The historic $1.25 billion settlement with Swiss banks is largely disbursed to Holocaust survivors. But as the settlement fund shrinks, dissent is mounting over how to allocate the remaining $350 million.

There are also indications the original formula used to calculate the value of individual bank accounts may have undervalued them. An economic historian involved in the claims process, Helen Junz, has suggested increasing the payout to account holders which now average $134,000, by more than 40%. That move would sap most of the fund’s remaining cash – which is already the subject of a bitter dispute between two lawyers in the case.

The bulk of the 1998 settlement was set aside to repay Holocaust survivors and their heirs who could demonstrate that they once held Swiss bank accounts. About $500 million was designated for living survivors who did not have bank accounts, because banks presumably profited from their slave labor and stolen property.

One lawyer in the case, Robert Swift, has proposed using remaining settlement funds to give all living Holocaust survivors $1,000, regardless of whether their relatives held looted Swiss bank accounts. Timing is of the essence, he said, because survivors die every day of old age.

But the lead court-appointed lawyer, Burt Neuborne, wants to reserve the remaining money to allow the Zurich-based claims commission to continue matching bank accounts with survivors or their heirs. Mr. Neuborne argues that pursuing bank account claims is especially significant because the accounts are central to original lawsuits that led to the settlement. Those lawsuits alleged that the Swiss banks looted World War II-era accounts while the accountholders were murdered.

Mr. Swift ratcheted up the fight a few weeks ago by asking the U.S. Supreme Court to decide which guidelines should be used to apportion the money that remains after bank account claims are paid.

Mr. Neuborne reacted to that effort by asking a federal judge to throw Mr. Swift off the case.

In a May 16 letter to the judge, Mr. Neuborne called Mr. Swift “a rogue settlement counsel who refuses to cooperate with his colleagues and insists upon filing unauthorized documents.”

In an interview, Mr. Neuborne said Mr. Swift had not consulted him about petitioning the Supreme Court to hear the case.

“I can’t file papers on behalf of the class and be blindsided by someone who claims to represent the class,” he said. He added, “It creates legal cacophony.”

Referring to the dispute, Mr. Swift said: “This is a serious and important disagreement about how money is to be shared among class members. That is an issue responsible lawyers can disagree about.”

Several lawyers close to the case have said they do not expect the Supreme Court to hear the case.

In his opposition papers to the Supreme Court, Mr. Neuborne notes that the difficulty in determining how much money may have been in the accounts originally led to a formula that likely undervalues their worth.

Ms. Junz, the Holocaust-era economics expert, suggested in a March 22 letter that an additional $179 million be spent to augment nearly $400 million in compensation to account holders and their heirs.

So far the claims commission has paired more than 3,200 Swiss bank accounts with their holders or heirs, according to a letter with the court.

Mr. Neuborne, a law professor at New York University, and Mr. Swift, an attorney from Philadelphia, are among approximately a dozen court-appointed “settlement counsel” who played leading roles in the lawsuits against the Swiss banks.

Their fight over how to distribute the remaining settlement money follows a separate fight over legal fees. Mr. Neuborne has asked the court for $4.1 million in legal fees for his work on the settlement. Mr. Swift, who opposes the fee request, has said Mr. Neuborne gave the impression he was working for free.

These legal battles are playing out as the settlement process should be nearing its end. Since the Zurich-based claims commission opened in 2001, compensation ranging from a food package to $21 million has been disbursed to 390,451 people, according to a report filed with the court.

Mr. Swift has been a frequent critic of the claims process. In particular, he complained that the judge in charge of the settlement, Edward Korman of U.S. District Court in Brooklyn, has shortchanged American survivors by favoring the more impoverished survivors who live in areas that were once part of the Soviet Union.

The 2nd Circuit U.S. Court of Appeals repeatedly has upheld Judge Korman’s distribution formula. But several groups of American Holocaust survivors have joined Mr. Swift in criticizing the judge.