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BP Business Economic Loss Claim Appeal 2017-256: Contingent Fee Law Firm Merits Professional Services Methodology


The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms

The Claims Administrator denied the BEL claim of this law firm in Sarasota, Florida (Zone C), finding it unable to satisfy the causation requirements of Exhibit 4B. Four of the Policy 495 criteria were triggered when the financials were subjected to matching analysis.  The Professional Services Methodology was then utilized to achieve sufficient matching. In the process, the program accountant recalculated causation which the Claimant did not pass.
Claimant’s revenue consists primarily of contingent fees from personal injury cases. These cases are typically not short term engagements but often last several months and sometimes years. Recognizing this, the program accountant allocated the contingent fee income over the life of each case as called for in the Professional Services Methodology. Claimant did not have hourly or daily billing information or time records that might have allowed the accounting vendor to utilize a different methodology.
Claimant argues that the PSM should not have been employed because the straight line method is less accurate in achieving matching than its contemporaneous cash basis P&Ls. Claimant also contends that the majority of the work on its cases occurs in the 90 days prior to settlement. Thus, Claimant argues that utilization of the straight line approach over-smooths the revenue and expenses.
De novo review persuades this panelist that the program accountant committed no error. In response to outreach by the program accountant, Claimant provided the start and end dates for its cases which were used to reallocate the corresponding revenue. Further, Claimant’s NAICS Code is one of the codes classified as a Professional Services code in Policy 495.
The Settlement Program was correct in utilizing the PSM and no basis for overturning this approach has been shown. Accordingly, Claimant’s appeal is denied.

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