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Lawyers’ fees under scrutiny

|Written By Kenneth Jackson

A small minority of lawyers representing survivors of Indian residential schools are being “unethical” by overcharging their clients and providing illegal cash payments at high interest rates before the settlements are complete, an official has warned.

The settlement process is a long and complex ordeal that includes court-ordered protections to keep lawyers from providing premature payouts to survivors who qualify and that govern how much they can charge in fees as part of the agreement for survivors of sexual and serious physical abuse.

“There appear to be a very small minority of counsel that need to be reminded of what those protections are and there appears to be an even smaller minority of counsel who may not be willing to abide by them,” says Jon Faulds, an Alberta lawyer representing many survivors.

Faulds is also part of the national administration committee composed of representatives of plaintiffs counsel and lawyers for the government, the Assembly of First Nations, and the churches involved in the operation of residential schools.

He notes his firm, Field Law, sits on the committee as a representative of the national consortium, a pan-Canadian group of counsel who act for residential school claimants.

“The vast majority of lawyers who are representing claimants in the Indian residential school process are doing so properly, responsibly, professionally, and in a way that accords to the protections that are provided,” says Faulds.

Lawyers recently came under fire from Daniel Ish, the independent assessment process chief adjudicator, when he warned about 200 lawyers, including several from Ontario, that “unethical” practices could see them forfeit all of their fees, according to a memo obtained by the Aboriginal Peoples Television Network and published Oct. 11.

“It has been brought to my attention that at least one firm has delivered cheques for compensation funds, payable to the claimant, to a third party for ‘delivery’ to the claimant,” Ish wrote in the June 13 memo.

“The claimant is then asked to endorse the cheque to the third party for services rendered in processing the IAP claim. This must certainly be an unethical practice.”

Faulds says that by prohibiting assignments, residential school survivors can’t pledge the money they’re entitled to receive in order to get something now. If they can’t pledge it, they’ll presumably be protected from lenders who charge high interest rates to people in difficult circumstances.

“The purpose of that is, I think, to prevent claimants who are entitled to receive money from being taken advantage of by people who are prepared to grant them money but charge them a rate of interest that exceeds what any reasonable person would pay,” says Faulds.

“Really, to boil it down in a nutshell, [the idea is] that any money payable under the settlement process goes to the claimants’ hands, no one else’s. That is the heart of it.”

Residential schools began in the 19th century and continued until 1996. The policy saw children taken from their homes and put into church-run schools funded by the government. The intention was to teach the children English and Christianity.

As a result, about 150,000 aboriginals were removed from their homes and communities. However, there were many problems, including sexual and physical abuse.

In 2007, the government announced a $1.9-billion package to compensate survivors. Then on June 11, 2008, Prime Minister Stephen Harper officially apologized on behalf of the federal government.

Under the agreement, lawyers are entitled to up to 15 per cent in fees on top of the settlement paid by the federal government, says Faulds. The lawyer can also apply for another 15 per cent that would come from the settlement.

All lawyer fees, however, are subject to review by the adjudicators who conduct the hearings. They have discretion to review the fees and reduce them if they think they’re excessive.

“Adjudicators use that power and discretion as a matter of routine. Virtually in every case, adjudicators will conduct a fee review in order to assure the fee is appropriate.

I think they have adopted that as a matter of policy to ensure some sort of consistency in the fees claimants are charged,” says Faulds, who adds he has heard of another lawyer in British Columbia who’s not following guidelines.

The Supreme Court of British Columbia forbade survivors from assigning money over to a third party for upfront cash, according to a 2007 decision by its late chief justice Donald Brenner.

But that didn’t stop a Winnipeg lawyer from bilking 26 clients of almost $400,000. The lawyer, who can’t be named due to Manitoba law, was disbarred in June for over-billing his clients.

The ruling didn’t entirely explain how the lawyer over-billed clients. But he did use some of that money to purchase land and apartments in Israel, according to a Winnipeg Free Press article published in May.

The lawyer “professed to be able to net $200,000 in fees over a four-month period,” the ruling reads. “However, he has negligible assets in Manitoba.

He has substantial assets in Israel which, at least in part, he acknowledges were purchased with fees generated from his residential school clients.”

The Law Society of Manitoba took control over his practice.

Any notion that lawyers would try to squeeze more money out of survivors makes Gail Gallagher sick.

She lost her mother to suicide, something she attributes directly to her mother’s time spent in a residential school.

“It took my 53-year-old mother’s life as she killed herself due to, I believe, a direct result of her residential school experience and her alcoholism,” says Gallagher, who has worked with the AFN and is now continuing her education in native studies in Alberta.

“I think what those lawyers are doing is disgusting.”

  • Residental School Surviver

    Frieda F. George
    When I first got my money, in which I told my lawyer not to call my son-in-law (home) in which they did, as they called me, to tell my lawyer asked me to call her, I got a cheque for $155.000 and out of that I received only $134.000 as my lawyer from Prince George had me sign papers I didn't really understand, on top of that my daughters husband on top of me loaning them $50.000 all in all they took $69,900
    I thought they were going to help me invest etc. but no.
    so I wasn't left with a lot of money left for me & my other 2 children, also my late husband committed suicide Nov. 1999, & before that he was in the process of beginning his residential school as he attended from age 6-15yrs of age, after his suicide, his family blamed me & took all his briefcase with information in it regarding what he was doing, etc Prince George BC
  • Jason
    Again this is were some lawyers take advantage of those that have been through alot.Are some of these lawyers after the best interests of the client. No, they are only filling thier pockets. Here is Sask the same thing is happening. My father went through a whole lot of abuse in the schools and had a lawyer that took in alot of the residential client's, this lawyer and partner got the government money for representing these clients. He called a few times and requested his file to see what was done,the excuse was that it was in Alberta. Then one day the lawyer was no longer in Sask, with no forwarding contact number. Then he got another lawyer and now he has to start the process all over from scratch. Back to the lawyer and partner in the beginning, what consequences are the lawyers gonna face? It will be nothing but they got paid. How many has this happened to?????
  • alvin
    Regulators created this situation and indeed most of the situations involving prohibitive fees for plaintiffs.
  • Terrence G.
    Were these competent adults who signed up for these financial terms? Lilkely. Perhaps lawyers should flatly refuse to make any financial arrangements with clients and refer all to third-party financial legal funders. Then the arrangement is between the client and the financial entity only. I do sympathize with victims who are forced to sign away their settlements, but this is how the unfunded obtain legal services. These cases could have all been settled for almost nothing in legal fees but the defendants chose to defend relentlessly, and some plaintiffs demand instant action rather than moving when it is opportunistic for them to have their lawyers move aggressively, an approach which is far less expensive but which often reaps larger settlements and with far lower fees. The regulator also drives up costs and lengthens the conflict such that generally only large and very expensive firms, who will bill aggressively, take victim cases on now. It wasn't always so.
  • Libby Jones
    you have NO idea what you're talking about
  • Bundle
    so if lawyers want to charge unethical interest rates... that is okay?
  • Tanya
    Nobody works for free. Why should lawyers? They are not getting paid because someone suffered, they are getting paid to help some get compensation for that suffering. They are highly skilled, highly knowledgeable people and in a free market they get paid according to the supply and demand. You rack up $50K in student loan debt, work 70 hours/week and see how little you expect to get paid for your services. This article was about a few bad apples. Every group has them, but its unfair to generalize about the whole group because of the actions of a few.
  • Libby Jones
    @ Tanya Oh they get paid alright....they get paid A LOT!
    The only part of this article I disagree with is the "small minority" As someone involved in this process, I have only seen a small minority of lawyers do the RIGHT thing. Just sayin.......
  • Bundle
    But what if your student loan was being charged an unethical interest rate to repay?
  • Joy Newman
    If what we read in the article is true, what these lawyers are doing is not right. When will they stand up for what is right and not who is right! We can all do this.
  • ron preyra
    It is unfortunately human nature that when people are able to take advantage of others they often will. When one considers the whispers of kick backs being paid to doctors, physiotherapists, tow truck drivers and others for injury referrals, "expert's" reports that at times seem devoid of scientific merit or even basic professional honesty and the relative ignorance of most claimants of the process and what is a reasonable fee it is a wonder that claimants get anything at all. Even the government seems to care very little about the well being of injured people... read the new no-fault legislation recently?
  • tom greene
    i wonder if jon faulds would look into these "healing" groups that targeted r.s.survivors money,.they wrote proposals saying they were going to help survivors ,they spent money on experimental psychology workshops and used psychoactive medicines calling it traditional healing.the people doing this were already following chuck spezanno's p.o.v. and erick gonzales so they spent most of the money on psychology of vision workshops ,very little on actual survivors. tom greene
  • denise
    I am from the sixties scoop and am astonished by the percentage of how much these lawyers are taking for our pain and suffering over years I being living and learning the white way all my life and still feel such a victim to my life any which way i see,They drive fancy cars and live in fancy homes and dine out at the expense of our pain.We have been stripped of our rights and have taken from our homes,parents, land and culture for what to be put down and smirked at and treated like we are no good to live this life. shame on these people!That live off the percentage of what pain we have endured all our lives.
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