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Most lawyers named to the federal Bench see their pay shoot up when they become judges, reveals an unprecedented Department of Justice (DOJ) analysis of the confidential, pre-appointment tax records of 567 recently appointed federal judges.

The results purport to show that, in the five years immediately preceding their judicial appointments, 71 per cent of the judges had average net incomes that were below the salaries they garnered as puisne judges.

This belies the conventional wisdom that many, if not most, lawyers take a pay cut to join the Bench and, the government contends, demonstrates that “there is no empirical basis for the [judiciary’s] contention that salaries need to be raised in order to attract better qualified applicants.”

The government and the federal judiciary have locked horns in recent months over how much the judges’ salaries should go up, and particularly over the propriety, reliability and/or utility of some expert evidence that both sides compiled for the Judicial Compensation and Benefits Commission.

Correspondence filed with the Commission shows the judges were furious when they found out that the DOJ had obtained from the Canada Revenue Agency the sanitized (i.e. without identifying information) personal tax information of the bulk of sitting judges who were appointed between 1995 and May 18, 2007. The judiciary argues it was ambushed because it says it learned of the report less than a month prior to the Dec. 14, 2007 deadline for first-round submissions to the Commission.

The judges also take umbrage to what their counsel, Pierre Bienvenu of Montreal’s Ogilvy Renault, characterized in a letter demanding an “urgent meeting” with DOJ deputy minister John Sims, as the government’s “inappropriate... violation” of the judges’ expectation of privacy by using their personal tax data without their knowledge or consent.

The DOJ responds that the report was prepared to address the longstanding and justified complaints of previous independent pay commissions bemoaning the dearth of reliable data on the incomes of private-sector lawyers. Because the judiciary is largely recruited from private practice, the earnings of self-employed lawyers are accepted by commissions, the government and the judiciary as key comparators in gauging appropriate judicial salaries. This spurred the judiciary and the government last year to commission their own studies on what self-employed lawyers really earn.

At the moment the annual salary of puisne trial and appellate judges under the Supreme Court level is $260,000, making the judiciary the best paid occupation in the country, Statistics Canada affirmed once again this month.

The nation’s 1,000-plus federal judges have asked the Commission to recommend to the Government of Canada a four-year salary package that is more than 2.5 times what the government contends is justified.

The Commission is due to make its report and recommendations to the Minister of Justice by May 31, 2008.

Meanwhile the Commission is no doubt pondering the recent joint submission by the Canadian Superior Courts Judges Association and the Canadian Judicial Council which dismisses as “defective” and “improbable” the DOJ’s expert-prepared January 2008 analysis of the pre-appointment incomes reported by 567 judges on their income tax returns.

The judiciary challenges the results and reliability of the DOJ report but the government stands by both.

The data indicate that 31 per cent of lawyers appointed to the Bench after 1994 were employed by others, as compared to 69 per cent who were self-employed.

Of those who were self-employed as lawyers, 62 per cent saw their incomes rise as judges, as compared to 92 per cent of those lawyers who were not self-employed.

On the flip side, more than one-third of the self-employed lawyers appointed to the Bench (38 per cent) took a pay cut for the Bench, as compared to just 8 per cent of those employed by the Crown, corporations or universities.

According to the DOJ report, among the self-employed lawyers, 10 per cent earned more than twice as much in private practice as they did when they went to the Bench (but fewer than 4 per cent had private practice incomes that at least tripled their judicial salary).

The overall pre-appointment average income of all 389 self-employed lawyers (i.e. including the 38 lawyers whose earnings were two to five-times-plus their judicial salaries) was seven per cent higher than their judicial salary.

By contrast the overall average income of all 178 lawyers who were not self-employed was 17 per cent lower than the judicial pay.

(The DOJ study was based on averaging of up to five years of a judge’s annual income prior to appointment, including a gross-up for inflation. This was compared to his or her salary in the first year on the Bench.)

The government argues that the tax data refutes the judiciary’s statement to the Commission that substantial salary increases are justified given the present income levels of senior private practitioners in Canada.

For its part, the judiciary’s own review of private-sector lawyers’ incomes, which was prepared by Navigant Consulting, explicitly makes the assumption that “more highly paid lawyers are more highly skilled” than lawyers who earn less.

“While there are no doubt exceptions, the income derived from private practice by lawyers whom one would characterize as ‘outstanding’ will almost always exceed the judicial salary,” the judiciary told the commission.

The government argues that statement is “unsupportable” given the demonstrated “broad range of incomes among outstanding candidates who actually became judges. There is no empirical basis for the [judges’] contention that salaries need to be raised in order to attract better qualified applicants. Rather the pre-appointment income study demonstrates that current judicial salaries are not a disincentive to attracting significant numbers of judges who enjoyed high pre-appointment incomes.”

According to DOJ estimates, the government’s salary package would cost $29.6 million from 2008-09 to 2011-12, while the judges’ proposal would cost $78.6 million.

Inclusive of the 3.2 per cent statutory indexing that kicked in April 1, 2008, puisne trial and appeal judges are now paid $260,000 per annum; chief justices earn $285,000; Supreme Court puisne judges earn $309,300; and the Chief Justice of Canada earns $334,100.

The judges seek cumulative salary increases of: 3.5 per cent in 2008; and 2 per cent in each of 2009, 2010, and 2011. This is in addition to the yearly statutory indexing they are automatically entitled to under the Judges Act –which boosts their salary in lock step with the prior year’s increase in the industrial aggregate, a measure of workers’ average weekly wages.

By contrast the government is offering an additional 1.7 per cent increase for 2008, but nothing on top of statutory indexing for the subsequent three years. 

The government’s pre-appointment income study challenges the assumption accepted by the previous quadrennial commission – which is still advanced by the judiciary – that lawyers who earn less than $60,000 per year are not judicial candidates. Therefore earnings below $60,000 should not be included as a comparator for judicial salaries, the judiciary says.

But the government points to its tax data showing that 19 per cent of all appointees (107 of 567 judges) were earning less than half of a judicial salary and that seven per cent of those lawyers appointed to the Bench earned $60,000 or less.

Says the government, “there can be no serious suggestion that judicial salaries have fallen below an acceptable minimum given that a puisne judge’s salary rose 41 per cent between March 31, 2000 and April 1, 2007, rising from $178,100 to $252,000. This included cumulative statutory indexing of 10.4 per cent since 2003.”