The legal expenses for class actions concerning First Nations child welfare are reduced by 50% by the Federal Court.
The judge deems the $55 million settlement between class action lawyers and Ottawa to still be unreasonably high.
The Federal Court has determined that class action lawyers engaged in a significant, multi-billion dollar settlement for First Nations child welfare will be awarded $40 million for their efforts—half of the initially requested sum. Initially, five legal firms sought $80 million plus taxes and approximately $600,000 in out-of-pocket expenses from the federal government. Despite Ottawa deeming the initial request excessive and negotiating a reduction to $55 million, Justice Mandy Aylen still found the agreed-upon amount to be excessive.
Instead, Aylen sanctioned $40 million in legal fees along with disbursements and taxes for the lawyers, to be funded from public resources.
Cindy Blackstock, the individual who lodged the human rights complaint in 2007 alongside the Assembly of First Nations, which culminated in the settlement, expressed her desire that this decision serves as a signal to other class action lawyers.
“I’m glad there’s a significant reduction from the $80 million that was asked for,” said Blackstock, executive director of the First Nations Child and Family Caring Society.
“I’m very concerned that this type of extraordinary amount of legal fees could create an imbalance with the people who have undergone the harm and are receiving far less of that per capita.”
In addition to the $40 million, Aylen also authorized a potential $5 million for continuing efforts in executing the settlement agreement. The five firms set to receive these fees are Sotos LLP, Kugler Kandestin LLP, Miller Titerle + Co., Nahwegahbow Corbiere, and Fasken Martineau Dumoulin LLP.
The legal expenses will not be covered by the previously allocated over $23 billion in federal funds, approved by the Federal Court for compensating First Nations children and families, nor will it be drawn from the additional $20 billion designated by Ottawa for the long-term reform of First Nations child and family services.
As per the settlement agreement between the lawyers and Ottawa, over 300,000 First Nations individuals will each receive substantial sums because of the federal government’s chronic and intentional underfunding of child and family services on reserves and in the Yukon. The agreement is rooted in a 2016 ruling from the Canadian Human Rights Tribunal, which determined that Canada engaged in willful and reckless discrimination against First Nations children and families by neglecting to provide them with the same standard of child and family services available elsewhere.
In 2019, the tribunal mandated that Canada pay the highest human rights penalty of $40,000 per First Nations child and family member. The tribunal asserted that the government’s actions incentivized foster care systems to relocate First Nations children away from their communities, cultures, and families.
Referred to as the “millennium scoop,” this practice resulted in more Indigenous children being placed in foster care than the number sent to residential schools during their zenith.
Canada faced three class action lawsuits, with two merging into a single case. In her ruling, Aylen determined that the class actions did not break new ground and instead leaned heavily on the proceedings and decisions of the human rights tribunal.
Aylen also expressed concern about the insufficient detail provided by the lawyers to substantiate their requested billing. Additionally, she reprimanded Ottawa for not pushing the matter further.
The five legal firms documented around 24,000 billable hours, with hourly rates varying between $180 and $975.
“Class actions cannot be an open-ended invitation for class counsel to docket their time without regard to productivity, knowing that there is no client who will scrutinize their dockets in the same manner that a traditional paying client would do,” she wrote.
“The use of inflated hourly rates, which has the effect of artificially increasing the amount of actual fees, is a further mischief to which this court is alert and it will not be tolerated.”
