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Class-action lawyers' fees too high, court told

Attorneys for disabled veterans to get $66.6 million from lawsuit

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HALIFAX -- Federal lawyers argued Friday attorneys who won a class-action lawsuit for disabled veterans shouldn't get $66.6 million in fees despite criticism from the former military members that Ottawa alone caused the case to drag through the courts.

Dozens of veterans and their spouses listened to final arguments in Federal Court on the proposed $887.8-million settlement between the former military members and the federal government over their clawed-back pension benefits.

Judge Robert Barnes reserved his decision on whether to approve the deal, which was reached last month after a five-year legal fight.

The Crown argued the three lawyers who took on the case on behalf of 7,500 veterans were charging 21 times the normal hourly rate for their services over five years.

But one veteran dismissed the claim, saying the federal government challenged the case every step of the way and rejected repeated attempts to settle it without going to court.

"The federal government took our money from us and now they're trying to tell us how to spend our money," Steve Dornan, who has post-traumatic stress disorder and incurable cancer, said outside the hearing room.

"So, you didn't want us to have the money in the first place. Now you're telling us that we're spending too much on our lawyers that got us the money. It's ridiculous."

Dennis Manuge launched the lawsuit in 2007 on behalf of himself and other disabled Canadian veterans whose long-term disability benefits were reduced by the amount of the monthly Veterans Affairs disability pensions they received.

The federal government fought the initial class-action certification, appealed a certification decision in 2008 and didn't alter the clawback after it was condemned by the military ombudsman, the Senate and through a motion in the House of Commons that said the offset should end.

The Federal Court ultimately ruled last spring it was unfair of the federal government to treat pain-and-suffering awards as income.

Defence Minister Peter MacKay said the government wouldn't appeal and appointed a negotiator to cut a deal.

The legal fees became a contentious issue last week after MacKay called them "grossly excessive," which Crown attorney Paul Vickery restated on the last day of the two-day hearing.

Vickery said the three principal lawyers handling the veterans' case logged about 8,600 hours and the hourly rate for one of them amounted to about $13,400.

"This fee request is plainly excessive and should not be approved," he said.

He argued in other large class-action lawsuits, such as the $4-billion native residential school and $2-billion tainted-blood settlements, lawyers were paid a far lower rate.

The settlement of the class-action suit in residential schools could see as much as $85 million to $100 million paid to lawyers, while the tainted-blood scandal saw a $52-million legal bill.

Ward Branch, a lawyer for the veterans, said the law firm voluntarily reduced its fee to 7.5 per cent of the total award, down from the original contract amount of 30 per cent.

"What made me comfortable about what we were requesting is that the class was behind us," Branch said.

Several veterans said at the hearing the deal should include damages and arrangements should be made to prevent them from having to pay higher taxes after receiving their retroactive payments under the deal.

The deal includes $424.3 million in retroactive pay to veterans and dates back to 1976.

-- The Canadian Press

"We saw overwhelming support from the class and they stood behind us here."

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