The Court allowed an appeal from a Review Officer’s decision that a $11.5 million dollar contingency fee agreement for settlement of an agricultural benefits specific claim was reasonable. The Review Officer applied an erroneous standard of review to the agreement and ignored critical factors like how quickly and easily the settlement was reached and how minimal the work product was.
This is an appeal from the Review Officer’s [“RO”] decision with respect to the Tallcree [“Tallcree”] First Nation’s Contingency Fee Agreement [“CFA”] entered into with Rath & Company and Jeffrey RW Rath [“Rath”] of Priddis, Alberta in 2015. The CFA before the RO was a result of an agricultural benefits settlement paid by the Government of Canada to Tallcree in the sum of $57,590,375. The 20% contingency fee amounted to $11,518,075.
Tallcree filed to request “a review of retainer agreement”. The RO determined that while the 20% contingency fee resulted in an extremely high fee never seen before, it was not one that was clearly unreasonable. Tallcree now appeals the RO’s decision. Given the sensitive nature of CFA’s with respect to vulnerable members of the community and their ability to access justice, amongst other reasons, the onus is on Rath to satisfy the Court that the CFA is fair and not unreasonable at the time it was entered into (MS v DM, 2014 ABQB 702).
The Court accepts that Tallcree was aware of the terms of the CFA, was aware as to the possible range of recovery, and was aware of the 20% fee that would accompany that general range of recovery between approximately $50 to $80 million dollars. However, Tallcree was unaware at the time of the CFA about how long such a recovery would take. How lengthy a process the settlement would take, and how quickly the settlement could be reached, were critical factors for Tallcree in determining the reasonableness of the CFA . Tallcree was in “dire economic circumstances” and needed the settlement monies “urgently on an Emergency basis”.
Tallcree argues that Rath withheld critical information from Tallcree at the time of the CFA that strongly suggested that the agricultural benefit settlement that they were seeking would be resolved favourably and quickly. While Tallcree’s previous legal counsel had filed formal claims for the unfulfilled Treaty promises related to agricultural benefits on behalf of Tallcree in 2012, the Court concludes that Rath was essentially only successful in settling those claims in short order after the CFA because of the change in Federal government. Rath would have been aware of this fortuitous change, as a fixed date election was legislated by S.C. 2000 c.9 to occur on October 19, 2015.
There were approximately 20 other First Nations who settled their agricultural benefits claims around the same time Tallcree did, represented by Rath or other legal counsel. These other similar settlements by Rath and other law firms establish that these settlements were clearly attainable at the time the CFA was entered into.
The RO’s decision that the CFA was reasonable because of the resulting fee “was not unexpectedly unfair” or “clearly unreasonable” on the facts in this case is not the same as determining the “reasonableness” of a retainer agreement. Accepting 20% as a minimal contingency fee ignored other factors critical in the determination of the reasonableness of the CFA, such as the actual time Rath spent on the file, and how quickly and how easily the settlement was reached. Most of the work product found in the record are actually simple emails created and signed by his paralegal. The RO’s decision constitute reversible errors. There is no proper legal basis or foundation for the RO to have limited or fixed his low-end minimum contingency fee amount at 20% of any amount recovered, which is why the RO’s decision resulted in an incredibly high legal fee that even he stated he had never seen before. Furthermore, the RO’s standard of “clearly unreasonable” is not the “correct” legal standard with which to review the CFA.