X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The day after the Sept. 11 attacks on the World Trade Center and the Pentagon, the American Trial Lawyers of America declared that plaintiffs’ lawyers should band together to do their part as a public service. ATLA President Leo Boyle called for a national moratorium on civil suits, saying, “We as a nation must speak at this hour with a single voice.” Don’t listen for it now. All you’ll hear is a cacophony of lawyers arguing over which is the right road for victims’ survivors to take: filing a claim with the federal Victims Compensation Fund or preserving their right to sue. That dilemma � recently trumpeted on front pages across the country along with voluble criticism of the funding scheme — begs another question: Which lawyers’ advice should the claimants seek? Should they follow the urging of ATLA and get free advice from a pro bono lawyer, or go the traditional route and — optimistically — pay a contingency fee? ATLA has signed up about 3,000 volunteer lawyers, including about 350 in New Jersey. “We should not make a nickel off of these people,” says ATLA-NJ President Christopher Placitella. Under ATLA’s newly created Trial Lawyers Care Inc., lawyers who sign up pledge not to earn any fees; clients who use TLC to sue will be referred to other lawyers. But other attorneys, like aviation-accident lawyer Michel Baumeister, are signing up clients on retainer, either for litigation or for representation before hearing officers handling fund claims. The going rate is a contingency fee of about 10 percent to 15 percent, with some lawyers charging more for litigation than for walking a client through the fund claim process. A few lawyers have not only signed up clients but have sued the airlines in the Southern District of New York, designated by Congress as the venue. Still, most attorneys have advised families to hold off their decision until mid-February, when Kenneth Feinberg, the special master named by Attorney General John Ashcroft, releases his final rules governing the process. “I want 100 percent of my clients to go into a fair fund, but the problem is that if you go in you have to sign away your right to sue,” says Baumeister, of the New York and Morristown, N.J. firm of Baumeister & Samuels. “Many families do not trust that the system will be fair.” The victims’ relatives are barred except in unusual circumstances from suing the government, though they can go after the terrorists, countries that harbor them, and banks and charities that have supported them. Such complaints are long shots, often without deep pockets or the chance of collecting a judgment. Feinberg’s interim rules, issued Dec. 21, have drawn much criticism, principally from the families who say they are unfair, unsupported by the letter or intent of the statute passed by Congress Sept. 22, and too stingy. Not surprisingly, the survivors say they are entitled to more from the fund, particularly in light of the liability cap Congress imposed to protect the airlines from bankruptcy. The so-called airline bailout statute limits liability, in court, to the insurance policies of the two carriers, United Airlines and American Airlines. Those policies were for $1.5 billion per plane. All the lawyers advising families say they want the fund to work, and all say they believe that ultimately most with claims will opt to go into the fund, primarily because they agree with Feinberg that “it’s the only game in town.” They cite the liability limits and the potential of another $50 billion in property damage and loss of business claims. Placitella, a partner with Woodbridge, N.J.’s Wilentz, Goldman & Spitzer, says that for most families “it’s a no-brainer.” He adds that even if Feinberg heeds the criticism and liberalizes the final rules in favor of the families, about 90 percent will wind up going into the fund. Others, particularly aviation-disaster plaintiffs’ lawyers who have signed up clients, say it’s a tougher call, based on the circumstances of each family. James Kriendler, a partner with New York’s Kriendler & Kriendler, which has been retained by 110 families, wrote a 15-page memorandum to Feinberg two weeks ago, saying widows of many of the high-end earners killed in the World Trade Center crashes would get closer to $20 million at a jury trial. He called some of the interim rules “insulting, … absurd” and a violation of Congress’ intent. Baumeister & Samuels and Kriendler & Kriendler, firms that have participated in large aviation mass tort cases, are among those charging fees for their services, though Baumeister and Kriendler say their fees are well under scale. UNHAPPINESS ACROSS THE BOARD Feinberg, who heads The Feinberg Group in New York and Washington, D.C., and who concentrates on mediation and arbitration, was left to interpret the statute and a follow-up law passed in November. In his interim rules, he estimates that each family of a deceased victim will receive an average of $1.65 million. By comparison, the families of the 270 victims of the 1988 terrorist bombing of Pan Am 103 over Lockerbie, Scotland, shared a total settlement of $500 million from the airline, or $1.85 million per family. Plaintiffs’ lawyers, however, say that because about 40 passengers were students, who got about $575,000 each, the average for families of adults was more than $2.1 million. Feinberg produced tables of “presumptive awards” based on age, marital status, number of dependent children, earning potential and several other considerations, such as taxes, benefits and commutation costs. No cap is placed on the fund in the law, but based on Feinberg’s tables, the total payout would be $4 billion to $5.2 billion, with some getting nothing but others getting more than $4.5 million. Feinberg wrote in his interim rule report that “absent extraordinary circumstances, awards in excess of $3 million, tax free, will be rarely appropriate.” This conclusion, say Feinberg’s opponents, is another misinterpretation of the statute, saying Congress did not intend to even out widely disparate awards, but only to allow families to get what they could have gotten absent the liability protection for United and American. Others, such as Oklahoma Gov. Frank Keating, have challenged the disparities even with Feinberg’s rules, saying in a recent Washington Post op-ed that “the government should be wary of emulating the arbitrary and often bizarre vagaries of litigation.” Keating, noting that the families of the Oklahoma City bombing got nothing from the taxpayers, said that “life is precious, and taxpayer dollars should not distinguish between those with and those without.” The most controversial aspect of the interim rules is that the award be offset by “collateral sources,” such as life insurance, pension plans, workers’ compensation and other government grants. Widows of high earners in the prime of their careers loathe this, saying they could lose a large chunk of any award. Widows of the uniformed service victims also object to this provision because police and fire unions have lucrative widows’ and orphans’ benefit plans and because the federal government has awarded those families a separate $250,000 grant. The upscale families are also lobbying Feinberg and Congress to change another controversial interim provision that calculates future earning power based on a total compensation package of $231,000 a year. In other words, under Feinberg’s tables, a bond trader earning $700,000 a year will only have his future earning potential calculated with a starting base of $231,000. The provision on how to calculate noneconomic losses is also drawing heat. Feinberg’s interim rules say that noneconomic losses, defined by Congress as including loss of enjoyment of life, of companionship and of consortium, as well as pain and suffering and mental anguish, will be the same for everyone filing claims with the fund. All families will get $250,000 plus an additional $50,000 for a spouse and each dependent child. So the widow of a father of three would get $450,000 for noneconomic losses. The lawyers, both pro bono and on retainer, are collectively pushing for a minimum payout, with Feinberg hinting at a $450,000 floor, while Kriendler suggests $1 million; elimination of the $231,000 earnings cap for calculating earnings potential; no cap for noneconomic losses; payouts for not only widows and children, but for parents, siblings and children over 18 who are still dependent; elimination of or a reduction in the offsets; and the right to get a preliminary hearing and still go to court if the family does not like the number. Of course, the families play down the other benefits available to them, saying they should not be factored into the equation. Those benefits include about $1.2 billion from charity funds, which translates to $100,000 to $300,000 per family; a federal tax waiver for 2001 and this year; a waiver of all federal estate taxes for assets up to $8.5 million, which is included in the tax waiver bill signed by President Bush last week; local fund-raisers to help with trust funds for children; and other federal grants. Gerald Baker, a partner with Baker, Garber, Duffy & Pedersen in Hoboken, N.J., who handles aviation mass tort cases, says Feinberg’s final rules will clear up many ambiguities and make the families’ decision easier. Baker, like others who have not joined ATLA’s pro bono program, says many families want to go to an aviation expert and in complex cases will need one. A longtime board member of ATLA-NJ, Baker says he is taking clients on a retainer basis but also is handling cases pro bono. Donald Nolan of The Nolan Group in Chicago, who is secretary to ATLA’s aviation section, is also eschewing the association’s call for fee-free work as well as the moratorium on suits. Nolan, who filed the first suit in December, says he has 24 clients. While he lauds ATLA’s efforts, he says “no one should be critical of those who opt to sue because Congress gave them that option.” Placitella answers that because most families will opt for the fund, they do not need such an expert; ATLA is running training sessions and has produced a 200-page handbook to help lawyers through the fund process maze, he notes. Nolan says that “seminars and handbooks aren’t going to do it,” suggesting families need the specialists. Placitella, in turn, says some families will wind up paying well above $100,000 for legal work that is available for free.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.