In the Bible, King Solomon is granted his wisdom so that he might better judge the rights and wrongs of his kingdom. In the United States, the man who might most appreciate Solomon's plea for a little insight is Ken Feinberg, the nation's arbitrator-in-chief.

Unlike Solomon, Mr. Feinberg hasn't (yet) had to threaten to cut up any babies. But as I step into the humming Feinberg Rozen offices in Washington, D.C., this week, the bespectacled 64-year-old attorney is in his final lap as the Obama administration's pay czar. He's hip deep in his new job deciding which Gulf residents will receive money, and how much, from BP's $20 billion oil-spill fund. These jobs follow on Mr. Feinberg's roles deciding payments for the victims of the Virginia Tech shooting, for the families of those killed on 9/11, and for Vietnam veterans claiming damage from Agent Orange.

Sitting in his office—adorned with letters and pictures from notables—I attempt to tactfully ask Mr. Feinberg what exactly, in his opinion, qualifies him to sit in such extraordinary judgment. Before I can even finish, he interjects: "Experience. I don't think that what I'm doing is rocket science. I think there are thousands, maybe millions, of people who could do what I'm doing.

"I think that in [the Gulf] case, the administration and BP felt that with 9/11 and with Agent Orange and with Virginia Tech, that there's a sort of built in credibility." He pauses, and then adds in his distinct Boston-area accent, "that credibility can disappear in an instant, I assure you."

He's acutely aware of that risk, and it is why in his every public event, in his every decision, he projects impartiality. He has even been criticized for not showing more emotion in issuing his life-altering decisions. He accepts that his job will leave some people unhappy.

"Why weren't grandparents eligible to apply for the death of their grandson or granddaughter in 9/11? Why do you give everybody in 9/11 the same formula for pain and suffering? Why do you say that fiancés shouldn't be treated like spouses when it comes to eligibility in 9/11? Why pay students and faculty the same in Virginia Tech, when a faculty member is earning an income and a student isn't," he says, reeling off a few of the tougher issues on which he's pronounced.

Ken Feinberg Zina Saunders

In the quiet of his office, a French opera playing in the background, he concedes his job is often about judgment calls. "I have a tremendous amount of self-doubt about all of this. You always toss and turn wondering if you're doing the right thing, if there's a better way, a more equitable way. You know you are going to receive criticism. You do the best you can. If other people think they can do better, they are entitled to their opinion. It isn't as if there's a mathematical formula that determines success in this business."

When I ask what he thinks about the circumstances under which BP was made to cough up $20 billion—under threat of federal criminal indictment—he says only that "the administration and BP got together . . . and decided, both, that coming up with a guaranteed sum to pay eligible claims was a creative alternative to years and years of protracted litigation."

Whatever the impetus for establishing the BP fund, it is certain to test Mr. Feinberg's skills. Tens of thousands of Gulf residents potentially have a claim for compensation, and they mobbed him on a recent tour through the region. Trial lawyers are bitter, as they feel the fund—which will require those who get payouts to ultimately release BP from legal liability—is robbing them of a day in court. Mississippi Attorney General Jim Hood and his Alabama counterpart, Troy King, have taken up the lawyers' cause, blasting the Feinberg plan.

Mr. Feinberg expects to issue his ground rules for claims by the middle of this month, and to be "up and running and replacing BP" by the week after that. While he holds BP responsible for "this tragedy," he also credits the oil giant for allowing him to move swiftly. Whereas in other funds he had to start a claim process from scratch, "here, much to BP's credit, they've already established 35 offices, 1,500 people, at a cost of heaven knows what, and they've paid out over $250 million. I think we can do better. I think we can do it in a more accelerated, principled way . . . but I must say I can't fault BP for trying." He was promised total independence and he says so far neither the administration nor BP "want to get near this. And that's appropriate."


Those are the comments that rile the tort-law community, which risks losing plaintiffs to the fund. Mr. Feinberg is courteous but not apologetic. The trial lawyers "may feel that I've said things—in an effort to entice people into this program—that are anti-trial lawyer. I certainly don't mean that; I'm a trial lawyer and have a lot of respect for trial lawyers. It's just that I'm trying to attract as many people as I can into this program."

The tort bar and state attorneys general, he says repeatedly, have raised "very legitimate" policy issues about releasing BP from liability before all the damage of the spill is known. And those concerns, he says, help explain why he intends to allow people to receive emergency payments of up to six months with no legal release. Only later, if claimants want a "final settlement," will they have to release BP from liability. Besides, "If the trial lawyers believe that they can do better than what I'm offering, this is a purely voluntary program. Nobody is required to participate."

As generous as he intends the payments to be, Mr. Feinberg makes clear he won't be handing them out on the street. BP, under pressure, has up to now been writing checks to pretty much anyone who asks. Isn't it possible, I ask, that fewer residents will receive money once he takes over?

"I don't think there's any question about that," he says. "I'm totally independent . . . Nothing will undercut the credibility of what I'm doing more than inconsistent treatment, unfairness, the perception of bias or the perception of fraud. If somebody received a payment from BP, in a time of beleaguered emergency, that just cannot be justified, I will not apply that principle so that everybody else receives an unjustifiable amount."

And he's firm that residents will be required to prove their claim. "When I go to the Gulf, I hear a lot about the underground economy. 'Mr. Feinberg, I got paid $5,000 a month all cash. Do I have a claim?' Well, you have to prove your claim. There's nothing illegal about all cash business, but do you have your tax return? . . . Do you have documentary evidence? . . . Will your ship captain vouch for the $5,000? . . . I need something. I can't be paying claims that can't be proven. And I can tell you that this is going to be a big issue."

All this drama is notable, given that Mr. Feinberg only just finished his controversial tenure as pay czar. His restrictions on executive pay for the top 25 officials at seven bailed-out institutions earned him boos from the financial sector and free-market advocates. His final report last month stating 17 companies had made questionable compensation payouts in the early days of the bailout—but refusing to name the bankers or demand clawbacks—earned him boos from populist types.

Mr. Feinberg is unrepentant. "Why would I name names of individuals? The companies were the ones that authorized the payments and we named the companies. . . . At the time these companies made these outlandish payments, it was legal, Congress hadn't yet spoken on the subject, and there's a lot of armchair quarterbacking going on here." Besides, he says: "11 of the 17 companies that I focused on as making inappropriate payments have repaid the taxpayer—with interest."

Mr. Feinberg's position commanded enormous attention, and he himself talked of using his "prescriptions for pay"—linking executive compensation to long-term performance—to alter Wall Street's wider compensation culture. Yet today he tones down his role. "In a sense, as one newspaper reported, what I was doing was sort of a sideshow. It was such a limited role I had—very few companies, very few individuals. The real test on executive pay is going to come from the other initiatives out there being promoted by the administration."

If his role was so limited, I ask, then why have the pay czar in the first place? Wasn't this just an attempt by Congress to soothe the angry public mob? "Congress felt that if we were going to give billions of dollars to save these companies, there should be a price to pay for that . . . If you look back at the history of our country, you can usually see . . . a tension between Main Street and Wall Street and this is the latest manifestation of that. But I don't think it's unique to 2010 or 2009."

Behind the creation of the pay czar job was, of course, the argument that somehow executive compensation precipitated the financial crisis. Does he really believe that? "I don't know. Congress apparently did. I don't know. It certainly seems to have been a factor—I don't know what weight to give it." He acknowledges that it would probably not be wise to believe pay restrictions alone will save us from another crisis.

The final Feinberg report does recommend that banks give their compensation committees the right, in times of crisis, to void pay contracts. But isn't a contract a contract, I ask? "A contract is a contract. I'm saying that, prospectively, we should openly adjust expectations with the notion of a break provision."

I note that one effect of his pay rules was to cause employees at targeted banks to jump ship. Can government really change the pay culture? "I'm not sure you can in a free market and an open society. I'm not sure you can or should tackle that culture. I do think that every company is different—we saw that. And I do think that the more you set principles in place and strengthen the power of regulators and independent compensation committees and private boards of directors—the more you allocate to them the primary responsibility of linking compensation to respective performance—the better."

So how much does a person deserve to be paid? How much is a person's business worth in the wake of an oil spill? How much is the family of a terror victim owed? None of the questions Mr. Feinberg makes a living deciding sounds like very much fun. Why does he do it? "If you're asked to serve, you serve," he says matter-of-factly.

A wry smile appears on his face. There is, after all, "a pretty low bar of success." What does he mean? "Well, there are a lot of people who think that all this is hopeless, and you'll end up just being completely vilified, and that goes with the territory." In the end, he says, "you try and do the best you can." King Solomon might understand.

Ms. Strassel writes the Journal's weekly Potomac Watch column from Washington.