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VW Is Latest to Enlist Ken Feinberg, the Go-To Guy for Crisis Settlements

When Volkswagen sought someone to help clean up its emissions cheating mess, the choice was easy: Ken Feinberg, the go-to guy for crisis compensation.
Image: Attorney Kenneth Feinberg Announces Payout Details For General Motors Recall Compensation Lawsuits
Lawyer Ken Feinberg speaks during a news conference on June 30, 2014, at the National Press Club in Washington, D.C.Alex Wong / Getty Images

In the 1994 crime drama “Pulp Fiction,” actor Harvey Keitel plays a character nicknamed “the Wolf” whose signature skill is mopping up messes (sometimes literally) left behind by killers.

With the announcement that it had retained lawyer Kenneth Feinberg, Volkswagen of America is getting a “Wolf” of its own.

Lawyer Ken Feinberg speaks during a news conference on June 30, 2014, at the National Press Club in Washington, D.C.Alex Wong / Getty Images

An expert in compensation and mediation who formerly served as Massachusetts Senator Ted Kennedy's chief of staff, Feinberg, 70, has become a legal guru for companies and organizations facing huge settlements — which is what experts say the automaker will need to clean up the logistical and legal mess stemming from its diesel-emissions test deceptions.

“If you want someone who’s really good at this, the list is short,” said David Logan, a law professor at Roger Williams University in Bristol, Rhode Island. “Feinberg’s got this experience with rushing to a place and hiring a bunch of people… and starting to write checks.”

Michael Horn, president and CEO of Volkswagen Group of America, said in a statement Thursday that Feinberg was an obvious choice.

“His extensive experience in handling such complex matters will help to guide us as we move forward to make things right with our customers,” he said.

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Feinberg’s expertise giving away money is nearly unparalleled, much of it under tragic circumstances: He oversaw $7 billion in payouts to 9/11 victims and their families, a wrenching process Feinberg described in his 2005 book, “What is Life Worth?: The Unprecedented Effort to Compensate the Victims of 9/11.”

In the years since demand for his specialized skills has increased markedly. He has been called on to oversee claims and compensation in the aftermath of high-profile tragedies like the deadly shooting rampage at Virginia Tech (2007); a mass shooting in a movie theater in Aurora, Colorado and the Jerry Sandusky sex abuse scandal at Penn State and the Sandy Hook Elementary School shooting, all in 2012.

In 2013, Boston mayor Thomas Menino and Massachusetts governor Deval Patrick appointed Feinberg to be in charge of One Fund Boston, which aided Boston Marathon bombing victims. (Back in 2005, Feinberg, a Massachusetts native, had a street named after him in his hometown of Brockton.)

In the wake of the financial crisis, the U.S. Treasury appointed Feinberg to oversee how companies that took bailout money compensated their executives. Feinberg also was the initial lawyer assigned to administer a $20 billion compensation fund for people and businesses who suffered financial losses due to the BP Deepwater Horizon oil spill in 2010.

The Volkswagen scandal doesn’t carry the emotional weight of Feinberg’s 9/11 Commission duties, or even of his work on GM’s ignition-switch compensation program last year, in which 124 deaths have been linked to the defect.

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“If you can handles those, then handling the decreased value of a Volkswagen … seems like pretty small potatoes in comparison,” Logan said.

The primary hurdle Feinberg will face in dealing with VW’s emissions scandal is that at least some company officials apparently deliberately approved the deception, as opposed to a case like GM, where executives allegedly exhibited poor judgment or bad management, Logan said.

While being made whole via vehicle buybacks or replacements might be sufficient to placate vehicle owners in a different scenario, the specter of fraud could prompt plaintiffs’ lawyers to push for higher, punitive damages.

Indeed, lawyers in California representing Volkswagen owners in a class action lawsuit already voiced skepticism about the tactic of bringing in Feinberg, saying it appeared to be an attempt to circumvent the courts, since victims would have to sign away their right to sue in order to enter the claims program.

“I’m suspicious and I’m concerned,” attorney Chris Seeger told Reuters.

Logan, the Rhode Island law professor, said that because Volkswagen executives appear to have had knowledge of the emissions ruse, Feinberg will face be a difficult balancing act.

“Trying to deal with the heightened expectations of plaintiffs might be his biggest challenge here,” he said.