Monday, August 30, 2010

Kenneth Feinberg Must Be a Hero, Everybody’s Mad at Him (Except the New York Times)

Let’s hope BP’s new victim compensation fund may be the standard for helping people in emergencies.

Plaintiff’s attorneys, state attorneys general, and attorneys in general are all whining because the new $20 billion victim’s compensation fund established by BP and independently supervised by Mr. Feinberg is saying, victims come first, no attorneys need apply.

What a concept! Could this be a model approach, actually compensating victims with 100 cents on the dollar, and avoiding the delays, phony posturing and bloviating of attorneys, and the political puffery of attorneys general preying on victim fears and vulnerability?

Is it possible that the BP recovery fund, operating on the principle of taking the word of victims first, then compensating, and then maybe going after those who are frauds, is a whole new mindset for those who cause serious injury, fear, and disasters. The perpetrators can immediately propose this approach, faking out the greedy bunch that always get the first dollar instead of the victims.

Legitimate litigation is essential, but, we see so little of it. Instead we see fabricated complaints promiscuously filed just to see how far a court will let it go. The evidence?

Today, the chances of a lawsuit filed actually getting to trial is around one in 100, this ratio holds true in both civil and criminal cases. (I haven’t seen data on class actions.) The reason for the surprising ratio is that some cases settle on the first day of trial, while others are thrown out, abandoned, settled, mediated, or arbitrated, all before trial.

Would such a BP-like process facilitate scams and fraud? Probably, but what else is new?

Large and small federal, state, and local programs, and private grants as well as private programs all have fraud and waste. Heaven knows, in most corporate programs of any scale there is waste to be sure, and people taking stuff home at night, or worse. But these diverted resources are generally very small percentages, with the bulk of the available or allocated dollars going to the intended mission. The cost is far, far less than letting litigators direct resource distribution and recovery, which is an inherent conflict of interest.

The BP settlement fund approach is massive, administered by a highly credible, independent individual, with very little bureaucracy, and focused on paying out the money. Almost every other beneficial program, whether managed by religious organizations, major foundations or philanthropic organizations, or the United States government is more focused on preventing abuse; attacking the credentials of those seeking funding as suspect; and protecting fund money rather than paying it out. Check it out at your favorite charity, college, church, synagogue, United Way, or other major charitable funding sources.

I serve on a college alumni association board that gives out $1,000 grants to mostly urban undergraduate students for a wide range of study projects and needs. When I first saw the program described, the student had to fill out three pages of forms, answer about 30 questions, and do a 1,000-word essay. For a thousand bucks? C’mon. My first question was, “Is the purpose of this grant program to create a structure within the college to give power to 12 people (The Grant Board) who can lord it over some poor, or rich, student whose goal in life is just to get a college degree at the earliest opportunity; or to make these applicants/supplicants feel ashamed or stupid, while the Board keeps the money anyway?” My second question was, “What is the measure of your success: the number of grant applications you turn down, or the speed with which you put all the money to work in student hands?” Yes, some is wasted. Yes, some is used stupidly. Yes, with more scrutiny, we might be able to achieve slightly higher quality goals, dollar for dollar. But, so what?

The form is now one page, seven questions, a couple references, and a 100-word concept description. We give the money pretty fast, until it runs out, rather than put applications and the applicants through several rounds of humiliating elimination.

Whether the amount available to help victims or applicants is $20 billion or $20,000, the goal should always be to get the money out there and see what it can accomplish, rather than to establish litigation-prone bureaucracies and barriers that are merely alter the egos of those selected to withhold help and lord it over people in need or in distress.

Thumbs up, Mr. Feinberg. Thumbs down to just about everyone else.

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