In Nootchtai v. Nahwegahbow Corbiere Genoodmagejig Barristers and Solicitors, 2025 ONSC 6071, released on Oct. 29, Justice Fred Myers ruled that the $510-million claimed by counsel based on a partial contingency fee agreement would amount to a windfall of huge fees unrelated to the value of 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,” the judge wrote.
In June 2023, the Crown agreed to pay $10 billion to settle claims brought by Robinson Huron Treaty First Nations for breach of the 1850 Robinson Huron treaty. Under the treaty, the Crown agreed to make annual payments to the First Nations and their members in perpetuity, with the amount to increase over time as revenues from the territory grew.
However, the annuities were frozen at $4 per person for almost 150 years in what the Supreme Court described as “a mockery of the Crown’s treaty promise to the Anishinaabe of the upper Great Lakes.”
The six-member legal team for the First Nations claimed $510 million as fees under a partial contingency fee agreement.
In April 2024, the chiefs and trustees of the Robinson Huron Treaty Litigation Fund voted to approve the legal team’s proposed $510-million fee after the lawyers offered to gift back half to the fund. The legal team was subsequently paid $255 million.
Two of the 21 First Nations opposed approval of the fees.
The applicants — Gimaa (Chief) Craig Nootchtai on his own behalf, and on behalf of Atikameksheng Anishnawbek First Nation, and Ogimaa Kwe (Chief) Karen Bell and Councillor Chester Langille on their own behalf, and on behalf of Garden River First Nation — sought a review of the legal fees.
They submitted that the fees must be reduced despite approval by the fund trustees and chiefs as they were too high.
Justice Myers noted that the issue before the court was whether the $510-million fee claimed by the legal team under a 2011 partial contingency fee agreement was fair and reasonable or if it amounted to unlawful “champerty.”
Champerty is the purchase of a stake in a lawsuit without a legitimate interest in the case, and is illegal in Ontario.
Under the 2011 agreement, the six-lawyer legal team agreed to bill at 50 per cent of their normal hourly rates in exchange for a contingent success fee of 15 per cent on the first $100 million recovered and five per cent on any amount above that.
The agreement did not, however, cap the total fee and also required the First Nations to fund all disbursements.
The legal team also engaged roughly 40 other lawyers, all of whom billed the fund at their standard hourly rates.
“As a result of the leverage employed by the Legal Team, using juniors and others (including at least one Queen’s Counsel) all billing at full fees, the 50 per cent discount on the fees of the members the Legal Team did not amount to a 50 per cent discount on the cost of the litigation,” Justice Myers noted.
The court observed that the discount on the hourly rates of the legal team amounted to about a 25 per cent discount on the $23 million billed by all the lawyers working for the legal team.
“With disbursements of another $6.5 million paid by the clients, the Fund was bearing over 80 per cent of the financial load of the litigation,” the judge wrote.
The court also observed that the chiefs of the First Nations involved and their negotiating committee did not consult independent counsel about the risks and benefits of the contingency fee agreement.
Justice Myers also noted that the legal team did not suggest or insist that the fund or the chiefs obtain independent legal advice.
The judge found that the chiefs did not fully appreciate the nature of the agreement and believed that the deal was in return for the lawyers bearing 50 per cent of the projected litigation cost.
“They did not know that a percentage fee is not appropriate in a mega-fund case. There is no evidence that they knew that lawyers funding disbursements and costs were normal incidents of a contingency fee agreement,” the judge wrote.
“No one told them that the draft agreement was champertous from the outset,” he added, ruling that the agreement was not fair when it was signed.
The court observed that the lawyers who worked on the case docketed 65,000 hours over 17 years and that the legal team incurred $23 million in billable time.
Justice Myers calculated that dividing the $510,000,000 by 65,000 hours would yield an average hourly billable rate of more than $7,800 per hour, or about $3,900 per hour if the court considered $255 million as the amount claimed for legal fees.
“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 judge wrote.
The judge cited Fresco v. Canadian Imperial Bank of Commerce, 2024 ONCA 628, in which the Ontario Court of Appeal observed that lawyers charging excessive fees beyond what is fair and reasonable undermines the integrity of the legal profession.
Justice Myers noted that the amount of the settlement in the case at bar was so big that the percentage recovery guideline often used in contingency fee review must be discarded to avoid an unseemly, disproportionate, champertous windfall to the lawyers.
He highlighted that if the fee were approved, 15 of the 21 Robinson Huron First Nations would receive less from the $10-billion settlement than the six members of the legal team.
The judge also noted that class counsel who obtained a $23-billion settlement for claims brought by Indigenous survivors of day schools were granted $40 million in legal fees.
Justice Myers held that the total value of the services rendered by the legal team on a quantum meruit basis was double their full billable fees for a total of approximately $40 million, or $23 million over the $17 million in compensation the legal team had already received.
The court ordered the legal team to return $232 million of the $255 million it had been paid by the litigation fund.
“The recovery from a lawsuit, whether by settlement or judgment, belongs to the clients. Lawyers are not entitled to a percentage of the clients’ recovery amounting to a windfall of huge fees in an amount that is unrelated to value of the professional services rendered. That would be champerty,” the judge wrote.
Counsel for the respondent lawyers, Brian Gover of Stockwoods LLP, said the decision was a disappointing outcome that “echoes centuries of paternalistic attitudes to First Nations” and that his clients were contemplating an appeal.
“Ontario Superior Court Justice Fred Myers’ decision flew in the face of the litigation fund’s firm belief that the legal team should be compensated in keeping with a fee structure that had been carefully negotiated,” he told Law360 Canada in an email.
He said that the chiefs, elders and other trustees involved in the agreement were experienced negotiators who drove a hard bargain and that the decision continued a centuries-old narrative of First Nations being incapable of making informed decisions for themselves.
He also noted that the court’s emphasis on the need for independent legal advice in such cases would mean that future litigants may feel compelled to automatically seek independent counsel.
“This could damage the all-important relationship between lawyers and their clients,” he said.
Counsel for the applicants, Michael Rosenberg of McCarthy Tétrault LLP, said his clients were pleased with the decision.
“The decision is a vindication for our clients, and they are hopeful that it will allow the Robinson Huron Treaty First Nations to move forward together,” he told Law360 Canada in an email.
Alana Robert and Gregory Ringkamp of McCarthy Tétrault LLP also acted as counsel for the applicants.
Dan Goudge and Geri Angelova also acted as counsel for the respondent legal team.
If you have any information, story ideas or news tips for Law360 Canada on business-related law and litigation, including class actions, please contact Karunjit Singh at karunjit.singh@lexisnexis.ca or 905-415-5859.