A southern Alberta law firm that overcharged a First Nation band $8.5 million had its fee cut by nearly three quarters, from $11.5 million to $3 million.
Rath & Company collected the $11.5 million fee back in February 2018 – based on a 20-per-cent contingency fee agreement (CFA) – having calculated the fee from the Tallcree First Nation's $57.5-million settlement with the federal government over agricultural benefits.
Alberta Court of Queen’s Bench Justice Donald Lee has concluded that the assessment was flawed and the CFA was excessive.
“The $3 million dollar award to Rath will be inclusive of all disbursements that Rath may have incurred in this matter,” Justice Lee wrote in the March 26 decision. “Rath is directed to refund the difference of $8,518,075 dollars it received as fees [$11,518,075 minus $8,518.075 = $3,000,000] to Tallcree immediately, and in any event within 30 days of these Reasons.”
Justice Lee’s ruling cited that the wrong standard was applied to the law firm’s fee when he concluded that it was not “unexpectedly unfair” or “clearly unreasonable.”
Lee went on. “Tallcree was essentially unaware of how strong their claims to agricultural benefits were. However, Rath knew that there was a strong chance that the federal government would change following the scheduled 2015 general election, and that the new administration would respond positively to agricultural benefits claims."
“While I appreciate that Treaty claims litigation can be very complex, and take years, if not decades to complete, there is no indication from the Record or in his submissions that Rath had ever undertaken such complex proceedings in the 20 years the firm had existed from 1995 to the time of the CFA. Rath’s reported cases seem to only involve fee disputes with other First Nations, and one can reasonably question if Rath could have ever undertaken complex Treaty litigation,” Justice Lee wrote. “At the end of the day, Rath & Company was a small six-member firm established in 1995 operating in Priddis, Alberta, that received over $11.5 million dollars in legal fees for eight to 10 months of activity pursuant to the CFA.”
He noted that the original $11.5-million fee “would be the equivalent of the total earnings of a Judge and top earning lawyer over his/her entire combined working career of between 30 to 40 years.”
“A $3 million dollar fee payable to Rath would amount to approximately eight years of total annual compensation paid to a top producing 75th percentile Canadian lawyer, or 10 years of total compensation paid to a Federally appointed judge,” Justice Lee concluded.