Lawyers’ fees under scrutiny

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.”

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