Thirteen people who resigned from the Alberta Law Foundation three months ago filed a $2-million lawsuit against their former employer this week.

The breach of contract lawsuit alleges that after the group resigned en-masse in January, the Alberta Law Foundation (ALF) changed the rules that would have paid them out between one and two years of their annual salary.

At the heart of the conflict is an allegation that the provincial government has taken control of the organization, which is funded by interest revenue from Alberta lawyers’ pooled trust accounts, where client funds are held. 

ALF funds legal non-profit work in Alberta and awarded 126 grants totalling $65.8 million in the 2024-25 fiscal year. According to its 2025 annual report, ALF had more than $280 million in reserves.

The foundation first clashed with the provincial government in March 2025 when the province announced all funding commitments over $250,000 would be approved by the justice minister as part of measures proposed in Bill 39, the Financial Statutes Amendment Act. 

At the time, Byron Chan, ALF’s then-executive director and one of the plaintiffs, said the government was meddling with which groups received grants from its funds and had already rejected or cut $10 million in funding to Alberta non-profits that had been approved by ALF’s board. 

‘Change of control’

That same month, the ALF board unanimously approved a change in its policy that entitled employees to compensation of between one and two times their annual base salary, depending on the duration of their employment, if there were to be a “change of control” at the organization, according to the statement of claim.

If the minister gained the power over the majority of the ALF board or if ALF were no longer an arm’s-length organization from the government, the lump-sum compensation would be paid out in a case where an employee wished to resign.

That happened, according to the plaintiffs, in December when Bill 14 gave the justice minister the power to dictate and write bylaws for the Alberta Law Foundation. 

“As a result of Bill 14, ALF was no longer an arm’s-length organization independent from the Government … and the minister obtained the power to appoint a majority of the ALF Board,” the lawsuit argues. 

ALF ‘refusing to pay’

On Jan. 5, 2026, the 13 staff members terminated their employment with two weeks’ notice.

Nine days later, four people from Optimus SBR, a management consulting firm hired by the ALF board, entered the foundation’s offices and announced the group was “relieved of their duties effective immediately.”

The plaintiffs say they received letters from ALF’s legal counsel that “ALF was refusing to pay each of the plaintiffs the separation package to which they were entitled.”

“ALF further made unfounded allegations that the plaintiffs appeared to be involved in an unlawful conspiracy to harm ALF and that the Change of Control Policy seemed to be neither valid nor applicable,” reads the lawsuit.

2025 board gone

The former employees argue they relied on ALF’s representations that they’d be entitled to the payout when they gave notice.

The lawsuit also points out that by Jan. 14, 2026, all seven board directors who’d signed off on the new policy in March 2025 had either been removed from or had resigned from the ALF Board.

The board includes three directors appointed by the justice minister, including the new chair, Shamsher Kothari. The board also includes two appointees from the law society and two chosen by the board itself.

In a brief statement provided to CBC News, Kothari confirmed he had received the statement of claim.

“We look forward to submitting our statement of defence in the days ahead,” said Kothari. 

None of the claims made in the lawsuit have been proven in court.