The man in charge of the $20 billion BP oil-spill compensation fund said Sunday that by creating the fund, the giant oil company is taking the first steps to limit its legal liability.
“Investors in BP should know that there’s now an alternative to the litigation system in place,” Kenneth Feinberg said in a telephone interview with CNBC Sunday afternoon. “I think that’s a really helpful sign if you’re an investor.”
Feinberg, who was appointed last week as the independent administrator fund, said that recipients of emergency relief funds, which are being paid out in real time do not sign away their right to sue BP for damages.
But, he said, those people who accept final settlements from the fund, will likely be required to give up their right to sue BP. “You’ll waive your right to sue,” Feinberg said. “That’s only fair.”
“It’s a way for BP to avoid lawsuits in the end,” Feinberg said. “And it’s a way for a claimant voluntarily to get a check now. You don’t have to litigate for years – with some uncertainty about whether you’d win – and you don’t have to pay a lawyer thirty percent.”
Watch Live TV Interview with Feinberg on "Squawk Box" Monday at 8:15 am EST.
Feinberg, whose previous experience includes overseeing the 9-11 victims fund and arbitrating executive compensation at TARP firms, said that only 94 of the 9-11 victims declined to take his settlement offer.
Three thousand claimants accepted the deal. He said he’s confident that the BP fund will similarly remove thousands of potential cases from court dockets. “The courts don’t need thousands and thousands of cases,” he said. “I am confident that the overwhelming majority of individuals and businesses will take my offer.”
Feinberg said the initial emergency fund process could be in place for as long as three to six months, and then he will move toward final settlements. But that date is uncertain because the oil is still flowing into the Gulf of Mexico and damage is ongoing.
He heaped praise on BP for having already established a claims process – which gives Feinberg infrastructure to build on – but complained that “there’s not enough transparency.”
“There’s not enough sunlight as to the status of individual claims,” said Feinberg, noting that thousands of claims have already been received.