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Lawyer’s contingency fee sparks controversy

|Written By Michael McKiernan

A contingency-fee agreement that will see a northern Ontario First Nation band pay its law firm almost $7 million has raised the ire of a prominent community member who believes the amount is excessive.

Lac Seul First Nation won a $27-million settlement from the federal government for a century-old dispute over timber harvesting rights, but under an agreement reached eight years ago, Kenora, Ont., firm Keshen & Major will take a 25-per-cent cut totalling $6.75 million.

At a recent public meeting to discuss the government’s offer, Garnet Angeconeb, whose father was chief of the Lac Seul nation in the 1970s, told band lawyer Will Major that he was a “rich man on the backs of poor Indians.”

But Douglas Keshen, Major’s partner at the firm, is defending the fee and notes the band was never asked to pay anything towards the case during the last eight years. His firm absorbed all fees and disbursements, including expert reports and legal opinions.

“Absolutely, the agreement was fair,” he tells Law Times. “When it went to trial last year, it was very intense and very complex and it was contested by Canada all the way. I know the band was very pleased with the result.”

But Angeconeb is vowing to continue the fight despite the band’s overwhelming ratification of the settlement on Sept. 9. With 735 members of the band’s 3,000-strong population voting, the settlement sailed through with 96-per-cent backing. More than 2,100 members, on and off reserve, were eligible to vote.

According to Angeconeb, many band members remain concerned about the size of the legal fees but were unwilling to risk the offer on the table, which the government had given them until October to accept, for the sake of the issue.

“It’s not thousands we’re talking about here; it’s millions of dollars,” he tells Law Times. “There’s many concerned that 25 per cent is too high and that the money would be better used going towards addressing some of the deep-rooted social concerns of the community.”

Angeconeb notes he has always supported the settlement, which he believes will be good for the First Nation in the long term. Nevertheless, he feels ratification doesn’t close the door to a challenge.

“I feel that 25 per cent is way out of range and it needs to be reviewed to look at what is fair for the First Nation,” he says, adding he has already looked into the band’s options.

“The band should seek independent legal counsel to take a look at the contingency fee and possibly file documents to have the Superior Court review the arrangement.”

Angeconeb will meet later this month with the chief and council to ask them to pass a resolution that would reopen the contingency-fee agreement.

In an open letter to band members, Chief Clifford Bull defended the size of the payment, noting Lac Seul had no money to pay for fees and disbursements when it launched the case in 2002 and, as a result, preferred to give itself a safety net in the event of defeat.   

“The risk undertaken by our legal team to carry the file for eight years was enormous,” he wrote. “If we lost the case, then the law firm would have had no way of recovering the amounts they paid out over the last eight years.”

But Angeconeb claims an earlier case involving the Long Lake First Nation near Thunder Bay, Ont., that settled around 2002 was similar enough to show the law firm there was a very good chance the Lac Seul claim would be successful.

“There was a case won with almost identical issues,” he says. “That would tell me that my risks were minimized. They would have assessed that, and 25 per cent was the figure they came up with knowing that the chances were they were heading for a nice windfall.”

Lac Seul’s claim dates back to 1919, when it surrendered the timber on its reserve to the government so it could handle the harvesting and sale of the product.

Following a two-month trial in 2009, Federal Court Justice John O’Keefe issued a judgment in which he agreed with the band that the federal government had breached its fiduciary duty to Lac Seul in its dealings with timber contractors.

The judge found contracts weren’t re-tendered, bonuses weren’t collected, and the Crown had failed to notify the First Nation when the price of timber or the terms of the agreements changed.

“The Crown did not act in a prudent manner and in the best interests of the band,” O’Keefe wrote.

Rather than imposing a settlement, O’Keefe asked the parties to enter into negotiations that resulted in the $27-million offer in August. Lac Seul had asked for $29 million.

Angeconeb says some of the same players were involved in both the Lac Seul and Long Lake matters and that the bands used the same historical research team to build their cases.

“They weren’t completely reinventing the wheel,” he says.

But Keshen dismisses the comparison between the two cases, saying the Long Lake matter settled out of court and had no bearing on Lac Seul.

“Our case was contested and it was incredibly complex,” he says. “It was as a result of the judgment that the settlement was reached.”

Lac Seul’s elections for council take place later this month, after which officials will get to work on distributing the funds from the government. Angeconeb says many people expect individual payouts of around $1,500, as well as joint investments on the part of the whole band.

“I find a little bit of danger in that. Having watched the payouts that went out with the residential schools settlement, many people did well by that, but others did not.”

  • Phil Clement
    I suppose it depends on your point of view. Most of the comments are from lawyers ....... defending other lawyers. Go figure - thick as thieves they say.
  • Chief\'s Open Letter

    LSFN \Indian\ band member
    Dear members of Lac Seul First Nation,

    As chief of Lac Seul First Nation, I wish to respond in writing to the recent open letter addressed to me in a couple of newspapers.

    I think it is safe to say that we all can agree the offer from Canada to the First Nation of $27 million is very good. After careful thought, consideration, and completion of the information sessions to the membership, I am convinced the 75 per cent / 25 per cent contingency arrangements we have with our legal team is fair. It is a win/win situation.

    When chief and council asked our law firm in 2002 to take on the case, options were discussed including the Nation paying legal fees based on an hourly rate and for our First Nation to pay as required the Reports of Experts. We did not have funds back then and chose the contingency option. The risk undertaken by our legal team to carry the file for eight years was enormous. If we lost the case, then the law firm would have had no way of recovering the amounts they paid out over the last eight years, and Lac Seul would have beared no costs. We were told by others that 30-45 per cent was a common contingency arrangement and ours was 25 per cent.

    There was a team of three lawyers who worked on the file. They incurred a huge debt over the eight years as they had to pay out other lawyers and experts who advised on specific areas of the case, including consultants, reports and studies completed, staff students as well as money to pay for band members and Elders when they assisted with the preparation for the trial.

    There is no Long Lac precedent as their claim was negotiated in an out of court settlement in Canada’s Specific Claims process. The details of that case are confidential and have no relevance to our case.

    Unlike the treaties, Lac Seul leadership will honour our contingency arrangement we have with our legal team. I have talked with members and we have concluded Information Sessions in our communities of Lac Seul (Kejick Bay, Whitefish Bay, and Frenchman’s Head). As well, we had Information Sessions in Sioux Lookout, Red Lake, Thunder Bay and Winnipeg.

    These sessions were very well attended and excellent questions were asked and recorded. Leadership did not hear a resounding ‘no’ to Canada’s offer, or the 25 per cent contingency fee for our lawyers. On the contrary, the members congratulated and applauded the leadership and our legal team for doing a good job in fighting for Justice.

    In Kejick Bay, an Elder stood up and said we should not fight over the money and everyone agreed that those were very wise words of wisdom. I just want to remind members that WE do not have the money in yet and this will depend on how the people vote in the referendum in September.

    Canada has given the First Nation only until October 21 for the offer to remain on the table. After that, if not successful, the judge will decide the matter and it will go back to court.

    Just like other communities, Lac Seul has had its share of grief and pain. We the people that live on the reserve experience this on a daily basis. We choose to live in our community because we are proud of being Anishnawbe and our accomplishments so far to make this a better community to live in. We will be a healthy and rich community again but it will take time to heal from all the pain and suffering. We have to pray to the Creator for help and guidance. We have to believe in our youth and support them as best we can so they can become the next best leaders for our community.

    During our crisis last spring, we appreciated the outpouring of support from people from all over who came to Lac Seul in our moment of darkness. Your love and support gave us strength and courage to get us back on our feet and to stand proud again. Thank you, to each and every one of you.

    I encourage everyone to come out and vote in September on Canada’s offer. I have my questions, as we all do, and if I ignored yours please forgive me. I am only trying to do my best for you in this demanding position as chief.

    May God’s Peace and Love be with you all.

    Respectfully submitted by,

    Chief Clifford Bull
    Lac Seul First Nation
  • Thanks alot
    U People talk about helping band members get a education and to get a career or a good job, I am a band member and i did ask for help to get a career. People from the band office Ignored me and did not return my call. What do u have to be related to the chief or band council's or a family member to get help.
  • Same Standards

    LSFN \Indian\ Band Member
    I believe LSFN leadership is not disputing the contingency agreement, it is a concerned LSFN member. The Chief has responded to the open letter and can be found on line either at the Sioux Bulletin or Wawatay's websites. First Nations across Canada are only looking for the same standard as others, we are fighting for the same standard of living, same standard of health care and education, same standard of compensation, same business opportunities... First Nations are also looking for recognition of our treaty rights, entitlements, for the honour of the crown...
  • 99th Percentile
    Best of luck to the next First Nations band that wants to retain a law firm on a contingency basis.
  • lawyer

    moe bardos, vancouver
    This fee should not be re-negotiated after the fact. Whereas it does look like a windfall, it could also have been 25% of nothing on top of the eight years of work, sweat and actual expense. One should just go back eight years and uncover the reasons why 25% was deemed to be right in the first place.
  • Average
    If the Indians didn't want to pay the 25% contingency fee then they should have never signed the agreement. The issue was decided by the Indian band 8 years ago. Why would Indians not be held to the same standard as others?
  • Give me a break

    Advocate of Advokat
    @ Advokat: You're bang on, and frankly I'm not sure how 50% of the people that have read your comment can disagree with you. It sounds like the law firm in this case was extremely careful about being open about the retainer and inclusive during the ratification process. Perhaps Mr. Angeconeb needs to realize a couple things before screaming foul on behalf of the Lac Seul Nation. One, the $27 million settlement likely would not have been possible without the dedication and hard work of its lawyer(s). I admit I don't know anything about this particular firm (or lawyer), but often the firms that take these complex title/treaty cases for first nations are often not the large national firms but smaller boutiques, and committing to a file of this magnitude for 8 years on a contigency basis can be a huge risk to the viability of the firm, particularly considering the resources it times up while the firm waits for the final result. Two, I'm certain that the Lac Seul nation carefully considered the NET settlement when opting to ratify the government's proposal. The implication that the firm should now be estopped from taking its negotiated fee after 8 years of hard work because the band felt "pressured" to accept a $27 million settlement is either disingenuous or dim-witted, but either way it's ridiculous. Perhaps Mr. Angeconeb can find some solace in the fact that the remaining $20 million may just actually be sufficient to "[address] some of the deep-rooted social concerns of the community”, assuming that is in fact his ultimate motivation.
  • Reasonableness is in the Eye of the Risk Taker

    I agree with Advokat. The law firm carried the case for 8 years with no certainty as to whether they would win or lose. The fee was negotiated by both parties in good faith and each took a risk: the law firm took the risk that they would put 8 years of work and not know whether they would recover their time and their disbursements and the band took the risk that if they won, they would have to pay out 25% of their winnings. I find it offensive that Mr. Angeconeb thinks that these lawyers are creating an "aboriginal industry" when, without these lawyers, there would never have been such a large settlement. Furthermore, if this fee arrangement is re-opened, I can easily see law firms refusing to do any more work on a contingency basis: why bother negotiating a contingency fee if what you negotiate can be re-negotiated after a win. What if the lawyers had lost: should they be able to successfully re-open their contingency arrangement and claim they should be paid for all their work over the past 8 years and their disbursements?
  • Northstar

    Garnet Angeconeb
    The concern about the high contingency fee was raised well over a year ago by band members. In this case, the Chief did absolutely nothing to negotiate a resonable fee. It seems that the "aboriginal industry" is alive and well for some people as in this case.
  • Band should honour the agreement

    Twenty-five percent is hardly unreasonable. The firm carried the case for 8 years, with no guarantee that it would ever be compensated for its work.

    If the case was such an easy one to win (as claimed by Angeconeb), then I have to question why the band entered a contingency arrangement in the first place. Personally, I do not believe it was an easy case - there are NO sure wins. It's pretty easy to make a claim that the case was a sure thing AFTER the settlement has been reached.
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