Lawyers, form-filling agencies under fire for alleged fee-gouging of residential school survivors

With almost $2 billion earmarked to compensate survivors of Canada's native residential schools, we shouldn't be surprised that some vultures would swoop in and try to take a bite.

Thousands of First Nations people became eligible for payments under the Indian Residential Schools Settlement Agreement for their experiences ranging from being deprived of their language and culture on up to physical and sexual abuse.

But a court is being told that many of the claimants allegedly have been strong-armed into handing over a large chunk of the money to lawyers and companies set up to help them fill out the complex forms needed to apply for part of the $1.9-billion settlement pool.

The charges do an end run around the court-mandated maximum fee that lawyers can levy for working on the most complex cases. The Globe and Mail reports the most that can be charged is 30 per cent of the settlement, supposedly including help with forms. The federal government pays up to 15 per cent of that fee, with the claimant responsible for the rest.

But so-called form-filling agencies have been set up at arms length from the law firms, allowing them to avoid scrutiny by adjudicators who assess whether the fees are fair and reasonable, the Globe said.

Lawyers for Dan Shapiro, chief adjudicator for the settlement's Independent Assessment Process, appeared in a Winnipeg court Friday to ask a judge to stop the practice, which he argues preys on vulnerable people.

[ Related: Hearings into sordid legacy of Indian residential schools wrap up ]

As many as 1,000 residential school abuse victims have been forced to hand over their entire settlements, Shapiro alleges.

“The whole Independent Assessment Process was designed to provide redress for historic wrongs for abuses that occurred at residential schools,” Shapiro told the Globe.

"It would be very unfortunate if part of the legacy of the IAP was that claimants were being revictimized by people that they were vulnerable to and trusted.”

APTN National News first reported the issue earlier this month, saying a Winnipeg lawyer and representatives of one of the form-filling companies were ordered to appear before Justice Perry Schulman of the Manitoba Court of Queen's Bench, the western supervising judge for the settlement agreement.

The secretariat overseeing the compensation program has been policing the process since 2011, when three lawyers were exposed for a fee-grabbing scheme that involved hundreds of claimants, APTN National News said.

Shapiro alleges many lawyers have used the scheme to pry additional fees from residential school survivors. But the Globe reported he asked the court to review a "pilot case" involving Winnipeg lawyer Ken Carroll and First Nations Residential School Solutions Inc., of which Carroll was part owner and which operated out of his building. It's now out of business.

Affidavits filed in the case revealed one of Carroll's clients, an elderly woman from Northern Ontario, was told to sign a form by David Spence, an employee of the form-filling agency, that required her to pay it 15 per cent of her $54,000 settlement.

Carroll was initially paid $8,100 by the government for his services, but an adjudicator cut the fee in half because the case was fairly simple.

[ Related: Lawyers warned not to bilk residential school survivors ]

The woman said Carroll insisted she come to Winnipeg from Thunder Bay, Ont., to pick up her compensation cheque, even though she was ill. When she left the lawyer's office to deposit the money at a branch of her bank, Spence and another man followed her and forced her to pay them another $8,100, her affidavit said.

Another of Carroll's clients said in his affidavit he was forced to borrow $800 to fly to Winnipeg from his remote Ontario reserve to collect his cheque there at the lawyer's insistence, the Globe said. He, too, was followed to a bank by an employee of the form-filling agency who persuaded the bank manager to give him more than $6,600 out of the man's compensation award, the Globe said.

Carroll said in a statement Thursday he broke his ties to the company after learning it was receiving improper fees and reimbursed two clients, the Globe said. But the lawyer noted there were no rules governing form-fillers and the fees they could charge.