Legal Fees as a Settlement Consideration
This weekend marks the end of the 105th Tour de France. This year’s race has been full of controversies, first as a result of allegations of doping by pre-race favourite and four-time winner Chris Froome (and a related threatened cyclist strike) and subsequently ranging from disqualification of one cyclist for punching another to the inadvertent tear-gassing of cyclists by French police.
This spring, news surfaced regarding a settlement negotiated in respect of the claims against controversial cycling figure Lance Armstrong. Armstrong’s former teammate, Floyd Landis, had commenced proceedings against him in 2010 under the False Claims Act. The United States government became involved in the fraud proceedings in 2013 after Armstrong admitted to using performance-enhancing drugs after years of public denial.
The litigation commenced by Landis was settled earlier this year. Terms of settlement were reported to involve a payment by Armstrong of $5 million (of the $100 million claimed against him), as well as a payment to Landis of $1.65 million in legal fees. Accordingly, Landis’ one-quarter share in the settlement payment is less than what he will receive in legal fees.
It is not unusual in our work to see settlement terms involving the payment of one or more party’s legal fees as part of or in addition to a settlement payment. Especially where litigation spans the better part of a decade, the legal fees incurred can rival or exceed the quantum of the settlement payment itself and may form an important part of negotiations.
Have a great weekend,