The Ethics of Administering the BP Compensation Fund

At the Mass Tort Litigation Blog, Professor Byron Stier raises some interesting ethics-related concerns about Kenneth Feinberg's administration of the $20 billion BP compensation fund, given that Mr. Feinberg's own compensation from BP is confidential.  (See this New York Times story in which Mr. Feinberg declines to reveal how much he is being compensated.)

I'm not entirely clear which ethics code would apply in this instance. It's not Rule 2.4 of the Rules of Professional Conduct, which says very little about how lawyers should act when serving as third party neutrals. So is it the Standards of Conduct for Mediators?  The Code of Ethics for Arbitrators (have a look at Canon VII(B)(2))?   Is there some other code or body of law that would apply here?  If so, what is it?  

Putting aside the question of the relevant ethics rule, Byron makes the following public policy arguments:

[Mr. Feinberg's] exercise of discretion could possibly result in BP saving substantial funds, especially if any remainder of the $20 billion fund is to be returned to BP. Accordingly, a fair process at a minimum requires that both the amount of his compensation, and the method of compensation be disclosed publicly.  If BP has the ability to review and cut his billable hours or his billable-hour rate, for example, Feinberg might have a conflict of interest that could lead him unconsciously to favor BP in structuring the administrative fund or making awards.  As a result, in addition to public disclosure, an even better solution might be for BP and Feinberg also to agree to have a federal judge review Feinberg's billable hours, billable-hour rate, and total fee, much as is already typically done by judges reviewing class counsel fee awards in class-action settlements under Rule 23.

I haven't followed the details of the BP fund, but if there is little or no chance that there will be money in the fund after the awards are made (a seemingly plausible assumption), I'm not sure I see how Mr. Feinberg's behavior could be impacted (consciously or unconsciously) by his compensation.  BP is out the $20 billion regardless of how the proceeds are distributed.  Are there other ways in which Mr. Feinberg's conduct might be affected by how his compensation is structured?   

Of course, it is critical to note (as Byron does) that Mr. Feinberg is widely admired for his integrity and for his tireless pro bono efforts in connection with the 9/11 victim compensation fund.  Byron's questions aren't intended to suggest some nefarious motive behind the confidential compensation package.  The questions are nevertheless worth asking from a process standpoint.  Can anyone offer any clearer guidance as to whether this should be a concern? 

Comments

[Brian J. Donovan]

Will Victims of the BP Oil Gusher Also Be Victims of Class Action Lawsuits and the BP Oil Spill Victim Compensation Fund?

http://donovanlawgroup.wordpress.com/2010/07/19/165/

[A Alabama Dill]

http://www.benzinga.com/news/11/01/746210/10-billion-may-be-enough-says-ken-feinberg-bp

Half of the money will be going back to bp according to the amazingly impartial Feinberg. What was that you said in July?