A Florida law firm hired to represent East Baton Rouge Parish in a claim against oil and gas giant BP will charge the city-parish 40 percent of any money it recovers, a deal that some Metro Council members are questioning.
The council members say they think a local law firm could have provided the city-parish with a better deal in pursuing claims of lost tax revenues as a result of the 2010 oil leak. Some local lawyers who were interviewed said contingency fees in many cases filed against BP have ranged between 8 percent and 25 percent.
The contract with Farrell and Patel law firm, based in Coral Gables, Fla., was signed by William Daniel, chief administrative officer for Mayor-President Kip Holden. Daniel said the contract is “nonbinding” until it is approved by the Metro Council and the mayor.
However, the contract was signed Jan. 18 and has yet to be placed on the council agenda or be vetted by the parish attorney’s office. In the meantime, Farrell and Patel has filed a 76-page lawsuit on the city-parish’s behalf seeking more than $35 million in compensation for losses caused by the explosion of the Deepwater Horizon drilling rig.
Councilman Trae Welch, who is also the city prosecutor in Zachary, said the contract as it was signed represents many “failures” on the part of the city-parish, starting with the 40 percent contingency fee.
“I don’t believe that’s anywhere near the going rate,” Welch said. “And you’ve got capable law firms that can handle the case right here, that live here and work here and hire people that live here.”
A contingency arrangement means the city-parish will not have to pay attorney fees to the law firm unless it wins. Whatever money Baton Rouge is ultimately awarded, Farrell and Patel would be entitled to 40 percent, under the current contract.
Mayor Pro Tem Chandler Loupe, a lawyer, said the arrangement favors the out-of-state firm over the city-parish. In the event of an award, the law firm would likely end up getting more than half of money recovered by the city-parish in the lawsuit, after billing the city-parish for costs associated with litigation including staff overtime, copies and meals.
Farrell and Patel did not respond to an email and telephone call seeking comment for this article.
Baton Rouge attorney Ed Walters, who represents clients seeking damages from BP on a contingency basis, questioned why the city-parish would turn to an out-of-state firm, when many qualified and willing lawyers in Baton Rouge are versed in BP litigation.
He noted that U.S. District Judge Carl Barbier issued an order last year capping the contingency fees attorneys could charge for representing businesses and individuals against BP to 25 percent.
“The judge has made it very clear he’s not going to approve anything more than a 25 percent contingency fee for individual claims,” Walters said. “I don’t know how what that means with respect to municipal and governmental claims, but 40 percent sounds high to me.”
Parish Attorney Mary Roper said Barbier’s 25 percent cap likely applies to claims recovered through a settlement reached with BP and not to cases being litigated.
Roper said she could not answer specific questions related to the contract with Farrell and Patel because her office did not review the agreement before Daniel signed it.
“William Daniel signed this agreement, which my office did not review or approve, with the understanding that a formal contract, which would have to be approved by the Council, would be formalized at a later date,” Roper wrote in an email. “It is my understanding from Mr. Daniel that this was intended as a nonbinding representation agreement.”
She also said that Daniel acting alone “has no authority to unilaterally bind the city-parish.”
But the contract, signed by Daniel, states that, “By signing this contract, the individual is stating that they are an authorized representative to make agreements, contracts and claims for the municipality.”
Daniel said he made a verbal agreement with Farrell and Patel at the time that the contract would be nonbinding and that a more permanent proposal would have to be negotiated at a later time.
“It’s nonbinding and they know it,” Daniel said. “I told them I could not sign a contract without the council’s approval and the mayor’s signature.”
Loupe said he thinks the written contract would void any verbal agreement Daniel may have made.
“The only person that can cancel that contract is the firm we signed it with,” he said. “And then what they would be entitled to as far as compensation is unclear.”
On compensation, one clause in the contract states that, “If our Firm’s representation is terminated by you prior to recovering final payment, but after our pursuit of claims on your behalf, our Firm is still entitled to the greater of 40 percent of claims recovered, or hourly fees and expenses for the work done on your case at the Firm’s standard rate.”
Daniel said he signed off on the unvetted contract because Farrell and Patel approached them about filing a claim with less than a week before a Jan. 20 deadline, leaving him no time to bring it to the council for approval.
Daniel said he consulted briefly with Loupe and Councilman John Delgado, both of whom are lawyers, before signing the contract to ask if any local lawyers would be interested in filing a claim for the city-parish. However, he said, they ultimately could not find a local lawyer in such a short turn around.
Loupe said the city-parish should not have waited until the last minute to decide to make a claim.
“It shouldn’t have been a last-minute thing,” he said. “Every business did it. Every hotel and motel association did it. Every city across the state impacted in the zone did it. Everybody’s done it.”
Daniel said the contract will eventually be placed on the Metro Council’s agenda, and it can decide whether to move forward with the contract.