Ottawa says lawyers don't deserve $80 million for First Nation child welfare settlement

Ottawa wants to pay class action lawyers roughly half the amount they're requesting in legal fees for a multi-billion dollar First Nations child welfare compensation case — the largest settlement agreement in Canadian history.

The federal government argued before Federal Court this past week that it should pay the class action lawyers between $40 million and $50 million, rather than the $80 million they've requested.

Federal Court Justice Mandy Aylen, who reserved her decision on Thursday, said the court must take into consideration the size of the settlement agreement and the fact that the case was based on more than 10 years of litigation at the Canadian Human Rights Tribunal (CHRT).

"This motion arises in what I would say are very unique circumstances," Aylen said.

"One is that this settlement of this type has been characterized as what we call a mega settlement ... Second, and importantly, this settlement piggybacks on the tribunal proceeding."

Paul Vickery, senior general counsel for the federal Department of Justice, called the $80 million sum unreasonable. He said there is strong public interest in cutting the bill down.

"Counsel fees are going to be closely scrutinized here, both by the claimant community and the broader Canadian public," Vickery said.

But class action lawyers said they're justified in asking for $80 million because the deal they helped to negotiate is unprecedented, and they took it on with the understanding that they would be paid only if they succeeded.

Ottawa agreed to pay legal fees for the five law firms that launched the class action lawsuits that led to the $23 billion-plus settlement agreement approved last Tuesday by the Federal Court.

The compensation will be distributed among more than 300,000 First Nations children and families who experienced discrimination because the government underfunded on-reserve child welfare systems and other family services. 

The CHRT said the government's actions created an incentive for foster care systems to remove children from their homes. Dubbed the "millennium scoop," the practice meant more Indigenous children ended up in foster care than were sent to residential schools at the height of the residential school system.

The legal bill will not be paid out from the $23 billion in federal cash set aside for compensation. It also won't come from the other $20 billion earmarked by Ottawa for long-term reform of First Nations child and family services. Class action lawyers will be paid through additional public funds.

The fees will go to five firms: Sotos LLP, Kugler Kandestin LLP, Miller Titerle + Co., Nahwegahbow, Corbiere and Fasken Martineau Dumoulin.

The government said it takes issue with some lawyers billing at the upper end of their hourly rate scales.