All but two of the Canadian jurisdictions which reached a settlement with tobacco companies to resolve their claims for health-care cost recovery chose to enter into contingency-fee arrangements with the lawyers who represented them in court. These arrangements were discussed in a previous post.
Contingency fee arrangements mean that the lawyers agreed to be paid only upon a successful outcome, often as a percentage of any final payment.
Newfoundland is one of the few Canadian provinces which had previously put on record its contractual obligation to the team it hired. In 2011 it said that the U.S. firm and its Canadian partners would share 30% of the proceeds of a lawsuit.
Earlier this month, the Minister of Finance for Newfoundland and Labrador reported that the final fee that will be paid to the lawyers will be $130 million. This represents 25% of the $520 million slated for that province.
On May 13, the Minister was questioned by a member of the opposition, who wanted precision on how much the province would receive: "L. PADDOCK: This year's budget included $520 million in revenue from the tobacco settlement. So I ask the minister: How much of that will actually be received, in hand, this fiscal year?"Mr. Siobhan Coady, the Minister of Finance and President of Treasury Board replied that "The payment terms are still being finalized... Newfoundland and Labrador's share of that $32.5 billion is $520 million, of which we have to pay legal fees. As the Member opposite knows, yesterday in Estimates we talked about what the legal fees cost out of that $520 million. If memory serves it was $130 million. So $390 million is what we are receiving in revenue, what we can book in revenue in this particular fiscal year."
