a lawsuit before that judge, but having the judge’s salary subject to a negotiation between the judge and that party every three months at exactly the same time as that judge hears and decides the case,” Vitter said in the letter.

He also said the $850,000 a month salary “seems staggering, particularly in that it’s not tied in any way to any certain number of hours worked by any certain number of people.”

Vitter proposed two “constructive suggestions” for fixing what he called a conflict of interest. First, an independent party, not BP or Feinberg, should decide on Feinberg’s compensation. Second, Vitter asked to see an itemized list of the hours Feinberg and staff at his law firm worked on the claims process.”
 

Here is the full letter:

February 24, 2011
 
VIA ELECTRONIC MAIL AND OVERNIGHT DELIVERY
IMMEDIATE ATTENTION REQUESTED
 
Ken Feinberg
Managing Partner, Feinberg Rozen, LLP
1455 Pennsylvania Avenue, NW
Suite 390
Washington, DC 20004
 
Lamar Mckay,
Chairman and President BP America, Inc.
501 Westlake Park Court
Houston, TX 77079
 
Gentlemen:
 
I write to express my strong objection to Mr. Feinberg’s compensation arrangement with BP and to suggest a better alternative.
 
As I understand it, BP has agreed to pay Mr. Feinberg and his firm $850,000 per month for claims administration from funds BP has set aside internally for claims-related matters.  However, this amount comes up for reconsideration/renegotiation every three months.
 
First, I think it is a clear and profound conflict of interest for Mr. Feinberg to be regularly negotiating his compensation with BP at the same time as he is deciding BP’s liability to Louisiana claimants and others.  This conflict is completely unacceptable. 
 
It would be like a judge not only being paid by one of the parties to a lawsuit before that judge, but having the judge’s salary subject to a negotiation between the judge and that party every three months at exactly the same time as that judge hears and decides the case.
 
Would you want to be that other party to the case?  That’s the position Louisiana claimants and others are in.
 
Second, an 850,000 per month flat fee seems staggering, particularly in that it’s not tied in any way to any certain number of hours worked by any certain number of people.  Given this arrangement, it does not surprise me when inquiries and other matters are not adequately dealt with by the Feinberg firm but instead fall through the cracks.
 
To correct all this, I have two constructive suggestions.
 
First, these serious problems including the fundamental conflict of interest would largely be avoided if Mr. Feinberg and BP agreed on a qualified arbitrator and charged her with setting the compensation of the Feinberg firm at the end of each month.  Compensation would be based on hours billed for specific, itemized tasks outlined on hourly billing sheets at reasonable hourly rates, with some appropriate overall cap (different rates for different personnel involved–Mr. Feinberg, other attorneys, paralegals, other staff, etc).  I ask you to adopt this arrangement and agree on a qualified arbitrator.
 
Second and as background, I would like to see a time/billing report for personnel at the Feinberg firm and their work on claims matters during January 2011.  I would also like to know what each individual’s normal hourly billing rate is to non-BP corporate clients.
 
I think all of these points and requests are very reasonable.  They go to the fundamental question of fairness to Louisiana claimants and others, particularly in light of other calls on BP resources (like Feinberg pay).
 
I look forward to your responses to these points as soon as you can provide them.  Thank you.
 
Sincerely,
 
David Vitter
United States Senator
 
Cc:       President Barack Obama
Admiral Robert J. Papp
Senator Mary Landreiu
Senator Kay Bailey Hutchison
Senator John Cornyn
Senator Thad Cochran
Senator Roger Wicker
Senator Jeff Sessions
Senator Richard Shelby
Senator Bill Nelson
Senator Marco Rubio
Senator Barbara Boxer
Senator James Inhofe
Congressman John Mica
Congressman Nick Rahall, II