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For BP, now come the lawyers Add to ...

A lawyer who used to represent BP Canada, who did not want to be identified, agrees with Mr. Buckee's analysis. "Even assuming the flow stops today, it will take at least a year to determine the extent of the damage and to quantify the loss," he said. "Then it will take at leas six months of motions to define what the litigation is, who is in what class action. I would suggest the basic, underlying negligence action - who screwed up and how - will take a least a year. The cases that turn on negligence will have to prove causation. They could take forever. Think cigarettes and asbestos."

But since the liabilities related to the spill are unknown, because the oil is still spilling and because the U.S. courts are unpredictable, BP could suffer severe damage. A criminal prosecution would only heap on the pressure. The admission by Mr. Hayward, BP's boss, to the Financial Times on Wednesday that the company was not prepared for the spill might encourage the lawyers. "What is undoubtedly true is that we did not have the tools you would want in your toolkit," he said.

BP CEO Tony Hayward

BP is already getting swamped with takeover and restructuring talk as its market value falls and the potential liability costs climb. Mr. Kilduff said that, "at the very least, BP gets broken up," with a possible Chapter 11 bankruptcy protection filing for its U.S. operations. Robert Reich, U.S. labour secretary under president Bill Clinton, has suggested that the administration should take BP's U.S. business into receivership until the spill has been dealt with.

Some analysts and institutional investors think asset sales are likely, with BP's Prudhoe Bay operations on Alaska's north slope a potential candidate. The Chinese would be eager bidders, as would BP's competitors.

Takeover talk centres on Royal Dutch Shell, partly because it now has a higher market value than BP and partly because Mr. Hayward's predecessor, John Browne, who was CEO until 2007, revealed in his memoirs that he tried to merge BP with Shell in 2004.

A takeover seems unlikely unless a credible estimate of the spill's liabilities is determined. In the meantime, BP is going through hell. U.S. Interior Secretary Ken Salazar said BP's "life is very much on the line here."

If that was true a month ago, when he made the comment, it's doubly true today.

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  • BP PLC
  • Updated May 24 4:00 PM EDT. Delayed by at least 15 minutes.

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