One of Western Canada’s largest law firms has petitioned Ottawa to legislate “unfair and unreasonable” legal fees that it says some rival firms are charging First Nations involved in historic claims against the government.
In June, two lawyers from MLT Aikins, which has more than 300 lawyers across Western Canada, wrote to then-Crown-Indigenous Relations Minister Marc Miller asking him to introduce federal legislation to prevent lawyers from charging First Nations “legal fees that in our view are out of proportion with typical market rates in other areas of law.”
In the six-page letter dated June 26 and obtained by The Globe and Mail, Sonia Eggerman and Josh Morrison cited several examples of law firms using contingency fees – in which lawyers agree to be paid only if they win – to earn tens of millions of dollars from settlements brokered with the federal government.
They argue that Canada has a fiduciary responsibility to protect First Nations from “unfair and unreasonable legal fees.”
“Our concern is that, without regulation that at least ensures that First Nations are fully informed of their rights and options before making a decision to agree to such fees, many hundreds of millions of dollars intended to help First Nations overcome historic wrongs will not reach them or will reach them only after prolonged litigation,” the letter states.
A spokeswoman from the minister’s office told The Globe in a statement that the government will not be legislating fees.
“While we encourage fair and reasonable pricing, lawyer fees aren’t federally regulated and any intervention on our part could be a conflict of interest given the Crown’s role as a party to litigation,” said Aissatou Diop. “The issue of potential unreasonable fee processes is best raised with the appropriate provinces and professional associations who regulate firms.”
Ms. Eggerman and Mr. Morrison focus primarily on cases filed as part of the federal government’s specific claims process, whereby First Nations can seek compensation for the Crown’s historical mismanagement of First Nations assets. Claims are submitted directly to Crown-Indigenous Relations and Northern Affairs Canada and can be adjudicated by a tribunal rather than the courts.
Last year, in one of its largest-ever specific claims settlements, Ottawa paid $1.3-billion in compensation to Siksika Nation in Alberta for illegally appropriating 115,000 acres of reserve land in 1910.
In the coming 18 to 24 months, the federal government is expected to settle dozens of claims worth hundreds of millions of dollars for broken agricultural promises made under treaties 4, 5 and 6. Signed between 1874 and 1876, the treaties pledged to give First Nations farming implements, tools and livestock to hasten a transition to an agricultural economy. Most of those promises were never honoured.
With known contingency fees in this area of law starting at around 3 per cent and going as high as 35 per cent, some law firms could earn tens of millions of dollars for relatively straightforward claims, according to some lawyers.
Donald Worme, a founding member of the Indigenous Bar Association and former lead counsel for the Truth and Reconciliation Commission, said such bills are disproportionate to the risk and complexity of the agricultural benefits cases. “I think it’s shameful,” he said. “I think it’s a scar on the profession.”
Popular among personal injury lawyers, contingency fees shift much of the risk of financing litigation from the client to the law firm. The Canadian Bar Association says contingency fee arrangements “can be an important tool for increasing access to justice.” While First Nations can access federal loans of as much as $100,000 a year for legal fees related to specific claims, they often need more.
“Most First Nations cannot afford the very heavy cost of litigation, and law firms would not take these matters on if there is no ability to be paid as they go or on a contingency basis,” said Cree-Métis lawyer Ron Maurice, the founder of Maurice Law, in an e-mail. “Who would assume that risk? The courts have long recognized the need to allow a reasonable contingency fee or it would undermine access to justice for impecunious plaintiffs.”
Mr. Maurice said his firm generally charges a contingency fee of 6 per cent to 8 per cent, which he called “fair and reasonable.” By contrast, he said, law firms that worked on the Indian Residential School Settlement Agreement received an amount equal to 15 per cent of the award received by their clients.
The MLT Aikins letter cites three fee disputes between Maurice Law and First Nations that have reached the courts. Two of those cases are expected to be heard in November. Mr. Maurice sent The Globe affidavits, budgets and band council resolutions filed in both cases that suggest the First Nations acknowledged and endorsed contingency fee agreements before and immediately after their settlements.
He characterized the MLT Aikins letter as a “smear campaign” by a rival firm that has been retained in two matters to challenge Maurice Law’s fee agreements.
The letter also cites a case between Tallcree First Nation, located about 500 kilometres north of Edmonton, and the law firm Rath & Company.
When Tallcree retained Rath & Company in 2015, it agreed to pay the firm at least 20 per cent of any resolution amount, according to court documents. A little more than two years later, Ottawa and Tallcree finalized a $57.6-million settlement, resulting in a fee of $11.5-million for Rath & Company. Tallcree contested the sum under the Alberta Rules of Court. A review officer concluded that the fee was reasonable and not “unexpectedly unfair,” but a Court of King’s Bench judge later found the fee “unreasonable” and revised it to $3-million, or roughly 5 per cent. The Alberta Court of Appeal upheld the $3-million fee in a 2-to-1 decision, with the dissenting judge writing that Tallcree was well aware of the potential costs when it signed Rath & Company’s retainer agreement.
In March, the Supreme Court of Canada declined to hear an appeal from Rath & Company.
The firm’s founder, Jeffrey Rath, told The Globe that Tallcree did not want to pay legal fees on an hourly basis and negotiated the 20-per-cent fee. The community discussed the fee at a public meeting and voted to approve the settlement and the fee, he added. “We did exactly what we were contracted to do,” he said.
While the Tallcree case took him a couple of years, Mr. Rath said, other First Nations claims have taken upward of a decade to reach a successful conclusion, and many carry the risk that the community could vote against the settlement.
Both the Canadian Bar Association and Indigenous Bar Association president Drew Lafond have called for more regulation around legal fees and First Nations. In a 2020 letter to the Law Society of Alberta, Mr. Lafond, a partner at MLT Aikins, recommended capping the percentage firms can charge for work on Indigenous claims, revising the code of conduct and developing mandatory training for lawyers working on disputes between law firms and Indigenous clients.
“Having First Nations pay out exorbitant sums to lawyers, which are unfair and unreasonable, only serves to revictimize Indigenous groups who’ve had to wait over a century for settlements,” he said.