Federal government of Canada has opposed a request for more than $80 million in legal fees from class action lawyers involved in a historic multi-billion dollar proposed settlement for First Nations child welfare. This settlement follows two separate class action lawsuits that were combined into one, resulting in a $40 billion agreement to address discrimination in the on-reserve child welfare system.
Five legal firms have filed a motion in Federal Court, seeking $80 million plus applicable taxes and approximately $600,000 in out-of-pocket expenses from the federal government. The government, while committed to achieving a fair agreement on legal fees, considers the requested amount to be excessively high, with some lawyers potentially earning more than $4,500 per hour. Zeus Eden, press secretary to Indigenous Services Minister Patty Hajdu, expressed concern about the exorbitant fees.
The legal battle and the subsequent settlement were fueled by allegations of discrimination against First Nations children and families, stemming from a 2016 Canadian Human Rights Tribunal ruling that found the government failed to provide them with the same level of child welfare services available elsewhere. As part of the settlement agreement, the federal government is obligated to pay class action counsel reasonable legal fees, taxes, and disbursements on top of the $23.4 billion earmarked for compensation.
This unique arrangement differs from typical class action cases where lawyers’ fees are deducted from class members’ compensation. David Sterns, one of the lawyers involved in the settlement, noted that the fairness of their fees will be decided by the court during a public hearing, considering factors relevant to similar cases.
Lawyers justify their $80 million
The lawyers justify their $80 million fee request by highlighting the unprecedented nature of the settlement and the substantial risks they undertook. They agreed to receive payment only if they succeeded, which they argue adds weight to their claim.
Cindy Blackstock, a First Nations children’s advocate, expressed concern that the proposed legal fees create a significant imbalance between lawyers and the affected First Nations children and family members. While the law firms stand to make tens of millions of dollars, the recipients of the settlement will receive just over $40,000 at most. Blackstock emphasized the need for more dialogue regarding the role of class action lawyers in reconciliation and the possibility of increased oversight.
Jasminka Kalajdzic, a law professor at the University of Windsor, noted the unusual nature of Canada opposing class action lawyers’ proposed legal fees. She expects the court to consider the fact that class counsel voluntarily set a cap of $80 million on billing, even though they could have asked for more.
The lawyers involved in the settlement agreement argued that they could have sought up to $2.35 billion under their contingency fee retainer agreements but opted for the $80 million cap at the request of the Assembly of First Nations to improve upon past class action experiences.
The dispute over legal fees in this landmark settlement is expected to continue, with the court ultimately determining the fairness of the requested amount.