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BP Business Economic Loss Claim Appeal 2017-649:Professional Services Methodology Applied to Law Firm Even Though Greater Portion of Work Occurs at End of Case

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

Claimant, a law firm in Jackson, Mississippi,appeals the denial of its BEL claim on the basis it failed the causation requirements of Exhibit 4B of the Settlement Agreement. Claimant asserts the Settlement Program(SP) incorrectly applied the provisions of policy 495 and the Professional Services Methodology(PSM) when it
allocated revenues evenly to the months spanning the length of claimant’s representation of a client. Claimant argues it is a criminal defense firm whose representation engagements last several months; but the majority of the work done on behalf of clients occurs during the last 30-60 days before a case goes to trial, results in a plea
or other disposition. Consequently,claimant contends income should be allocated to those months of significant casework rather than “smoothing income equally” over the course of representation of the client. Finally,claimant also argues this claim should have been referred to the “Neutrals Process” for resolution.
BP counters that the SP correctly determined claimant’s financial submissions were not sufficiently matched and properly applied the provisions of policy 495 and the PSM which contemplate unmatched revenues will be adjusted on a straight-line basis over the period of an engagement unless a reliable basis exists for alternative allocation of revenue. A review of the record discloses that the majority of claimant’s client work is done in the course of criminal defense litigation. Claimant collects a fixed fee up-front before work commences on behalf of a client. Although it may be true that the greater portion of claimant’s work on behalf of a client occurs as the case nears resolution, it is recognizable that other investigatory work, discovery and preparation occurs before then. This dynamic exists whenever there is protracted litigation, whether it be civil or criminal.
This panelist concludes claimant has not sufficiently established through reliable documentation a basis for alternative allocation of revenue. Nor has claimant shown that the determination of the SP to allocate revenue on a straight-line basis over the span of an engagement was an unreasonable exercise of its professional judgment and should be overturned.Relative to claimant’s final argument that this claim should have been submitted to the Neutrals for resolution,this panelist concludes it is not a cognizable justiciable issue for resolution by this panelist.
Accordingly,the decision of the Claims Administrator is affirmed and the appeal of claimant is denied.

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