AMERICAN lawyers acting for the families of the Lockerbie bombing victims will earn more than £500 million in commission from the historic compensation settlement with Libya, The Scotsman has learned.
The US firms involved defended the deal, which will see them take around 30 per cent of the pay-out to each family.
But the Scottish law companies who have helped co-ordinate the compensation fight for many of the 40 British families affected by the tragedy insisted they would only receive an administration fee for their efforts.
It is understood that a provisional deal was struck in Paris last week after representatives from the Libyan government offered a consortium of US solicitors a 1.85 billion compensation package for the 270 families affected by the tragedy on Pan Am flight 103 in December 1988.
The agreement, which works out at about 7 million per family, will compensate the immediate relatives and dependants of all 259 passengers and crew, and 11 people on the ground who died when the plane was blown up over Lockerbie.
The deal comes seven years after the majority of the victims’ families signed "no win, no fee" deals with a number of top American legal firms based in New York.
Most of the British victims are represented by Manhattan legal firm Speizer Crowse who are understood to have the relatives of 30 UK victims signed up to contingency deals securing lawyers between 28 and 35 per cent of any individual settlements.
Speizer Crowse, one of the most highly regarded legal firms in the US, currently represents 60 families seeking compensation while their Manhattan rivals Kreindler and Kreindler represent 118, mainly Americans.
Frank Greneda, of Speizer Crowse, said the commission earned by the lawyers will be considerable but insisted that a tremendous amount of work had gone into securing the deal. He said: "There has been a lot of talk about amounts but the specific contingency arrangements are confidential and subject to individual agreements between the lawyers and the families .
"I think the controversy over the amounts the lawyers will receive is really a much ado about nothing.
"In the US we have always worked around a contingency fee system and the system works."
Mr Greneda added: "Sure the rewards in the US are more substantial than anywhere else in the world but nobody has questioned the fee whilst the work has been going on, it is only now as we approach a resolution when the criticism comes your way.
"I don’t expect any real flack as people will be grateful for the work that has been put in to achieve this deal.
"From day one there have been a lot of lawyers involved in this and a great deal has been achieved. I don’t think anyone would have thought a resolution would be brought to the issue of a compensation package from the Libyans."
Mr Greneda went on: "Right now the specifics of the deal remains a work in progress and it is also subject to a strict confidentiality order.
"All we can say is the situation we have now is very different from before and we expect to have a lot to report in the next 60 days."
Dan Cohen, whose daughter Theadora was killed in the tragedy, said that the majority of the families had reluctantly signed individual deals with the US attorneys pledging them between 28 and 35 per cent of any settlement.
He explained: "I’ve spoken to most of the families represented by the lawyers and it appears the average cut for the attorneys is about 30 per cent.
"When you accumulate all the individual settlements it is a significant amount of money and I know it is causing a lot of bitterness among the relatives of the victims.
"To be honest at the time there seemed to be little hope of a compensation agreement with Libya and a lot of the families took on the no win, no fee deals because they feared they could go bankrupt if they paid up-front legal fees in such a complicated case. The deal is going to make a lot of lawyers very rich indeed, in fact I’m sure some will be retiring on the strength of this deal."
The main Scottish legal firm involved in the compensation deal is Glasgow solicitors, Levy McRae, who represent 34 of the 40 British families involved in the claim.
According to a source, the firm and its senior partner, Peter Watson, head of the Lockerbie Air Disaster Group, will receive nothing like the payments expected by their US counterparts.
He said: "It’s a complete misrepresentation to suggest the British firms will be earning huge sums for their involvement in the Lockerbie case.
"The matter has been represented by US solicitors in the American courts and firms like Levy McRae and several London-based solicitors have effectively been acting as co-ordinators between the families and the US firms.
"The UK firms have effectively adopted the roles of postboxes sending on vital information like birth certificates to the US lawyers."
Libya has set conditions in its 1.8 billion compensation offer to relatives of the victims. Each family has been offered around 7 million - but it is believed that 1.3m of that figure will be held back unless the US removes Libya from its list of countries that sponsor terrorism.