The Department of Justice loses almost a third of lawsuits at a taxpayers’ cost in legal fees averaging more than $200 million a year, says a newly-released audit. Of cases settled out of court, 44 percent were paid out just before trial.
“Stakeholders believe Justice Canada could engage in forms of dispute resolution more often,” said an Evaluation Of Litigation Services. Sixteen percent of federal lawyers interviewed said the department “never or does not often use these methods and that substantial improvements in this area are needed.” Another 27 percent of lawyers said “at least some improvement is needed”.
Auditors examined tens of thousands of lawsuits managed by the department over a five-year period from 2015 to 2019. Costs to taxpayers of legal fees averaged $222 million a year not including the expense of settlements and court awards. The Government of Canada last year paid out $405.9 million in settlements and court awards to successful litigants.
Over the period a total 58,045 cases never went to trial and were either dismissed outright or settled. “There may be room for improvement in the case of certain dispute resolution methods such as mediation, arbitration and neutral evaluation which can be used to avoid lengthy court trials,” said Evaluation. The report noted “about half of files are settled” after federal lawyers had billed thousands of hours in costs, “which means that substantial resources have been devoted to the file”.
“Justice Canada is spending more hours on files with higher risk and complexity,” said the report. Auditors estimated 31 percent of cases were settled or lost at trial.
“Overall the expectation is that demand will continue to increase for litigation services based on a number of factors including an increase in class action litigation consistent with trends seen across our society,” said Evaluation. The department handles an estimated 30,000 cases a year.
Federal departments most often sued are the Canada Revenue Agency, Department of Immigration and the Department of Crown-Indigenous Relations. Immigration cases had declined since 2014 with a larger number of complaints resolved by the Immigration and Refugee Board instead of Federal Court.
“Counsel across Justice Canada are required to assess legal risk and complexity on their files,” wrote auditors. “These assessments are an important method for the department to communicate with clients about the work it is undertaking for them in a consistent and coherent way so that clients have a clear understanding of the legal risk and complexity of their litigation files.”
Federal lawyers bill an average 1.29 million hours each year, by official estimate. Cabinet in 2016 struck a committee to review civil litigation. The committee never issued any public findings.