Justice Geoffrey Morawetz of the Ontario Superior Court in Toronto concluded that the 'astronomical' fee owed to four Quebec law firms is reasonable given the circumstances of the case.Christopher Katsarov/The Canadian Press
A team of Quebec lawyers who took on Big Tobacco almost three decades ago – and won – are set to receive an unprecedented payout of nearly $1-billion, after a judge with Ontario’s Superior Court of Justice approved the payment of their fees earlier this week.
In his ruling, Ontario Chief Justice Geoffrey Morawetz concluded that while the dollar amount was “astronomical” and “unheard of in Canadian legal history,” the fee itself is reasonable, given the risk that the lawyers took on in accepting the case, the amount of work that went into the litigation and the extraordinary results that the team secured for their class members. (Class-action lawsuits are brought on behalf of a group, who are called class members.)
Lawyers from four law firms – Trudel Johnston & Lespérance, De Grandpré Chait, Kugler Kandestin, and Fishman Flanz Meland Paquin – will split $901,177,915 in fees. This figure represents 22 per cent – their agreed-upon contingency fee – of the $4.12-billion that the legal team won for the class.
The litigation aimed to hold tobacco companies accountable for misleading the public about the harms, such as disease and addiction, of their products. Although the case originated in Quebec, it became a matter for Justice Morawetz because the companies later filed for protection from creditors in Ontario.
The portion that each firm will receive is not being made public.
Justice Morawetz’s highly anticipated ruling has been closely watched – and debated – in class-action legal circles across the country.
On one hand, there is an argument that law firms need strong incentives to take on expensive, risky cases. The tobacco file has dragged on for 27 years, but the lawyers involved haven’t been paid anything yet. Combined, they have docketed more than 200,000 hours working on the case. The matter went to trial and lasted more than 250 days. Some of the lawyers and firms involved were forced to take on significant personal and professional loans to keep the litigation going.
On the other hand: What would the public think about the legal profession if lawyers were allowed to recoup a nearly billion-dollar fee?
In class-action litigation, lawyers are typically paid a percentage of either a settlement agreement or a judgment.
When the original law firm took on the case in 1998 at the request of a Quebec anti-tobacco advocacy group, it agreed to a 20-per-cent contingency fee. Another 2 per cent was added in 2017 to account for additional services.
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The law also gives courts the discretion to determine whether the fees charged by a plaintiff’s lawyer are reasonable. Justice Morawetz noted that in Quebec, 20 per cent to 25 per cent is the most common range for contingency fees, although some as high as 33 per cent have been deemed reasonable by the courts.
In making their assessment, courts consider factors such as: the time and effort required, the importance of the matter, the result obtained and the risk involved.
Justice Morawetz found that back in 1998 when lawyers working for what is now Trudel Johnston & Lespérance took on the case, they were assuming a huge amount of risk.
“Success was by no means assured. Tobacco companies had not previously been held liable for the harms caused by their products. Establishing liability in this case required advancing several novel legal arguments,” he wrote.
“To state the obvious, the fee request is astronomical. But is there any principled basis on which the fee can be or should be reduced?” Justice Morawetz wrote in his decision. “The work was done pursuant to a written agreement. The work was well done and produced an exceptional result.”
However, in an unusual move, Justice Morawetz included a postscript to his ruling: “In receiving this reward, if counsel are truly acting in the best traditions of the legal profession they should recognize that they have a moral obligation to society.”
He urged the lawyers to make a significant contribution to a health-related charity.
André Lespérance, one of the lead counsels on the case, said in an interview that he always planned to make a large donation. For him, when he agreed to join the file in 2008, it was about securing justice for the victims.
Mr. Lespérance said they never imagined the case to be a money-maker.
“We were a gang of foolish people who believed that this was a cause worth bringing to justice. Money was never discussed for a second. At all. The only money thing that worried us was to become bankrupt,” he said.
He said that they always understood they had a winning case. Convincing a judge that a manufacturer of a deadly product, who had been lying about the risk of that product, should be liable for damages wasn’t the obstacle.
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The challenge was the resources needed to litigate the case. They were also concerned about collecting in the event of a win.
Avram Fishman, managing partner at Fishman Flanz Meland Paquin, said tobacco companies have a long track record of not paying compensation to victims. This is why his firm, which has expertise in insolvency matters, was brought onto the case about a decade ago.
In 2015, the lawyers won their case against the tobacco companies in Quebec. About three weeks after the appeal court upheld the decision in 2019, all three tobacco companies – JTI-Macdonald Corp., Imperial Tobacco Canada Ltd. and Rothmans, Benson & Hedges Inc. – filed for insolvency protection in Ontario. However, those proceedings have protected funds for the claimants.
Mark Meland, another lawyer on the case, noted that of the $901-million in counsel fees, $50-million will be set aside in a reserve for victims. This is separate from the remaining portion of the award, amounting to more than $3-billion, that they are set to receive.
Asked if the team has any celebration dinners planned, both Mr. Fishman and Mr. Meland said there will be a time for that – but not yet. The final procedural step required to close the matter – for both the lawyers and the claimants – is expected to occur Friday.
As for Mr. Lespérance, when pressed on what he plans to do with the money, he had just one idea: “I’m going to buy a flute. A really good flute.”