In early May, with its legal options dwindling and investors impatient, BP saw a chance to negotiate what became a $18.7 billion settlement that ended five years of litigation over the worst offshore oil spill in U.S. history, Reuters reports.
An unexpected opportunity to secure a global deal that would wipe the slate clean of hundreds of claims and untold billions of dollars in penalties opened up when Chief Executive Bob Dudley met with Patrick Juneau, the lifelong Louisiana litigator who BP had panned for handing out “absurd” sums of money as part of a class settlement in 2012.
The British giant was ready to bury the hatchet after years of acrimony over payouts, which had ballooned to more than $10 billion. It had bigger problems: unresolved claims by the federal government, five Gulf of Mexico states and hundreds of local municipalities stemming from Macondo well blowout.
Toward the end of a more than hour-long conversation about the claims, Juneau, a mediator by trade, steered it toward the bigger cases BP still faced from the 2010 disaster that killed 11 men and gushed oil into the Gulf of Mexico for 87 days.
“I suggested to Mr. Dudley that it seemed to me that I, along with Judge Shushan and Louie Freeh, thought that those matters can be and should be addressed,” he tells Reuters.
Sally Shushan, the eastern Louisiana district court magistrate and former FBI director Freeh, who had been enlisted to investigate Juneau’s oil spill claims program, were already deeply steeped in the issue.
Within weeks, District Court Judge Carl Barbier, who had overseen years of acrimonious lawsuits, had designated this trio to shepherd the sides to what would be the largest corporate settlement in U.S. history, according to people involved.
Within a day, BP signaled its interest in further talks, Juneau says. Its executive board put Chief Financial Officer Brian Gilvary, a mathematics Ph.D. and career BP man, in charge of the effort, hoping it would turn out better than in 2012, when an initial round of settlement talks collapsed.
Dudley returned to meet Juneau, Shushan and Freeh in New Orleans later in May, bringing the credibility of an American who grew up just a two-hour drive away in Hattiesburg, Mississippi.
“That’s how you settle: you get the CEO to walk into the room,” says Jim Hood, the attorney general of Mississippi, one of the five states involved in the settlement.
It took BP nearly two months of 10-hour sessions, often through the weekend, to reach the provisional agreement signed a week ago, finally putting a price tag on the spill’s civil damages. The deal swelled BP’s total bill for Macondo to $53.8 billion, yet provided a sense of closure for investors and boosted the share price of the company valued around $120 billion by as much as 5%.
With a federal confidentiality order still in effect and a final agreement yet to be signed, much is still unknown about the secret negotiations that headed off what could have been another decade of litigation. But Reuters reports conversations it has had with half a dozen people directly involved or briefed on the matter show how a series of legal decisions and deft maneuvering by a trio of insiders paved the way.
