A Tampa attorney claims a lead plaintiffs lawyer in the Deepwater Horizon oil spill litigation colluded with BP in drafting a class action settlement that guaranteed more than $3 billion in legal fees.
Attorney Brian Donovan of The Donovan Law Group filed the suit Feb. 12 in HIllsborough CIrcuit Court against Steve Herman, co-lead counsel in the multidistrict litigation against BP over the 2010 spill.
Donovan claims Herman of New Orleans-based Herman Herman & Katz was negligent and breached his duties to class members through an “eight-step plan to maximize his compensation” while reducing BP’s liability on oil spill claims.
Responding by email, Herman stood by his handling of the Deepwater Horizon case, noting he addressed many of Donovan’s concerns in emails and in court during the original litigation.
But Donovan called the MDL “an example of Louisiana judicial homecookin’ at its very worst” in which both sides put the interests of blowout victims on the back burner.
“Justice for the BP oil well blowout victims was never considered by defendant Herman,” Donovan wrote in a 130-page complaint.
The lawsuits claims 19 lawyers on the plaintiffs’ steering committee stood to earn more than $3 billion in fees from a common benefit fund and under contingency fee agreements with their clients.
“It is beyond cavil that a reasonable, objective observer would not conclude that this amount is out of proportion to the value of the professional services rendered,” he wrote in the complaint.
Donovan declined to comment about the suit.
Herman questioned the validity of Donovan’s numbers and said he was apprised of his clients’ full range of options.
In a 2012 email cited in Donovan’s complaint, Herman advised him on available procedures on lients who opted out of the settlement.
“Seems like that was pretty good advice,” Herman wrote. “No idea the extent to which he or his clients may or may not have followed it.”
On the subject of fees, Herman wrote: “The common benefit fees are a matter of record. Neither Donovan, nor any of his clients (assuming he has any), nor anyone else objected to them. Nor did Donovan, nor any of his clients (assuming he has any), nor anyone who settled in the GCCF or the class settlement program ever pay one cent to the PSC or any other common benefit attorneys any common benefit fees.”
The suit is the latest skirmish over fees between MDL leadership attorneys and lawyers representing individual clients.
In November, Philadelphia’s Kline & Specter alleged leading plaintiffs lawyers in pelvic mesh device litigation settled cases on the cheap despite much larger jury verdicts. A federal judge in West Virginia rejected those allegations and approved $500 million in common benefit fees Jan. 30.
BP initially set up a claims process for people and businesses along the Gulf of Mexico who lost money due to the 2010 spill and were entitled to compensation under the Oil Pollution Act of 1990. Attorney Kenneth Feinberg initially decided claims awards under the Gulf Coast Claims Facility, but plaintiffs lawyers criticized the process for lengthy delays and inconsistencies. In 2012, BP agreed to settle the class action for an estimated $7.8 billion while a new administrator processed claims.
Last month, BP, which also paid $20 billion to the U.S. Justice Department in 2015, raised its total projected oil spill costs to $65 billion, in large part due to outstanding claims in the class action settlement.
Donovan’s suit alleged Herman’s “eight steps” involved limiting BP’s class action liability by restricting claims based on geography and other factors, and encouraging claimants to drop their lawsuits in favor of quick cash under Feinberg’s Gulf Cost Claims Facility.
Donovan called the leadership lawyers “cooperative dealmakers,” not BP adversaries, who shut out 220,000 claimants in favor of their own clients.
“This deal was consummated behind closed doors,” he wrote. “In sum, plaintiff, plaintiff’s clients and all others similarly situated are being indefinitely held hostage by defendant Herman. Escape is impossible.”
Herman in his email defended his advocacy efforts, noting he challenged the fairness of Feinberg’s claims process in 2011. Feinberg of The Law Offices of Kenneth R. Feinberg in Washington defended his Gulf Coast Claims Facility as a “great success.”
Donovan’s suit estimated lead lawyers would get $3.035 billion in fees based on an estimated $2.4 billion in contingency fees, $600 million in common benefit fees, and co-counsel and holdback fees assessed on claims before the settlement.
He said more than $321 million went to members of the common benefit cost and fee committee and $277 million to other members of the plaintiffs’ steering committee.
“I don’t have any idea what any firm earned in individual client contingency fees,” Herman wrote in his email.
In 2012, U.S. District Judge Carl Barbier of the Eastern District of Louisiana capped contingency fees at 25 percent. Four years later, the judge appointed special master John Perry of Perry, Balhoff, Mengis & Burns of Baton Rouge, Louisiana, to review the allocation of $600 million in common benefit fees paid by BP.
In 2017, the common benefit cost and fee committee submitted a proposed allocation plan for 122 law firms. Herman and Jim Roy, a partner at Domengeaux Wright Roy & Edwards in Lafayette, Louisiana, who both were co-lead counsel in the multidistrict litigation and co-chairmen of that fee committee, recommended each firm receive more than $87 million.
In 2017, Perry recommended approving the fee request, which grew to $700 million after settlements with Halliburton and Transocean. Barbier adopted the special master’s recommendation.
Soon afterward, Donovan filed a motion on behalf of three clients. The motion sought a public record of all compensation paid to the plaintiffs’ steering committee, legal experts, special masters and the settlement claims administrator. Barbier denied the motion a year ago.