The case, Fontaine v. Canada (Attorney General), concerned the practice of lawyers referring their clients to “form fillers,” external groups that did work related to the Independent Assessment Process and charged a 15- to 20-per-cent fee.
The IAP is the mechanism through which people who suffered serious physical, sexual, or psychological abuse at residential schools can apply for additional compensation on top of the base class action settlement.
Manitoba Queen’s Bench Justice Perry Schulman found many of the agreements to pay fees to form fillers are contrary to public policy and illegal. He went further by broadly condemning the practice.
"Apart from considerations of illegality, agreements to pay Form Fillers in circumstances of unequal bargaining power and where an improvident deal was made, such as the two examples in the record before this court, are unconscionable and therefore voidable at the instance of the instance of the claimants who entered them."
Daniel Shapiro, chief adjudicator for the IAP, filed the suit. More than 30 form fillers and legal counsel are alleged by the chief adjudicator’s office to have taken part in the practice although this case only applied to Carroll Law Office.
The chief adjudicator’s office reviewed a random sampling of the 507 IAP files Carroll, which was the primary subject of the complaint, was working on and found nearly all of them had been referred to First Nation Residential School Solution Inc., a form filler that would charge people additional fees on top of their legal fees, which are capped at 30 per cent of a settlement.
In his ruling, Schulman emphasized the vulnerable position of the IAP claimants.
“As a group, IAP claimants are uniquely in need of the court’s protection,” he wrote. “To put it plainly, in supervising the administration of the Settlement Agreement, the courts have a responsibility to protect claimants from charlatans.”
Schulman concluded many of the form filler agencies, which were staffed with non-lawyers, were actually arms of specific law firms that were being used to perform the work of paralegals or counsel and therefore were practising law.
“Prohibitions against the unauthorized practice of law are for the protection of the public, and are even more important in the context of the Settlement Agreement, where claimants are recovering from traumatic experiences and are more likely to be in a vulnerable position as a result.”
In order to protect IAP claimants, Schulman ordered anyone being represented by Carroll to have their settlements paid out by the court monitor.
The other law firms and form fillers that were singled out by the Shapiro’s office will have to provide information about their arrangement to the court monitor, who will figure out the best way to return those fees to IAP claimants. Any that don’t comply will be barred from working on the IAP.
As for Carroll, the Winnipeg Free Press reports the Law Society of Manitoba has opened up an investigation into the firm.