Lena Diab says her department has been in contact with a lawyer representing about 150 former residents of the Nova Scotia Home for Colored Children who allege years of sexual, physical and psychological abuse by staff over a 50-year period up until the 1980s.
Those allegations have not been tested in court.
Diab says the matter is sensitive and should only be taken to court as a last resort.
Premier Stephen McNeil has not said how much the provincial government is willing to provide in a settlement.
He has promised to hold a full public inquiry into the alleged abuse at the home.