Kenneth Feinberg and his law firm have been paid more than $2.5 million in 3 1/2 months to administer the $20 billion fund set up by BP Plc to compensate victims of its oil spill in the Gulf of Mexico.
The London-based oil company agreed to pay Feinberg Rozen LLP in Washington a fee of $850,000 a month from mid-June, when Feinberg agreed to run the claims facility, through Oct. 1, according to a report today on the compensation by former U.S. Attorney General Michael Mukasey.
Feinberg, 64, who ran the fund for victims of the 9/11 attacks and was special U.S. master for executive pay, was chosen by BP and President Barack Obama to compensate those affected by the largest U.S. oil spill. Feinberg Rozen retained Mukasey and his firm, Debevoise & Plimpton LLP, to evaluate the package. Mukasey said the payment was reasonable for demanding work under scrutiny by residents, public officials and BP.
“All of the work to date has proceeded against a backdrop of intense pressure from diverse stakeholders -- including but by no means limited to the White House and BP -- to work quickly,” said Mukasey, attorney general under former President George W. Bush.
William Brennan, a principal with consulting firm Altman Weil Inc. in Newton Square, Pennsylvania, said the compensation puts Feinberg Rozen on par with the top U.S. law firms where attorneys generate $1 million or more in annual revenue.
“That’s a heck of a lot of money for any law firm,” he said in a telephone interivew. “Considering Feinberg’s expertise in this particular area, it’s not unreasonable that he would charge that amount.”
The $850,000 monthly payments to Feinberg’s firm will continue through year-end and then will be reviewed, a person familiar with the contract said today.
The money goes to seven professionals at Feinberg’s firm and is paid by BP separately from the fund to help victims, according to the person, who spoke on condition of anonymity about details not spelled out in today’s report. Among those being paid is Feinberg’s brother David, according to the report. David Feinberg is listed on the firm’s website as director of special projects.
The payments from BP help offset the “significant distortion” the project is causing to the Feinberg firm’s business, Mukasey said in the report today. Feinberg Rozen has turned away three mediation requests since June, according to the report.
Four attorneys spent 2,777 hours from June 16 to Oct. 4 working on the claims fund, according to the report. The firm hired two attorneys to help handle the work.
$1.14 Billion Paid
Feinberg has awarded $1.14 billion in claims as of Oct. 7 after criticism from the Justice Department, Florida Attorney General Bill McCollum and Gulf Coast businesses that the process was moving too slowly at first.
Feinberg initially declined to disclose his salary. He later told reporters he would do so as part of his effort to make the claims process as transparent as possible and reassure critics.
Representative Michael Burgess, a Texas Republican, questioned during a House Energy Committee hearing on July 27 whether Feinberg could operate independently given that he was being paid by BP.
“I don’t see any difficulty in maintaining my independence,” Feinberg said at the hearing. “I certainly do see the implication of your question, which is there could be a perception that since BP is paying, shouldn’t we have more transparency or full disclosure? And I agree with that.”
The compensation disclosure underscores that Feinberg is an employee of BP, raising “concerns about the management of the fund,” said Tyson Slocum, director of energy programs for Public Citizen, an advocacy group in Washington, said in a phone interview today.
While Feinberg should be commended for his past work on the 9/11 fund and as the Treasury Department’s special master for executive compensation, he still hasn’t disclosed how much he is making personally from running the BP fund, he said.
“We haven’t gotten the answers that everyone has been promised for months,” Slocum said.