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BARRISTERS AND SOLICITORS - Compensation - Contingency agreements - Fair and reasonable

Tuesday, May 11, 2021 @ 6:20 AM  

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Determination of the appropriate amount of Tallcree First Nation's (Tallcree’s) account with Rath & Company and Rath (Rath). In this appeal from a Review Officer’s decision with respect to a contingency fee agreement (CFA), the Court previously found that the CFA was unreasonable. Tallcree and Rath entered the CFA on or about Oct. 14, 2015. The CFA was a result of an agricultural benefits settlement pursuant to Treaty 8 paid by the Government of Canada to Tallcree in the sum of $57,590,375. The 20 per cent contingency fee amounted to $11,518,075. The Court previously concluded that the Review Officer made two reversible errors. The Review Officer did not follow the standard required of him to determine the “reasonableness” of the CFA pursuant to Rule 10.9 but applied a lower standard for Rath to meet of “unexpectedly unfair” or “clearly unreasonable”. The Review Officer also made a palpable and overriding error by setting a 20 per cent contingency fee as a reasonable low-end minimum percentage without question, without any evidence and without any case law precedent. The Review Officer’s decision was revoked and the Court, substituting its own decision for that of the Review Officer, was now tasked with determining the appropriate amount of Tallcree’s account. Tallcree took the position that a $1 million to $2 million final award would be appropriate. Rath took the position that his final fee award should remain at $11,518,075.

HELD: Rath’s final award was $3 million. Substantially all Rath’s efforts were non-legal in nature. Rath undertook little personal risk and had a substantial likelihood of success. Not only was liability acknowledged, it was mandated by the defendant itself as a matter of policy and conscience. Tallcree’s file took approximately eight to 10 months to settle. Several aspects of the arbitration clause and the termination of legal services clause found in the CFA were not only arguably highly prejudicial to Tallcree, they might also have been contrary to the Rules of Court provisions regarding CFAs. Rath’s final award of $3 million was inclusive of all disbursements.

Tallcree First Nation v. Rath & Co., [2021] A.J. No. 435, Alberta Court of Queen's Bench, D. Lee J., March 26, 2021. Digest No. TLD-May102021003