Earning trust is biggest obstacle in disbursing $20 billion BP escrow fund
Saturday, June 19, 2010
It is not easy to divvy up $20 billion. Perhaps no one in America knows this better than Kenneth R. Feinberg.
The nation's unofficial authority on disbursing massive relief funds oversaw the paying out of billions of dollars for families of those who died in the Sept. 11, 2001, attacks and the Virginia Tech shootings. His phone rang once again this month, not long before word began to spread in Washington about such a fund for victims of the gulf oil spill.
BP executives contacted Feinberg to see whether he would be willing to take the job. He agreed, and President Obama signed on.
There is no blueprint for this kind of work, or at least there wasn't until Feinberg and the small, loyal team that has worked with him for years created one in the aftermath of the Sept. 11 attacks. After nearly a decade, they have gotten this difficult, contentious task down to something of a science.
Feinberg flew to Mississippi and Louisiana on Friday to get started. He began by surveying the mess and meeting with governors. On Monday, he is scheduled to go to Houston to talk to BP executives. The company has already received an estimated 50,000 claims. Tens of thousands more could come its way.
Back in Washington, Feinberg's team was busy setting the machinery of the fund in motion. A Washington lawyer in private practice, he has worked with the same three people for decades: His brother, David; the firm's longtime business manager, Camille Biros; and his law partner, Michael Rozen. They began arranging town hall meetings across the region, where frustrated people can vent their concerns and find out how to file claims. They set up 800-numbers and readieda Web site. In the coming weeks, they will hire scores of local lawyers, accountants, environmental experts and database engineers to staff community offices across five states.
With the Sept. 11 and Virginia Tech funds, Feinberg's team worked for free. This time, the operation will be funded by BP, and the company will pay the team a salary (it has not disclosed how much).
Feinberg, 64, says his biggest obstacle will be earning the trust of a deeply suspicious population. Supremely confident and blunt-spoken in pinstripes and French cuffs, he is the picture of the Washington superlawyer -- albeit with an unmistakable Boston accent. But he must convince beleaguered shrimpers and bait shop owners and marsh boat captains that he is not there to represent BP or the government. Getting them to quickly settle their claims through the escrow fund instead of suing BP is critical to the success of the compensation program.
"This program cannot be run from Washington, D.C.," Feinberg said in a news conference Friday after a two-hour meeting in Jackson, Miss., with Gov. Haley Barbour (R). "You have to come down here to the states affected by this spill and hear firsthand what's being done, what needs to be done, to provide prompt, fair, impartial compensation for people with a legitimate claim."
"Do not assume that everybody's going to file a claim that should file a claim," Feinberg warned. "There are people in our country very skeptical of a program like this, worried about it. 'It's too complicated.' 'I'm not sure what I have to submit.' 'I don't trust them.' 'I'm worried.' 'I'm frustrated.' 'I'm angry.' "
Barbour offered his help in introducing Feinberg, telling his state's residents that the man from Washington was "somebody that everybody can trust."
Obama and BP have given Feinberg carte blanche to establish an independent system to compensate those affected by the oil spill. "It is my program," Feinberg said, noting that it has "my imprimatur on it, not the administration or BP." Feinberg declined to comment for this article.
Over the years, Feinberg has helped settle some of the nation's most complicated legal disputes, including a class-action lawsuit by Vietnam veterans over the use of Agent Orange, the government's Sept. 11 Victim Compensation Fund that distributed $7 billion to the 5,500 survivors and families of the dead, and the Hokie Spirit Fund that compensated families of the victims of the 2007 mass shootings at Virginia Tech. Obama also named him the "pay czar" overseeing executive compensation under the government's Troubled Assets Relief Program.
Each time he and his team wade in, they must establish guidelines so that people understand how the money is being doled out. It can be a touchy business; inevitably there are those who believe they got too little and others got too much. "You start thinking about how many different layers there are to this; it's a lot," said Rozen, Feinberg's law partner. "It's the sheer enormity of all of this that cuts across so many different kinds of livelihoods, whether they be commercial fishermen or independent contractors or oil rig workers or tourist venues."
Feinberg's role is not to side with the victims, but to be an impartial arbitrator. "We're not looking to be an advocate -- pro or con," Rozen said. "It's a pretty simple set of instructions: to find the best way to compensate victims or people who have been harmed here by this disaster in the most efficacious and expeditious kind of way."
Asked in an interview whether Feinberg might be cast in the South as a distrustful Yankee, Barbour said his accent isn't an issue.
"And the fact that he used to work for Senator Kennedy isn't an issue either," Barbour joked, noting Feinberg's job in the 1970s as chief of staff to the late senator Edward M. Kennedy (D-Mass.).
"He has to just be straightforward and upright," Barbour said, "gather around others who have no ax to grind but want this to be a fair process, and then conduct it in a way that is open."