Law Times

Law Times • augusT 8, 2016 Page 3 www.lawtimesnews.com May maintain rates below market price Consultation needed on services contract, lawyers say BY ALEX ROBINSON Law Times R eal estate lawyers are de- crying what they say is a lack of consultation on a new federal relocation services contract, expected to set fixed rates below market price for their services. The contract is for the In- tegrated Relocation Program, which provides relocation ser- vices to federal employees, such as RCMP officers and members of the military, who have to move for work. Each year, around 18,700 em- ployees and their families are moved through the program. The federal government is in the process of re-issuing the contract, which sets out the terms of services, which in- cludes any legal work involved in the relocation. Lawyers say they were not consulted on the previous multi- year contract and that they have not been consulted on the re- newal process. "The problem that I have with it is that nobody consults the real estate bar," says Merredith MacLennan, chairwoman of the real estate law committee of the Federation of Ontario Law Associations. "Nobody went to the real es- tate bar and asked could you do this work for this price." Under the current contract with Brookfield Global Reloca- tion Services, real estate lawyers' fees are fixed at a rate, which they say is well below market rates. In Ontario, lawyers receive $700 for a purchase and $475 for their work on a sale transaction under the contract. The Working Group on Lawyers and Real Estate — a joint initiative by the Ontario Bar Association, FOLA and the Ontario Real Estate Lawyers Association — released a sug- gested fee schedule that recom- mended a lawyer be paid a mini- mum fee of $850 for a purchase on a property that was $100,000 or less. For transactions on proper- ties worth more than that, it rec- ommends the minimum fee in addition to a percentage of the price of the property. MacLennan says market rate prices for purchases tend to be between $800 and $1,200, and for a sale a lawyer would typi- cally charge between $600 and $900. "It's definitely well below market rate in Ontario," she says of the fees on the current con- tract, which was issued in 2009 with extensions. Lawyers say the rates for real estate lawyers have been locked in since then, without consider- ation for inf lation or increased costs. Lawyers also say they can- not afford to take on this work, meaning the employee who is being relocated sometimes has to cover the difference between the contract's fee and the law- yer's usual rate, if they wish to use a particular lawyer. Timothy Kennedy, the past chairman of the Ontario Bar Association's Real Property Law section, says the current situa- tion can therefore stop govern- ment employees from using the lawyer of their choice. "The way the existing relo- cation contract is set up and the new one is being proposed, it doesn't allow some of our best citizens the opportunity to choose the lawyer that they would like," he says. "They are restricted to law- yers who have agreed to abide by the terms of the service pro- vider's contract. And one of the things that makes that contract very onerous is the cost associ- ated with the legal services are artificially low." The request for proposals for the new contract lays out re- quirements that the relocation services company sets maxi- mum rates for the legal work at- tached to such services. Lawyers worry that this will incentivize the bidders, who win the exclu- sive right to provide these ser- vices, to find lawyers who will offer extremely low rates and to fix those rates over the length of the contract. And while real estate agents are paid on a commission, based on a percentage of the value of the property, lawyers' rates are fixed under the agreement. MacLennan says this is prob- lematic as not every purchase and sale is straightforward and may include unforeseen compli- cations. "If there is any sort of dif- ficulty, if we need extensions, if there's issues that then need to be resolved, if there's further negotiations that have to hap- pen, there is no provision in this contract for the lawyer to charge additional fees," she says. "So you're stuck at this sort of block rate that is already below market." Kennedy, who used to pro- vide relocation services, says more experienced lawyers are increasingly realizing it is not realistic to do this work at the fees provided. "I am aware of lawyers that did the work and will no longer do it because of the reporting requirements and the costs that they were allowed to charge," says Kennedy, who is now gen- eral counsel at MaxSys Staffing & Consulting. MacLennan says the low rates mean that less experienced law- yers have been more willing to do this kind of work. "When you start out you need to do whatever work comes your way," she says. "More and more lawyers are saying I used to do that work, but I'm not doing that anymore." Robert Tchegus, a Kingston real estate lawyer, says his firm, Cunningham Swan Carty Little & Bonham LLP, decided to stop doing the relocation work as it simply could not afford to con- tinue doing the work. "You don't have to do reloca- tion if you don't want to," he says. "Our problem was just that the fees were ridiculously low." The firm, of which Tchegus is a partner, pulled out in 2008, when the federal government was in the process of re-issuing the contract. Tchegus says he cannot en- vision how any lawyer could hold up his or her professional obli- gations under the Law Society of Upper Canada's Real Estate Prac- tice Guidelines for Lawyers, given the volume of transactions they would need to take on to make doing the work profitable. "When one goes through the law society's requirements — the professional checklist that they have for a real estate transaction — I challenge anybody, for those fees you cannot satisfy your pro- fessional duties," he says. "So if you can't do that, some- body is hurting." MacLennan says some law- yers have felt pressure to keep doing the work as they fear real estate agents will stop giving them work if they do not pick up the relocation services jobs. She says those who continue to do the work also do so out of a sense of duty to existing clients. Carleigh Taggart, an Ottawa real estate lawyer who provides the relocation services, says while the contract's fees are below market rates, no one is making her do the work. "If I had to rely on the pro- gram for my livelihood, then sure, I wouldn't make much money, or I would have to close an incredibly high amount of deals to keep my firm profit- able," she says. "However, only a select few of my closings are through Brook- field. "Given the military and RCMP move their members around the country often, it makes sense that the rates are be- low what most lawyers charge." Taggart compares the reloca- tion work to Legal Aid cases, where lawyers expect to do the same work they would do pri- vately for less money. MacLennan says she would like to see the contract altered so that lawyers' fees are not set in stone. "We're trying to either get the legal fees exempted from the contract or work out [and] find some other mechanism to set the fees rather than at a set fee," she says. Public Works and Govern- ment Services Canada, which issued the RFPs for the contract, did not provide comment before deadline. LT NEWS Merredith MacLennan says real estate law- yers were not consulted on the renewal of the federal Integration Relocation Program. 1 TitlePLUS policies issued with respect to properties in Québec and OwnerEXPRESS ® policies do not include legal services coverage. Amounts shown include processing fee and applicable taxes, breakdown available upon request; some restrictions may apply; please refer to the policy for full details, including actual terms and conditions. The TitlePLUS Policy is underwritten by Lawyers' Professional Indemnity Company (LAWPRO ® ). The processing fee and related taxes are collected by LAWPRO as agent on behalf of LawyerDoneDeal Corp. Prices are subject to change without notice. 2 Premium is calculated based on purchase price. The policy pricing above applies to the following types of residential properties: houses, condominiums, cottages, To learn more about the TitlePLUS program call 1-800-410-1013 or visit titleplus.ca rural properties, vacant land (some restrictions may apply), and residential rentals (up to six units). Please call for pricing for (a) residential properties under New Home Direct, New Home Program and New Condo Select; (b) residential properties with 7 or more dwelling units, farm, leasehold or commercial properties; (c) transactions up to $200,000; or (d) transactions over $500,000, up to a maximum of $5 million. © 2016 Lawyers' Professional Indemnity Company ® Registered trademark of Lawyers' Professional Indemnity Company. Simplify your practice today and offer the title insurance developed with the support of the members of the real estate bar. House Condo $285.85 $180.55 House price from $200,000.01- $500,000 Condos from $200,000.01- $500,000 Ontario pricing: 2 Plain and Simple pricing includes: Premium, processing fees and taxes All mortgages insured under the same policy Legal service coverage That's why TitlePLUS ® residential resale purchase policies include legal service coverage and all inclusive pricing. 1 Plain and Simple. We know you want great coverage for a great price. We're listening... Lawyers' Professional Indemnity Company (LAWPRO ® ), 250 Yonge Street, Suite 3101, P.O. Box 3, Toronto, ON M5B 2L7 (05/16) Untitled-1 1 2016-06-21 9:43 AM The way the existing relocation contract is set up and the new one is being proposed, it doesn't allow some of our best citizens the opportunity to choose the lawyer that they would like. Timothy Kennedy

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