Jefferson Parish public school teachers may be getting cash bonuses. New Orleans — if one councilwoman has her way — will be paving more of its famously pockmarked streets. Coastal restoration efforts of various kinds will get a shot in the arm.
The $18.7 billion that BP is shelling out to settle government claims over the 2010 Deepwater Horizon disaster will be a boon to many.
But first, the lawyers will take their cut.
Dozens of attorneys have been negotiating with BP on behalf of state and local governments through five years of complicated litigation. They will reap some of the windfall.
In Louisiana, which will get $6.8 billion of the overall settlement, Attorney General Buddy Caldwell has spent $38.5 million on nearly a dozen law firms.
Moreover, local agencies in southern Louisiana such as parish governments, cities and school boards stand to receive another $400 million — and about a quarter of that cash likely will to go to lawyers’ fees. The money will arrive over the next few weeks, after a federal judge late last month announced — not surprisingly — that the “vast majority” of the local agencies had accepted BP’s settlement offers and that the oil giant had given the deal its blessing.
In addition, all of those lawyers had the benefit of extensive legal work already done by a steering committee of court-appointed lawyers — some of them from Louisiana — who are in line to receive as much as $600 million, though that is not part of the $18.7 billion settlement.
Whether the money spent by Caldwell’s office on outside lawyers was necessary to win Louisiana’s share of the proceeds remains up for debate. But it’s not the first time Caldwell has caught criticism for doling out work to other attorneys — many of whom have padded his campaign coffers — rather than sticking with in-house counsel.
Eight of the law firms working for Caldwell on the BP litigation have been among his political contributors, according to one legal watchdog.
“Not to suggest that anybody who contributes to the attorney general should be disqualified from practicing on behalf of the state,” said Melissa Landry, executive director of the nonprofit Louisiana Lawsuit Abuse Watch. “But the fact that eight have (made contributions) suggests that there are factors other than their experience and expertise that are influencing those decisions.”
The Attorney General’s Office denies any favoritism. In an email, Caldwell’s spokesman, Aaron Sadler, said: “The attorneys selected by our office were chosen based on their qualifications, experience in complex litigation and their proven credentials for excellent results, which is completely consistent with Louisiana law regarding retention of persons or firms to perform professional legal services.”
Value for money?
Sorting out whether the state got what it paid for is complicated. Only Florida spent more money on lawyers to corral its portion of the BP settlement. Alabama and Texas spent nothing on outside attorneys to handle their economic claims, officials said.
On the other hand, Louisiana also will receive the biggest payout. Florida will get $3.25 billion; Alabama, $2.3 billion; Mississippi, $2.2 billion; and Texas, $788 million.
Sadler, the attorney general’s spokesman, said Louisiana simply needed more representation than the other states. “Mississippi and Texas had far less complicated and comprehensive claims than Louisiana, and they recovered far less,” he said.
Still, others believe Caldwell could have gotten the job done with less hired help.
“The BP case certainly presented a host of novel and difficult environmental law issues, so it would be the type of case where I would think hiring outside counsel would be appropriate,” Loyola University law professor Dane Ciolino said. “But do we need that many lawyers?”
Ciolino noted that much of the legal work on the case — including more than 300 depositions — was done by a group of lawyers appointed by U.S. District Judge Carl Barbier to spearhead the litigation on behalf of all plaintiffs. BP agreed to pay that group — mostly lawyers from Gulf Coast states, a few from Louisiana — up to $600 million.
Those lawyers handled much of the first phase of the civil trial against BP over liability and damages. They also drafted a 192-page master lawsuit laying the groundwork for more than 500 local government complaints that were later filed against BP.
Given the group’s contributions, Ciolino said, it’s hard to imagine why Louisiana needed so many additional lawyers. “A lot of people are going to get paid a lot of money for sitting around and watching other lawyers work,” he said.
But Caldwell defended his decision to hire other attorneys. He said he hired his own legal muscle to oversee Louisiana’s claims because the group would be “answerable” to him, and he also would avoid any potential of having to pay a cut of the state’s settlement to the so-called Plaintiffs Steering Committee.
But there’s also the issue of which lawyers got hired. Landry, of the legal watchdog group, argues that Caldwell has relied too heavily on insiders and political contributors.
One example was T. Allen Usry, a former Caldwell campaign manager who steered more than $100,000 in contributions to him. Usry’s firm, Usry, Weeks & Matthews, of New Orleans, was paid more than $7 million for work on the BP case through last year.
Covington lawyer Henry Dart was paid $3.2 million through last year. Campaign finance records show that Dart’s employees have given Caldwell at least $35,000 in political donations since 2007, Landry said.
The Baton Rouge law firm of Shows, Cali & Walsh has contributed at least $15,000 to Caldwell’s campaign since 2007; it has been paid more than $650,000 for work on the BP claims. Firm partner E. Wade Shows was previously Caldwell’s campaign treasurer.
State Sen. Dan Claitor, R-Baton Rouge, said he backed legislation last year to bar Caldwell from hiring lawyers on a contingency basis, in part because he’s seen “a narrow band of supporters that clearly profited highly from their support and relationship.”
Claitor, a former assistant city attorney for New Orleans, said Louisiana ultimately landed a good settlement, but he argues the state could have done it with fewer lawyers. “We could’ve done just as well, in my opinion, if we’d gone out and hired a couple of guys,” he said. “A good 20-year lawyer would’ve done a fine job of that, I’m sure.”
Some observers also have questioned the hiring of lawyers by the various local governments that filed claims against BP — from St. Bernard Parish to the Jefferson Parish School Board and the east bank levee authority. The size of the awards they got was based on a formula that considered variables such as lost property or sales taxes due to the oil spill.
Working on contingency
Unlike the legal guns working for Caldwell’s office, the lawyers for local agencies almost all got paid on contingency, agreeing to accept a certain cut — usually close to 25 percent — of whatever BP ended up paying the agency they were representing.
In Jefferson Parish, the Gretna law firm of Gaudry, Ranson, Higgins & Gremillion is slated to get almost $12 million for its work in securing the parish’s $53.1 million settlement, local officials said.
On the north shore, Slidell lawyer Tom Thornhill counts dozens of local agencies among his clients. Thornhill helped steer a $16.8 million settlement to St. Tammany Parish, $15.4 million to St. Tammany’s School Board, $3 million to Slidell and $2 million to Mandeville. Those claims alone are likely to net him a $7.2 million cut, based on a 25 percent contingency arrangement.
Lawyer Darryl Higgins, who handled Jefferson’s claims, did not return a call seeking comment for this article, and Thornhill declined to comment, making it difficult to assess how much work they put in on behalf of their clients.
To submit the local government claims, the lawyers filled out a two-page form in order to join the broader lawsuit already underway. The master suit, drafted by the steering committee, outlined the basic case against BP and argued how the spill affected local resources and tax revenue, among other things.
New Orleans lawyer Walter Leger Jr., who represented dozens of government claims against BP, said his work involved more than just signing onto the committee’s master suit, which he helped draft.
Leger described regular meetings with other lawyers as well as with government officials.
Through most of the process, he said, it was never clear that BP eventually would agree to a broad deal. Each parish or local agency might have ended up having to fight the giant corporation one by one in court, and each would have needed its own counsel ready for trial.
“It wasn’t just filling out a piece of paper and sitting around,” Leger said. It was “five years of legal work … on the bet that we would eventually recover for them.”
Follow Richard Thompson on Twitter, @rthompsonMSY.