Judge caps contingency fees in BP settlement

NEW ORLEANS (AP) — A federal judge on Friday imposed a 25 percent cap on contingency fees for attorneys whose clients resolve their claims against BP over the 2010 oil spill in the Gulf of Mexico through a multibillion-dollar settlement agreement.

U.S. District Judge Carl Barbier's ruling says plaintiffs' lawyers who believe they deserve more than 25 percent of a client's settlement award can petition him for a departure from the cap.

The cap doesn't include "reasonable costs," the judge wrote. It also doesn't apply to a separate agreement for BP to pay up to $600 million in fees, costs and expenses to a team of plaintiffs' attorneys who brokered the class-action settlement agreement. Those fees won't be deducted from plaintiffs' payments.

Barbier gave his preliminary approval to the proposed settlement last month. The deal doesn't have a cap, but London-based BP PLC estimates it would pay about $7.8 billion to resolve more than 100,000 claims by people and businesses who blame economic losses on the nation's worst offshore oil spill.

The judge has scheduled a Nov. 8 "fairness hearing" on the deal. BP, however, has agreed to pay claims under the terms of the agreement before the judge decides whether to give it his final approval.

Barbier said the 25 percent cap is "nearly equivalent" to a cap that a New Orleans colleague, U.S. District Judge Eldon Fallon, set in overseeing a $4.85 billion settlement with Merck & Co. involving its withdrawn Vioxx painkiller.

The cap is only a ceiling and doesn't preclude attorneys and their clients from agreeing to lower amounts, Barbier also noted.

"Attorneys have an ethical responsibility to charge only reasonable fees," he wrote. "In many cases, a reasonable fee may be less than 25 (percent), particularly for a relatively simple claim by an individual. This Order is not intended to allow or encourage attorneys to charge more than a reasonable fee under any circumstance."

The settlement agreement announced in March doesn't resolve separate claims brought by the federal government and Gulf states against BP and its partners on the Deepwater Horizon drilling rig. The settlement also doesn't resolve claims against Switzerland-based rig owner Transocean Ltd. and Houston-based cement contractor Halliburton.

The April 2010 blowout of BP's Macondo well triggered an explosion that killed 11 rig workers and spilled more than 200 million gallons of oil into the Gulf.

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