Lawyer’s fees of $510M in $10B treaty settlement unreasonable, judge rules

A judge has ruled the legal team for the Robinson Huron Treaty litigation team is entitled to $40 million in fees, not $510 million.

A Superior Court judge has ruled that the legal team that secured a $10 billion settlement for First Nations under the Robinson Huron Treaty Litigation Fund is entitled to $40 million in fees, not $510 million.

The $510 million was based on a five per cent contingency fee agreed to by the sides involved in the case.

The Robinson Huron Treaty Litigation Fund is a trust that represents 21 participating First Nations in northern Ontario with about 40,000 members who are beneficiaries under the Robinson Huron Treaty.

In 1850, the First Nations ceded territories in exchange for annual payments that were supposed to be increased on a regular basis. However, the payments have been frozen at $4 per person since 1875, despite the vast mineral and other resources that have been extracted from the area.

In a case that took 17 years to make its way through the court system, the Supreme Court of Canada ruled in the First Nations’ favour in 2024, leading to the $10 billion settlement.

But some of the First Nations were unhappy that the legal team was getting half a billion dollars for its services and went to court to try and have the fees reduced.

By that time, $255 million had already been paid. In a decision released Oct. 28, Superior Court Justice Frederick L. Myers reduced the fee to a total of $40 million.

Myers said while the legal team deserves to be well paid, $510 million is excessive.

“The legal team that acted for the fund enjoyed stunning success,” he wrote in his decision.

“Through its sustained, creative and excellent efforts over some 17 years, the legal team engineered a settlement that is as historic as it is transformative to the beneficiary First Nations and their members.”

However, Myers ruled that lawyers are not allowed “to extract fees from clients that exceed what is fair and reasonable for licensed professionals in the circumstances.”

In this case, the fee amounts to a legal term known as “champerty.”

“Champerty is roughly described as buying a piece of a lawsuit without a legitimate interest in the case,” the decision said.

“Champerty has been forbidden in England since the Middle Ages. It remains illegal in Ontario.”

While many cases are conducted on the basis of contingency fees as high as 30 per cent, lawyers are not entitled “to a windfall of huge fees in an amount that is unrelated to the value of the professional services rendered.”

“A lawyer’s professional retainer is not a lottery ticket offering a bonus prize of generational wealth to the lawyers if the clients hit the jackpot and win a mega-award,” Myers wrote.

While counsel for the legal team suggested they would accept $255 million they had already received, Myers wrote that amount was also excessive.

“Dividing the $510 million claimed by 65,000 hours would yield an average hourly billable rate of more than $7,800 per hour. Even looking at $255 million, the average billing rate would be around $3,900 per hour,” he wrote.

“Those rates would be a windfall that bear no relationship at all to the chargeable value of legal services in Ontario, whether in 2007 or today.”

The largest fees ever awarded were in the 2023 Moushoom v. Canada, a $23 billion residential schools settlement in which the legal team received $40 million.

“Yet even in that monster-of-all-cases, the court capped fees at $40 million,” Myers wrote.

He settled on the $40 million figure, with $23 million still to be paid. Myers directed the legal team to return $232 million from what they have already received.

He directed the remainder to be dealt with as settlement proceeds. Myers also suggested that the entire $510 million be placed into a segregated trust account “for a period of time pending a motion for a stay pending appeal being brought in the appropriate appellate court.”

Read the full decision here.