Lawyers in line for $66 million in legal fees in veterans disability case

OTTAWA – Lawyers who fought a clawback of military pensions all the way to the Supreme Court of Canada are in line for a $66-million payout when a judge later this week considers a settlement agreement for thousands of disabled veterans.

Justice Robert Barnes of the Federal Court of Canada in Halifax will review an $887.8-million settlement negotiated between the Harper government and roughly 7,500 ex-soldiers who are part of a class-action lawsuit launched by former army veteran Dennis Manuge.

Part of that settlement involves a request to the court to pay the legal fees of the attorneys at McInnis-Cooper, who’ve carried the case since its inception in 2007.

The cash would come out of the $424 million set aside for retroactive payments to veterans, who since 1976 have seen their long-term disability benefits reduced by the amount of their monthly Veterans Affairs disability pension. That includes $82.6 million in interest.

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The rest of the settlement is an estimate of the amount the veterans will be owed in the future and a $10-million scholarship fund for veterans and their families.

Ward Branch, one the attorneys, said the fee would have been much lower had the government chosen not to drag out litigation, especially with a reference to the country’s highest court over the legality of the class-action certification.

“Who has made this fee that high? It’s the government,” Branch said in an interview.

Some of the veterans involved in the lawsuit are angry the fee is coming out of their pockets.

Ron Cundell, a retired sergeant, said he doesn’t begrudge what the lawyers are getting paid. Rather, he believes the federal government should be picking up the tab, not veterans.

“So please tell me what did I win?” Cundell said. “The government of Canada was found guilty of stealing from disabled veterans. They stole $424 million. Yet the victims have to pay lawyers to get back money that was theirs to begin with.”

The most severely disabled veterans will pay the most under the retroactive plan because the more money owed to them, the higher the lawyer payment, he said.

“So what is the government’s legal punishment for this theft? Nothing,” said Cundell, a longtime veterans advocate.

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A spokesman for Defence Minister Peter MacKay also criticized the size of the payments.

“The legal fees sought, which equates to a top hourly rate of $13,487.50, are so far beyond what can be characterized as reasonable as to be grossly excessive,” Jay Paxton said in an email.

“The Crown informed the judge that the government of Canada will oppose the amount of legal fees being sought as unreasonable and we expect that much of that settlement reaches its intended beneficiaries, the veterans.”

Branch said the legal-fee structure was determined at the outset by Federal Court rules, which give the option for each side to agree not ask each other to cover their costs.

The case dragged its way through the courts for years, and accumulated some weighty political support along the way, including condemnation from the military ombudsman, the Senate, and a motion in the House of Commons urging the government to halt the clawback.

Branch said at every hearing he’d approach the Justice Department lawyers and ask to talk about a settlement.

“And they just kept blowing us off, over and over again,” he said.

The Harper government never talked settlement until last spring when the Federal Court rejected all the legal arguments put forward by federal lawyers and said it was unfair of Ottawa to treat pain and suffering awards as income.

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MacKay said there would be no appeal, and appointed a negotiator to cut a deal with the disabled veterans.

If the judge signs off on the settlement during the two-day hearing Thursday and Friday, the legal fees will not set a record. The settlement of the class-action suit in native residential schools could see as much as $85 million to $100 million paid to lawyers handling those claims.

The tainted-blood scandal saw a $52-million legal bill.

In both of those cases, Branch said, federal lawyers did not force a reference to the high court, let alone pick a fight over a procedural issue.

“They made us litigate … all of the way to the Supreme Court of Canada,” he said. “Usually if you go to the Supreme Court of Canada, it’ll be on the merits of the case.”