No, this is definitely not a mushroom. When Holmes used this word in “The Norwood Builder” in The Greatest Adventures of Sherlock Holmes, I could guess the vague meaning, but Merriam-Webster gives an exact meaning.

Foolscap – a size of paper formerly standard in Great Britain

Usage: Perhaps I shall get the credit also at some distant day, when I permit my zealous historian to lay out his foolscap once more – eh, Watson?”