BP Fund Czar Is Skilled at Weighing Compensation for Victims of Disaster
Among the emotionally charged cases Feinberg has handled is the $7 billion fund for the relatives of those who died in the Sept. 11, 2001, terrorist attacks. He mediated a $180 million settlement between Vietnam War veterans and the chemical companies that made the defoliant Agent Orange. And he helped resolve litigation arising from asbestos, the Dalkon Shield contraceptive device and treatment of pregnant women with the drug diethylstilbestrol, DES.
In addition, he was one of two administrators appointed to sort out how much money lawyers should be paid in the Holocaust slave labor lawsuit.
Out-of-Work Fisherman and Empty Hotels
He'll face a similarly difficult task in his new job, where he has to weigh claims for compensation from such diverse applicants as out-of-work fishermen in the Gulf to hotels in Florida claiming lost business because of the oil spill.
"It's going to be extremely hard to leverage himself because the verification and validation of the claims will be an issue to start with," says Jeffrey A. Sonnenfeld, senior associate dean of the Yale School of Management. "That will get more complicated when they wrestle with how much people are entitled to. But just authenticating who the parties are is going to be hard -- there will certainly be scammers."
After completing his grueling, three-year assignment as special master in charge of administering the 9/11 victims compensation fund, Feinberg wrote a book titled What Is Life Worth? in which he said working with the survivors of the terrorist attacks was the most difficult job of his life.
"I had never witnessed the level of emotion and pain that I saw on a daily basis in meeting with the victims of 9/11," Feinberg wrote. "How could I calculate awards? What distinctions could I recognize among different family members? How could I do 'justice?' I could not play Solomon. I would listen to their grief. I would hear what they had to say. But I would not calculate awards by weighing their suffering."
An "Extraordinarily Successful" Result
By all accounts, Feinberg did a masterful job in determining how much each victim's life was worth despite a major public controversy and having to face grieving relatives on a daily basis. But as he wrote in his final report, 97% of the families accepted his decisions rather than go to court, an "extraordinarily successful" result.
"There were formulas, and he could have been very cold and said this is the standard, but he listened to the testimony of the families and came up with an amount of money that was more palatable in achieving justice," says Anthony Bisignano, a New York attorney who represented several of the victims' families.
In one case, in which it was claimed that a young woman's relatives were entitled to more compensation because she had been engaged to be married at the time of the attack, Feinberg took the time to read the woman's love letters to her fiancé to decide the case, Bisignano says.
"In so many instances, attorneys enter a mediation with little hope of ever resolving a case without having a judge or jury make a decision," says Bisignano, who has also worked with Feinberg on lawsuits arising from a fatal ferry crash in Staten Island, N.Y., and a fire in the former Deutsche Bank building in Lower Manhattan. "Feinberg has an incredible way of bringing the parties together."
A Career-Altering Moment
The son of a bookkeeper and a tire salesman in Brockton, Mass., Feinberg attended the University of Massachusetts and New York University Law School. He clerked for a New York state appeals court judge and later became chief of staff to the late Senator Edward M. Kennedy (D-Mass.).
After working on Capitol Hill, Feinberg became the head of the Washington office of the law firm of Kaye, Scholer, Fierman, Hays & Handler. His career-altering moment came in 1984, when U.S. District Court Judge Jack Weinstein appointed Feinberg to be one of three mediators in the Agent Orange case.
It was a hugely controversial legal case: Tens of thousands of Vietnam veterans, many suffering unexplained ailments, couldn't legally prove they had been directly damaged by Agent Orange. But Feinberg still managed to persuade the seven firms that made the chemical to pay $180 million compensation to avoid the nuisance of further litigation. Most of the vets received less than $800. But Feinberg's reputation as a Solomon-like mediator was established.
Feinberg now has his own dispute resolution practice in New York and Washington, the Feinberg Group. He often commands fees in the hundreds of thousands of dollars as a mediator to help settle drawn-out legal problems.
Slasher of Executive Pay at Bailed-Out Companies
One departure from his usual work as a legal mediator was his selection by President Obama in 2009 to serve as the special master, or "pay czar," for firms bailed out in the financial crisis. It was his job to determine the appropriate level of pay for executives at seven firms that had been rescued.
He ended up slashing cash salaries for the top 25 executives at the firms -- Citigroup (C), AIG (AIG), Bank of America (BAC), Chrysler, Chrysler Financial, General Motors and GMAC (GMA) -- by 90%, to a maximum $500,000. He also forced them to take most of their compensation in deferred stock that would rise or fall depending on the health of their company.
"He did a sensational job," says Yale's Sonnenfeld. "He didn't get baited into histrionics or personal defenses, and I think most of the people he worked with in finance have come to agree with that. He can walk into some pretty stormy situations and disarm people with his fundamental character and competence."
He'll need all those skills and then some to resolve the thousands of claims that'll be coming his way in the BP oil spill case.