Kenneth Feinberg: What is a life worth?

By | May 18, 2014

Consultants solve ambiguous problems.

So do lawyers.

I recently watched an interview with Kenneth Feinberg, a famous lawyer, and was struck by his confidence, poise, professionalism, humor, and mindfulness. All traits that consultants should try and emulate. Even more impressive was Feinberg’s ability to structure ambiguous problems and implement solutions.

Don’t know who Feinberg is? You will by the end of this blog post.

Kenneth Feinberg has unique qualifications. He is in the business of resolving tough situations, putting a monetary value on human lives and grief. He makes some very tough decisions, and deals with a lot of sad families. As a short list of some of the alternate dispute resolution and settlements he has led include:

  • September 11 victim compensation fund
  • Agent orange
  • TARP executive compensation
  • BP oil spill fund
  • Penn state settlement
  • Virginia tech shooting settlement
  • Aurora victim relief fund
  • Boston marathon bomb victims – One Fund Boston
  • Newtown-Sandy Hook community foundation
  • General Motors car recall

I cannot think of a job that is perhaps more emotionally charged, and difficult than setting the economic value of a life, then working to persuading thousands of victim’s families to understand the calculations and accept the compensation. A difficult job, and by all appearances, a job well done. Feinberg was interviewed by the Milken Institute in 2010 as a follow up to his book: What is a Life Worth?

Some ways to think of his efforts on the 9/11 compensation fund:

  • He worked on it pro-bono for 33 months
  • He was given little guidance by Congress
    • The statute was passed in 11 hours.
    • There was no $ appropriation.  The fund was technically “unlimited”.
    • The statute did not specify who was eligible to receive awards or how much
  • 9/11 compensation fund formula for calculating the award
    • ADD Economic loss (estimated earnings of deceased if not for 9/11)
    • ADD Non-economic loss (pain and suffering of the surviving family)
      • Set the same for everyone
      • $250K for death of victim
      • $100K for each surviving spouse of child
      • For injuries, it was bench-marked on days in the hospital
    • SUBTRACT collateral sources of income (e.g., life insurance)
  • The payout range was compressed (high wage-earners got less of a multiple, and low wage-earners got more of a multiple). For example, payout between a waiter making $24K and a investment banker making $1M annually was $1.8MM – $5MM, not as big a spread a straight formula would have indicated
  • He dispensed $7 billion in compensation
  • 97% of the eligible claimants of the 9/11
  • Undocumented workers were also given compensation
  • In the end, he felt he became a better listener because of the 9/11 work
  • Top lessons in the art of mediation
    • Competence – know more about the dispute than anyone else
    • Doggedness – hang in there.  Explain to the parties that “I am prepared to stay here as long as it takes”
    • Creativity – there is always more than 1 way to get to “yes”   Win-win.  Think out of the box.  Find ways to get it done.
    • Data – go to reputable sources to corroborate the claims

Kenneth Feinberg

In the end, he felt that in retrospect, the Congress should have stayed out of it.  It is unjust to compensate some victims of 9/11 and not other tragedies (Oklahoma bombing, Katrina, World Trade Center bombing in 1993). He does not think a similar compensation program will ever be set up again. It was a unique time in history.

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4 thoughts on “Kenneth Feinberg: What is a life worth?

  1. Tomm

    “Putting a monetary value on human lives and grief”
    When I read it first I thought it’s an absurd job, but my second thought is that these values have to be somehow pre-determined by insurance industry.

    From a consultant’s standpoint (which might be flawed) I would expect an insurance company to have in place hundreds of standardized profiles of potential victims, including plethora of characteristics: impact on kids (number, level of independency) average cash inflows (at moment of death and future potential), # relatives left, etc.
    General public is not aware of those values because in general we (luckily) don’t have to deal with such cases.
    Thanks for promoting awarness around the subject.

    Reply

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