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BARRISTERS AND SOLICITORS - Compensation - Contingency agreements 

Thursday, November 19, 2020 @ 6:10 AM  


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Appeal by Tallcree First Nation (Tallcree) from a Review Officer’s (RO’s) decision with respect to Tallcree’s contingency fee agreement entered into with the respondents Rath and Rath & Company in October 2015. The contingency fee agreement before the RO was a result of an agricultural benefits settlement paid by the Government of Canada to Tallcree in the amount of $57,590,375. The 20 per cent contingency fee amounted to $11,518,075. Tallcree filed its appointment in March 2018 to review the retainer agreement. The RO found that while the 20 per cent contingency fee resulted in an extremely high fee that he had never seen before, it was not one that was clearly unreasonable. The RO also found that a 20 per cent contingency fee was essentially a minimum percentage applicable in the simplest of cases.

HELD: Appeal allowed. The onus was on Rath to satisfy the court that the contingency fee agreement was fair and not unreasonable at the time it was entered into. The reasons and decision of the RO were reversible for correctness and contained palpable and overriding errors of mixed fact and law. Rule 10.9 of the Rules of Court mandated a review based on whether the contingency fee agreement was “reasonable,” not whether it was “clearly unreasonable.” Requiring that the contingency fee agreement be shown to be clearly unreasonable was a lower standard for Rath to meet. It was also a palpable and overriding error for the RO on the facts as he found them to set a 20 per cent contingency fee essentially as a minimum. Accepting 20 per cent as a minimal contingency fee ignored other factors critical in the determination of the reasonableness of the contingency fee agreement. Such factors included the actual time Rath spent on the file and how quickly and easily the settlement was reached. The court revoked the RO’s decision and substituted its own decision. Before deciding the appropriate amount of the account, the parties were given a further opportunity to provide written submissions as to the appropriate final amount of Rath’s fee.

Tallcree First Nation v. Rath & Co., [2020] A.J. No. 1054, Alberta Court of Queen's Bench, D. Lee J., October 8, 2020. Digest No. TLD-November162020007