A Federal Court judge wants input by the end of the month into whether he has the power to decide how much the government should pay lawyers who successfully pursued an unprecedented lawsuit against Canada for the loss of identity suffered by victims of the ’60s Scoop.
The request by Judge Michael Phelan to the lawyers involved comes after Justice Edward Belobaba, in a separate but parallel proceeding in Ontario Superior Court, threw a legal grenade into the Scoop class-action settlement by decrying the $75 million Canada had agreed to pay in legal costs as too rich by half.
In a scathing decision in June in which he opened up the larger question of how class-action lawyers are compensated, Belobaba also railed at part of the deal under which lawyers who acted in Federal Court would collect half the fee total – $37.5 million – while the other half would go to the lawyers who had acted in Superior Court.
The lawyers who had spent years fighting the landmark case in Superior Court agreed to allow Belobaba to deal with the fee issue separately. That paved the way for his final approval and implementation of the hard-fought Scoop settlement under which survivors are to be paid up to $50,000 each.
The lawyers in the Federal Court action, however, made no such concession. They maintained, and still do, that Federal Court Judge Michel Shore, who was handling the matter, had signed off on the settlement on May 11, including the fee arrangement he called fair and reasonable. They nevertheless went back to Federal Court for one more judicial sign-off in light of the change on the Ontario end of the settlement.
On Aug. 2, Phelan, who took over the case from Shore, signed an order under which the lawyers in Federal Court would get their $37.5 million.
However, the following day, after Belobaba had received a copy of the order, Phelan sent a note to the Federal Court parties in which he said his approval applied to the Scoop agreement “other than fees.”
Almost a week later, Phelan questioned whether he could even rule on the fee issue.
“In light of Justice Shore’s decision approving fees, what jurisdiction does the court have to consider the issue?” Phelan wrote.
In response, lawyer Celeste Poltak with Koskie Minsky in Toronto wrote Phelan to say there never was any new request for the judge to rule on the fees because “the amount was already approved by Justice Shore and Your Honour.”
The letter goes on to point out that no one had appealed Shore’s order and, as a result, the fee issue had been “finally disposed of.”
Nevertheless, in a case conference call Thursday, Phelan again asked for submissions before Aug. 31 on his authority to deal with the fee issue, and promised to render a decision within a week or so of that date, said Kirk Baert, another lawyer involved in the case.
In the interim, the lawyers acting in Superior Court – Jeffery Wilson and Morris Cooper – are waiting to see whether their $37.5 million will materialize. They declined to comment on the latest twist but had previously said it would be grossly unfair for them to have to take home less than their Federal Court counterparts given Belobaba’s criticism.
In his decision in June, Belobaba was effusive in praising Wilson, whose small firm took on “enormous” risk by filing the case in 2009 and then put in millions of dollars in time without any guarantee of success.
“Bluntly put, this is as close a case of class counsel ‘betting the firm’ as I have seen,” Belobaba wrote.
At the same time, the judge slammed “opportunistic” class-action lawyers who had acted in Federal Court, saying he was “stunned” they had admitted to collecting $10 million in fees for essentially having done not much at all.
In all, Belobaba said, the total legal bill should have been around $37.5 million – half what was agreed to – of which the Federal Court lawyers deserved no more than $12.5 million.
It now remains to be seen whether Phelan makes any changes to the fees and what Belobaba will decide regardless of what happens in Federal Court.