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Judge condemns taking legal fees from residential school survivors' compensation

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A terminally ill residential school survivor was told she had to travel from her Ontario home to her Winnipeg lawyer's office to claim her compensation cheque. Once there, officials with a form-filling agency her lawyer, Ken Carroll, had previously worked with escorted the woman to the bank and took $8,100 of the settlement money.

Any lawyer or firm who did anything like this is in trouble now following a court ruling in Manitoba last week put a stop to the dubious practice.

Manitoba’s Court of Queen’s Bench cited Winnipeg lawyer Ken Carroll and the First Nation Residential Schools Solution Inc. as a test case to make a larger point. 

Mr. Justice Percy Schulman said his ruling applies to any lawyer and agency that filled in forms for survivors to get compensation and then charged their fees against their compensation cheques.

In fact, Schulman made no bones about his feelings on the matter in a ruling that covered 55 pages and took up for some 1,000 survivors of residential schools.

Schulman did more than rule on just the legality of the extra charges -- on top of what lawyers were entitled to collect.

"In addition to the illegal aspects of the form filling contracts... if they were not already void, I would find them voidable for being unconscionable," Schulman said in expressively strong language.

He noted that residential school survivors have already by recognized as vulnerable, especially in their dealings with lawyers.

"The experience of claimants in Indian Residential Schools demands that particular caution and sensitivity be used in assessing whether (fee) agreements... for services arising out of those experiences are unconscionable," he wrote.

If that weren’t bad enough, there was evidence of coercion used against clients in test cases before the court, such as the Carroll’s client in Thunder Bay, the Manitoba Justice said.

"Coercive tactics are never appropriate and are further evidence of the unequal relationship between the claimants and the form fillers in this case," Schulman wrote.

The ruling is a victory for the federal agency in charge of approving applications and distributing compensation payments to thousands of residential school survivors. The Residential Schools Adjudication Secretariat has been probing such fees for years.

This spring they took their case to court on behalf of 1,000 residential school survivors to end the extra fees.

Carroll later repaid the woman. He has yet to comment on the ruling and a canvas of some legal firms found lawyers unwilling to comment publiclly on the practice, now that it’s been shut down by the courts.

It’s not the first time a Manitoba lawyer has run into trouble over fees charged over residential school settlements.

In 2012, Winnipeg lawyer Howard Tennehouse was disbarred over nearly $1 million in fees he illegally charged residential school survivors.

Schulman is the supervising judge for Indian Residential Schools Settlement Agreement which oversees compensation through the Independent Assessment Process. At $5.5 billion, the agreement is the largest of its kind in Canadian history.

The era of residential schools, which spanned more than a century, is an especially black mark on a dark history of relations between Canada and indigenous peoples. Prime Minister Stephen Harper issued a formal apology in 2008 for the schools.

The institutions are now generally acknowledged as being set up "to take the Indian out of the child." Thousands were also subjected to physical, emotional and sexual abuse as defenceless children.


Updated on Wednesday, June 11, 2014 at 4:01 PM CDT: Corrects first 2 sentences, indicates Carroll later repaid the woman.

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