Law firm in midst of residential school payout controversy shuts doors

The Calgary law firm at the centre of a residential school compensation scandal is closing its doors at the end of the month.

By Kathleen Martens
APTN National News
The Calgary law firm at the centre of a residential school compensation scandal is closing its doors at the end of the month.

A lawyer for Blott & Company surprised a B.C. Supreme Court hearing Friday with the news.

His client is laying everyone off, lawyer Roy Millen told Justice Brenda Brown, and will cease to operate as of June 30, 2012.

David Blott’s practice, which only worked on compensation or Independent

Assessment Process files, was being wound down by the court anyway. It was punishment for what Brown described in a June 5 court order as a violation of clients’ trust and breaching the IAP, in part, through a “loan scheme.”

Blott’s dealings – and those of his associates – with physical and sexual abuse victims of Indian Residential Schools were investigated after complaints were filed with the court late last year.

The judge kicked him out of the IAP earlier this month and froze the 15 per cent commissions the government of Canada paid on each file. Blott had approximately 3,200 files yet to put through the IAP.

The judge appointed a “transition co-ordinator” to oversee those files and their transfer to new lawyers. That person is retired B.C. Supreme Court justice Ian Pitfield.

Pitfield attended the hearing today and heard suggestions from a variety of parties involved in the IAP on how to handle the transfer of files.

He also listened to Millen demand Blott be paid for the work he’d already done on the files – although much of that work will have to be redone – even the 1,159 files not yet submitted to the IAP, despite a looming deadline in September.

Millen’s equation could net Blott nearly a quarter of a million dollars.

Blott’s firm has already earned more than $10 million from the IAP, and the associated company Honour Walk, also of Calgary and operated by Thom Denomme, has earned at least $6 million, according to the investigator’s report.

In a written ruling released late Friday, Brown agreed Blott should be paid between $500 and $1,500 for work on some of the files, plus the commission fee.

The lawyer for the government of Canada, Catherine Couhglan, instead argued that money should go towards paying off the $3-million cost of the investigation.

Brown will rule on who pays for the investigation at a later date. As well, parties to the hearing are still waiting for her decision on whether to censure the lending companies – BridgePoint Financial of Toronto and Settlement Lenders of Edmonton – for their role in the Blott-loan-lending arrangement that at times charged what court heard were criminal rates of interest.

Loans and other third-party services for profit are prohibited under the IAP. This is to protect survivors and their compensation awards.

Another associated company – Funds Now – operated by David Hamm of Calgary may also be censured. It charged Blott clients 20 per cent for finding the loans then later reduced the amount to 10 per cent.

All of these firms, investigators noted, operated for about 5 years – the length of time the IAP has been in place.

Further, Brown has allowed the Law Society of Alberta access to the files to check the quality of work and other issues.

Meanwhile, Blott’s move to close his doors puts the pressure on Pitfield to move quickly. Brown says Blott and his associated companies must deliver the claimant files and related paperwork to Pitfield before the end of June.

Sources say Pitfield wants to meet with claimants and discuss new lawyers with them in person.

The Law Society of Alberta put Blott under the supervision of a lawyer-manager at the end of April in response to the court’s investigation. Its president, Steve Raby of Calgary, told APTN National News Blott met the test for interim suspension at that time but doing that would confuse clients and further delay their compensation claims.

Raby said earlier this week that decision may be revisited.

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