Legally Insane: Trial Lawyers Abuse the System on the Gulf Coast

By June 28, 2013General

The American public does not hold attorneys in high esteem. For every one Ben Matlock, there are at least two Lionel Hutzes or Saul Goodmans.

And perhaps nowhere do real-life attorneys come as close to their pop-culture caricatures than in Louisiana. The bayou is a breeding ground for enterprising trial lawyers who don’t let facts get in the way of a multimillion dollar jackpot. Their nicknames say it all: “The King of Torts,” “The General” and, of course, “Alligator Mick.”

The tort bar feeding frenzy has now set its sights on BP, which has diligently made amends following the Deepwater Horizon oil spill three years ago. So far, BP has paid more than $10 billion to satisfy claims of individuals, businesses and government and more than $14 billion for clean up.

Nevertheless, there are those who want to abuse the system and collect money they don’t deserve. Due to an egregious misreading of BP’s agreement settling claims against it, businesses that were not harmed by the spill have rushed to empty the company’s pockets.

For example, one rice mill 40 miles from the cost earned more in 2010—the year of the spill—than it did in the previous years. It received $21 million from the settlement administrator under this absurd interpretation of the agreement.

An alligator farm received almost $17 million, a sum that assumes the company would have tripled its profits.

Even businesses that have a tenuous (at best) connection to the Gulf are getting a piece of the action. A car dealer 100 miles from the coast collected $1.45 million. A law office in central Louisiana made more in 2010 than it did in previous years; it still got $3.3 million for its “losses” as a result of the spill.

And the list goes on.

Considering that there are injured parties who actually deserve compensation, you might think there would be widespread outrage about bad actors cutting in line. You’d be wrong.

Says one Lousiana attorney in Businessweek recently (in the appropriately titled piece, “How BP Got Screwed on Gulf Oil Spill Claims”):

“This is Louisiana, after all,” says Danny Abel, a longtime New Orleans plaintiffs’ lawyer not involved in the case. “A big foreign company with deep pockets and you’re surprised there’s a feeding frenzy? Come on, man.”

That’s just not right.

BP is now going to court to rectify this situation and fix the injustice, and there’s more at stake than just the company’s bottom line. When individuals abuse our tort system, everyone loses.

Not only is it unfair to deserving victims, it also drags down our economy. Tort costs drag down our economy—to the tune of about 2 percent of GDP—and make our country less competitive, hurting manufacturers from Baton Rouge to Bar Harbor.

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