Judge reduces Saskatchewan law firm’s fees to $21,000

A judge has awarded a Saskatchewan law firm just $21,000 after it asked for $321,000 from the government for work it did representing residential school survivors in the settlement of a class action lawsuit.

In Fontaine v. Canada (Attorney General), Saskatchewan Queen’s Bench Justice Neil Gabrielson found the firm billed the government too much for work related to the Indian Residential Schools Settlement Agreement, a country-wide class action settlement which was approved about 10 years ago.

MacDermid Lamarsh brought a request for direction in 2016 after accounts submitted to the federal government went unpaid. The firm, which was one of 90 firms that represented class members, claimed $321,644 for work done relating to the IRSSA dating back to 2005.

The federal government disputed all of MacDermid Lamarsh's claim except $22,476 in fees for work done under s. 13.02 of the IRSSA, which held that the government agreed to pay lawyers who attended the negotiations for time spent up to the settlement at their normal hourly rate.

On top of the $22,476 it claimed under s. 13.02, the firm also sought $158,766 for work it conducted as counsel that it said was owed under section 13.03. This section held that the government must pay lawyers for work in respect of finalizing the agreement at their hourly rate.

The government argued that the fees the firm sought were excessive and that some of them pertained to work that was done outside of the time that was covered under s. 13.03.

The government also noted that if s. 13.03 actually covered the work the firm had claimed, the government potentially could be billed $13.5 million, if each of the 90 firms that were signatories in the settlement claimed $150,000.

“An obligation to pay each of the IRSSA’s legal counsel or law firm signatories what ML invoiced cannot be reconciled with the intention to confine finalization costs to a modest level,” the decision said.

Gabrielson found that s. 13.03 of the agreement was intended to compensate lawyers for the negotiations leading up to the settlement of the agreement.

“On the evidence, ML was not actively engaged in the negotiations, but has submitted accounts for work that consisted virtually entirely of receiving and reviewing documents,” he said in the decision.

MacDermid Lamarsh also sought $66,161 for costs incurred as a result of executing a 2006 order. The firm argued that the order obliged it to send notices to potential claimants letting them know about the order and of the settlement application, which the firm said the government is obliged to pay for.

Only two other firms had invoiced Canada for expense incurred in sending the notices, according to the decision. One of those firms was not paid, and the other was only paid $400 by the government for postage.

The government contended that once the firm wrote one letter of advice, it should not have needed to spend more time drafting additional letters.
MacDermid Lamarsh also claimed $74,239 for carrying out another 2006 order from later that year, which involved sending opt-out notices to potential claimants.

The judge determined that the firm should not be compensated for its correspondences with potential claimants, and that it should only receive payment for postage, which amounted to $636 for the letters after the first order and $726 for the second round. Gabrielson said the firm had sent out the second round of notices voluntarily without letting the government know it was being done.

The judge ruled MacDermin Lamarsh was entitled to fees claimed pursuant to s. 13.02, plus interest at a rate of five per cent a year, which brought the cost award to $21,534.

This was not the first time the fees law firms have charged in relation to the settlement have come into question. As Legal Feeds reported in 2014, a Manitoba judge ruled a number of lawyers had been overcharging residential school survivors for work related to collecting settlements from the government.

Nolan Courteau, a lawyer with MacDermid Lamarsh, did not immediately respond to a request for comment.

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