BC’s Share of Big Tobacco Settlement Worth $128 Million for Lawyers

British Columbia’s share of the bill for lawyers who represented the province for more than a decade in the lawsuit against big tobacco companies will be about $128 million.

That’s around half the legal bill for a consortium that, along with B.C., also includes Manitoba, Saskatchewan, New Brunswick, Nova Scotia, P.E.I. and the three territories.

The fee doesn’t appear inappropriate, said Cynthia Callard, the executive director of Physicians for a Smoke-Free Canada, but “it’s a lot to pay the middleman.”

In October, a proposed settlement was announced that would require tobacco companies — JTI-Macdonald Corp.; Rothmans, Benson & Hedges; and Imperial Tobacco Canada Ltd. — and their parent companies to pay $32.5 billion in damages.

About three-quarters of the money is for the provinces and territories, while other beneficiaries include individual smokers, their families and an independent foundation mandated to improve diagnosis and treatment of tobacco-related disease.

The proposed settlement would be paid out over time, an estimated 20 years.

Callard said that means the provinces and territories will recover money they are owed by the tobacco companies only if people will keep smoking for decades to come, and some of those people will die because of it.

Canadians should be concerned about the outcome as well as the secrecy and lack of disclosure throughout the process, Callard said.

“This has got huge public policy implications, yet it’s had less political daylight than rezoning a park.”

The case goes back to the 1990s and has proceeded mainly behind closed doors since 2019 when the three tobacco companies involved filed for creditor protection under the Companies’ Creditors Arrangement Act.

One of the long-kept secrets has been the details of how lawyers for B.C. and the other members of the consortium are to be paid. Those details finally became available in an affidavit filed in early February in Ontario’s Superior Court of Justice.

Sworn by Michael Peerless with Peerless Law in London, Ontario, the affidavit was intended to provide clarity to a judge determining the fees for lawyers representing Quebec plaintiffs in two other class actions that were also part of the settlement with the tobacco companies.

Those lawyers were seeking a fee of more than $900 million, some 22 per cent of the $4 billion that would be owed to their clients under the settlement.

Peerless’s affidavit spells out that the total payment for lawyers representing the consortium would be about 3.6 per cent of the settlement owed to the provinces and territories they represent.

Those retainer agreements specified the lawyers were to be paid only if the suit was successful and the fees were to be calculated on a “declining sliding scale” percentage basis, he said. The agreed fee was nine per cent of the first $1 billion recovered from the tobacco companies, then gradually declining to one per cent on any amounts over $6 billion.

That works out to a fee of $263 million on the $7.3 billion owed to the provinces and territories in the consortium. Each jurisdiction’s share of legal fees can be calculated based on its share of the proposed settlement.

That means B.C.’s share of the legal bill would work out to about $128 million.

Smaller shares would be owed by Manitoba ($40 million), Saskatchewan ($26 million), Nova Scotia ($28 million), New Brunswick ($22 million), Northwest Territories ($6.5 million), P.E.I. ($5.9 million), Yukon ($3.5 million) and Nunavut ($3.4 million).

Citing solicitor-client privilege, a spokesperson for B.C. Attorney General Niki Sharma declined to comment or to confirm the amount that B.C. will owe.

In a phone interview Peerless said the amounts The Tyee had calculated are correct and that the pay was reasonable considering the volume of work and how long the case has taken.

Peerless said he started working on the file in 1996 and was first retained in 2003. Over the years, he said, the effort has involved dozens of lawyers and other staff at multiple firms in Canada and the United States. The U.S. had previously had a similar tobacco case, so there were people at firms there with expertise and access to documents.

Working on a contingency fee basis means the lawyers will be paid only when the settlement is complete.

It may be some time yet before the process is finished, Peerless said. With two of the three tobacco companies opposed to the proposed settlement, he said, it remains to be seen what the mediator, former Ontario chief justice Warren Winkler, will decide and whether there will be appeals.

“The cheque is nowhere near arrived,” said Peerless. Even if the settlement is finalized, he added, full payment will take many years as the amount owed to the provinces and territories gets paid out. “We won’t be paid all of that money for at least 20 years from now.”

B.C. launched its first tobacco lawsuit in 1998. In 2012 it announced it had formed a consortium with five other provinces and would be represented by the law firms Bennett Jones LLP and Siskinds LLP. The territories joined the consortium later.

In December B.C. said it expected to receive about $3.5 billion from the settlement, which it would “invest in cancer treatment and primary care, and research into treatments, as well as to promote smoking cessation.”

Ontario, Quebec, Alberta and Newfoundland and Labrador each had their own legal representation separate from the consortium.