Conflicting court views on legal fees leave ’60s Scoop lawyers in limbo

TORONTO — Class-action lawyers who secured a landmark $750-million compensation deal for Indigenous victims of the ’60s Scoop have been left in fee limbo amid conflicting views as to how much they deserve.

Under the settlement, which required separate approvals from both Federal Court and an Ontario court, Ottawa agreed to pay $75 million to the law firms involved.

The lawyers further agreed to split the fees 50-50 between the two groups — one group comprising the Toronto lawyers who began the case in Superior Court in 2009, the other comprising three firms who pursued their action through Federal Court.

In June, Federal Court Judge Michel Shore approved the $37.5 million earmarked for the lawyers in his court. The amount was “fair and reasonable” and amounted to less than 10 per cent of the overall global payment, said Shore, who had helped mediate settlement discussions.

Ontario Superior Court Justice Edward Belobaba, however, took a much dimmer view of the fee deal.

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He delivered a blistering indictment of the agreement, calling $75 million in fees rich beyond reasonable and the system for compensating class-action lawyers broken. He also railed at the split, saying the Federal Court lawyers simply didn’t deserve anywhere near half the total, or $37.5 million.

“This decision was a bolt of lightning on this topic,” said Kirk Baert, who represents one of the three groups of Federal Court lawyers.

Belobaba did sign off on the class-action settlement, but only after the lawyers on the Ontario end agreed the fee issue would be resolved separately. The Federal Court lawyers, however, balked at re-opening the arrangement.

“Why would class counsel, after the bargain has been struck and after we’ve lost all our leverage by going for a settlement approval, agree to take less?” Baert said. “The answer is: We’re not going to.”

Still, in light of the change to the Ontario deal, the national lawyers headed back to Federal Court to again secure approval for their end of the class action.

As Shore had done previously, Federal Court Judge Michael Phelan signed an order on Aug. 2, with the agreement of the parties involved, approving both the settlement and $37.5 million in fees for the lawyers in his court.

According to one source who asked not to be named given the sensitivity of the matter, Belobaba had expected a full hearing in Federal Court on the lawyer fees. After receiving Phelan’s order on Aug. 3, the source said Belobaba began asking for details about what Phelan’s decision had been based on.

Days later, Phelan wrote the Federal Court parties to ask for “submissions on the current motion for approval of fees.” Two days later, he further wrote that nothing in his order “should be taken as either explicitly or implied approval of counsel’s fees.”

“His directions have left a little bit of confusion,” Baert said. “(But) these fees have now been approved twice. It’s done.”

A telephone conference with Phelan and the lawyers involved aimed at clarifying the situation is set for Thursday.

Belobaba appears to be awaiting the outcome of those discussions before deciding how much the Ontario lawyers deserve.

Morris Cooper, who along with Toronto lawyer Jeffery Wilson was instrumental in reaching a settlement in the Ontario case, said Belobaba should accept that the national lawyers have been awarded $37.5 million and approve the same amount for the Ontario group.

“I’m hopeful he will conclude that we shouldn’t be penalized if he’s dissatisfied with how the Federal Court has dealt with it,” Cooper said. “That would be grossly unfair in our view based on his own findings that we were the ones who did everything and deserve at least twice as much as them.”

Baert, who called Belobaba’s views “mystifying,” said it would be up to the legislature or appeal courts to make any changes to how class-action lawyers are compensated. The judge’s view that fees should be calculated differently for settlements over $100 million makes no sense, Baert said.

“Class actions don’t happen in a vacuum,” Baert said. “Law firms bring them and they pay for them. So when they do their jobs, they should get paid and they should get paid what the defendant agreed to pay.”

The fee issue has no bearing on how much will be paid to victims of the ’60s Scoop — Indigenous children who lost their cultural heritage after being taken from their homes and placed with non-Indigenous families. Each will receive between $25,000 and $50,000, depending on how many file claims.

Colin Perkel, The Canadian Press