By Jorge Barrera
APTN National News
A boutique Calgary law firm is quietly promoting a ground-breaking private investment fund to backstop cash-strapped First Nations sitting on lucrative land claims.
Ron Maurice, a senior partner with Maurice Law, said the proposed First Nation Land Claims Fund would meet an immediate demand by providing an alternate route to Fist Nations that have been forced to stall their land claim because they lack the dollars to pay research and legal fees.
It’s estimated that only about 5 per cent of First Nations involved in land claims have the ability to finance their litigation without government assistance.
“I would be surprised if the uptake from First Nations wouldn’t be overwhelming,” said Maurice, in an interview with APTN National News. “This would at least be able to get them out of the gate and hopefully moving quickly toward resolution. Most First Nations will see the upside of this, especially if the risks for them are negligible.”
The self-sustaining land claims fund would focus on specific claims which primarily stem from historical grievances.
Bands with limited financial resources face a myriad of obstacles in trying to settle their claims and are often forced to wait years for the federal government to wade through its backlog to decide whether it fits under the specific claims policy and is eligible for a negotiated settlement.
To speed up the process, bands either need to obtain a bank loan to litigate or enter into contingency fee agreements with a law firm.
Both options bring problems.
“Understandably, financial institutions are generally reluctant to lend money to First nations in view of the uncertainty that is an inherent part of any litigation,” says an outline of the fund’s proposal document.
Few law firms also “have sufficient resources to take on the risk of pursuing a large, complex and expensive legal action that could last for many years,” says the proposal document.
“Even if the law firm does take the matter on a contingency fee basis, the First Nations will likely have to pay a substantial portion of any settlement or judgement to the firm if they are successful,” says the document.
The fund would help circumvent that by essentially underwriting bank loans and providing legal services at reduced rates.
Under the proposed fund model, a First Nations would be required to pay back borrowed money only in the event of a successful settlement.
Maurice said the initial aim of the fund is to finance claims that can be settled between three to five years and have a minimum potential settlement award of $2 million.
The fund would also seek claims that have either a high probability of achieving a negotiated settlement or fall under the mandate of the Specific Claims Tribunal.
The tribunal was created in 2007 to cut into the backlog of specific claims. It has been mandated to handle claims of $150 million or less.
If successful, the band would use its settlement to pay back the bank loan and an equivalent amount to the fund. The band would also be charged between three to five per cent in success fees.
Maurice said his firm would also slash its legal fees by up to 50 per cent for work on a band’s claim, reducing the incentive for a prolonged process.
The fund needs about $5 million to get started on its first five years of operation. The fund proposal also identified an initial group of five First Nations land claims that have a high probability of success and a total settlement purse ranging from about $340 million to $455 million.
Maurice said the hope is to keep claims out of the court system
The Cree-Metis lawyer and his firm appear to have extensive experience in land claims litigation. Maurice Law sells itself as a “boutique” firm that specializes in Aboriginal and treaty rights.
In the 1990s, Maurice worked as commission counsel to the Indian Claims Commission and dealt with 66 public inquiries into specific claims across the country.
In private practice, he was involved in negotiating a $82.4 million settlement for the Siksika Nation’s acreage discrepancy claim in February 2003.
The claim was based on Canada’s selling of 12,500 acres of land in 1910 without obtaining a valid surrender.
Maurice said the idea for the fund goes back about seven years when his firm was representing a band that ran out of money midway through extensive litigation.
“We thought we needed to find some way to secure bank financing and overcome the problems that banks see with lending money to First Nations because of the uncertainty of the outcome and timing,” he said. “The thinking was that if we could put together enough claims so there was a spread of the risk we could go to an insurer to provide an insurance policy to underwrite the litigation so we could obtain a line of credit.”
The concept evolved from there and now Maurice has been shopping the idea around to investors in Canada and overseas.
And while there is some interest in the fund at home, the strongest uptake has been from foreign investors.
“Oddly enough there may be more empathy for First Nations overseas than domestically,” said Maurice.
A private equity fund in the U.K. is seriously looking at investing, said Maurice, who is planning to travel there within the next two weeks.
“I am hopeful we will be able to have a firm commitment from an equity fund,” said Maurice. “It may be the frontrunner, though our associates here in Canada have been looking at it very seriously.”
Maurice has also been in discussions with Canadian financial institutions on the issue and he’s received indications some banks would be willing to provide loans with the fund, acting as a guarantee, in place.
With an estimated 15 per cent per year rate of return, Maurice said the fund is looking for special types of investors with a sense of social responsibility.
“There is an altruistic type of bent to this and we are hoping to get the right type of investment,” he said. “Maybe a corporation with a social corporate responsibility mandate that is looking for a return on investment, but prepared to advance risk money to try to help First Nations realize the potential of their land claims.”
There are about 1,308 land claims from 650 First Nations currently filed under the federal government`s special claims policy and another 74 are before the courts.
Since 1973, 331 specific claims have been resolved through negotiated settlements and 272 through other means. The average settlement value is about $6.5 million and payouts have ranged from $15,000 to $125 million.
Between 1997 and 2006, 191 specific claims have reached settlement with a total payout of over $1 billion.
Indian Affairs accepts about 70 per cent of all specific claims for negotiation on the grounds that they constitute a valid claim against the Crown, the First Nations Land Claims fund proposal states.