$400/hr/attorney * 2500 hr/yr * 10 yr * 200 attorneys = 2 trillion dollars I am short, but nervous. Any attorneys here care to comment on any errors in the estimates for this calculation?
Average full time attorney bills about 1400 hours per year. I am unsure where you would get the number 200 attorneys working on the case at once? If appears to me that perhaps you worked the numbers backwards with a total cost and then tried to figure out what it would take to get there. I would be willing to agree that the lead attorney (or even 2/3 leads) could get $1200-1500 per hour but a lot of legal work is done by non attorneys and they are going to bill out with a blend of paralegals/attorneys at $200-400 per hour(for the top lawyers that BP would hire) and sliding down lower as you add more and more people. i could see 12-20 working on the case if calculated as full time man hours full time people but it is hard to imagine a legal team larger than 20 during the peak of litigation and less otherwise. Take a look at other major cases like Ford Pintos, breast implants, asbestos cases. Enron which I believe is the largest or one of the largest was under $700 mil and it was easier to jack the fees on that case due to the fact that enron didn't have anyone at the helm and no chance of getting any more business out of them. Plus that was a different type of case with plaintiffs having bottomless pockets and no hurry to settle. of course you also have to account for much of the legal work is done as this is not new law with BP already having on staff lawyers and I don't know this but would guess that they have law firms on retainer which will also tend to mitigate the legal fees. If you want to get really super crazy and push the limit hard you could say that the legal fees may add up to a billion dollars. I think it will be south of 500 million dollars but you can stick with 2 billion if you like. Even if you went with 2 billion and your numbers are correct, how does that materially hurt (as in put them out of biz???) BP over 10 years? That would be about $200 million per year and BP is making more than double that per week with oil at $75 Lastly, even if BP is on the hook for 100% despite having partners you can count on those partners covering some of the legal costs as anything that is mutually beneficial will be shared. Just because BP is the only name coming out of Washington and it keeps things simple for the dolts watching the TV does not mean they are the only ones putting up a defense. On a side note it will be interesting if the rhetoric coming out of DC ends up driving the price of oil up and slowing down the economy which ends up costing more jobs and losing more votes than bashing BP gains votes. I think it is pretty clear we see a lot of new faces in DC after November.
I would also assume that BP is requiring some signed documents with the money being paid out now. Maybe not complete release of liability but something. If I am a damaged party and BP has said they will "make me whole" I am not sure I want to have a lawyer with his sticky fingers in my pie. Will he be able to improve my situation?? Injuried parties certainly have a right to be fairly compensated, but not to hit the lottery jackpot.... BP has time on its side....claimants agree to a reasonable and fair price using some standard metric..... get the check and move on.....don't agree, fight in seperate court action and wait many years and maybe get very little net after attorney fees.... Exxon Valdez is a good lesson.....monetary award was reduced down about 80% or so...... It will be interesting to watch.... SteveD
Keep in mind that these people have not lost something forever...only temporarily not able to make money...shrimper makes $100,000 net per year (??)..pay the guy $300,000 and move on....how would he show lost above that amount? BP will write individual checks up to a certain amount pretty freely....over a certain amount you are going to have to provide some documentation and proof of loss.... The deaths are a seperate issue......I assume the employment contracts are full of warnings of the dangers of the work...$2,000,000 per person (?).....$22,000,000 While it is a terrible tragedy for 11 people to die in an accident, there were more than 20 killed in the flood in Arkansas yesterday. I hope President Mush Head doesn't ban camping for six months also. SteveD
Most states have workers comp laws that specify the amount of compensation for any type of injury / death. As a rule an employer can not be sued but I am basing that on Wisconsin. I would believe it to be somewhat the same through the us though. With that being said I would also guess that one or more things will happen in regards to the deaths and injuries. A, the estate of the workers killed are paid over and above either by insurance that the company provided or B in the absence of life insurance (I doubt it was not provided) directly by the company. Of course social security death benefits also kick in for those family members that qualify Not to take away the tragedy of the gulf of mexico on the families who had loved ones die as nothing else could would or should matter but let us not forget there is another gulf that sees more Americans die every month since 2003. I don't hear about that to much on the news anymore(I dont watch the news much either so perhaps I am just missing it). I guess when it happens month after month after month it doesn't really make front page news anymore.
BP's quick ratio is poor. Fundamentally, a long term investor would look at their quick ratio of 0.75 and have second thoughts about investing in such a company despite the high dividend. http://news.yahoo.com/s/ap/20100613/ap_on_bi_ge/us_gulf_oil_spill "Meanwhile, Gulf states affected by the disaster are putting the squeeze on BP, seeking to protect their interests amid talk of the possibility that BP may eventually file for bankruptcy. The attorney general in Florida and the state treasurer in Louisiana want BP to put a total of $7.5 billion in escrow accounts to compensate the states and their residents for damages now and in the future. Alabama doesn't plan to take such action, while Mississippi and Texas haven't said what they will do. As of the end of March, BP had only $6.8 billion in cash and cash equivalents available."
NoDoji, How does a writer put the word "only" in front of $6.8 billion in the bank? Myself and a lot of people have a line of credit tied to their checking account. I sure hope BP thought of adding that feature so they can avoid those $20 NSF fees in case they bounce a check with having a balance that small..... : o )
I had to laugh at that, too. Journalism is supposed to be objective, but there was typical journalistic subjectivity shining right through as usual. Using the word "only" insinuates that because "the attorney general in Florida and the state treasurer in Louisiana want BP to put a total of $7.5 billion in escrow accounts" that BP is going to have to do that. I'm sure BP has plenty of credit lines, but that's where the quick ratio comes into play; their immediate liquidity is already insufficient to meet short term obligations if it had to in a pinch. So what we have here is potentially a "pinch". Regardless of all this, I took BP off my IRA investment list a while back when it was clear that there was no quick and easy solution to their mess. I chose instead a position in IRR, an energy and natural resource ETF that pays a higher dividend and has exemplary risk management with its portfolio. I too was wondering about that.