Geoff Lazar, a solicitor with the Veterans' Advocacy Service, Legal Aid NSW, told the inquiry that lawyers had to navigate a maze of different legislation to make claims for injured veterans.
"Trying to figure out which one (legislation) they come under can be extremely complex for us, and virtually every veteran, completely unintelligible for them," Mr Lazar told the inquiry on Thursday.
Mr Lazar said long delays by the Department of Veterans Affairs and an often opaque claims process, which veteran's found "confusing and difficult", only damaged his clients' heath further.
"The delays are affecting all of them, whatever their rank, whatever their abilities," Mr Lazar said.
"I've got clients whose claims have been outstanding for 15 months and all of the ones that I can think of now have mental issues, serious mental issues as well as physical issues."
Mr Lazar said one of his client's recently became so ill from the stress of dealing with his claim he is convinced the DVA has someone following him.
"He won't go home directly, he drives around all sorts of places to try and 'lose' the people he thinks are following him," Mr Lazar said.
"That is having a huge affect on him and on his marriage."
Gerard McAleese, a senior solicitor with the Veteran's Advocacy Service, told the inquiry another pressure point for veterans and their lawyers was the lack of transparency by the DVA.
He said even though the DVA often made mistakes in calculating compensation payments, its standard response was to refuse to give reasons for how it arrived at its final decision.
"It's more difficult to trust that a decision is correct if you don't know what the underlying reasons are for that decision," Mr McAleese said.
The inquiry also heard evidence on Thursday that 20 years of budget cuts to the DVA had resulted in the "systemic failure" of the department, across all sections.
Douglas Humphreys, a Federal Court judge and former principal Member of the Veterans' Review Board, said the recent revelation that there was a backlog of 60,000 veterans waiting for their claims to be heard was "shameful".
Mr Humphreys said resources had been cut back savagely over the decades. Until recently all claims processed through the DVA had been "entirely paper driven", before they were finally able to invest in an IT system.
He said strained resources also had a "pernicious effect" on the quality of the service delivered by the DVA, due to its heavy reliance on contract staff.
"The claims officers can be very junior, poorly paid and not tertiary trained," he said.
"You cannot take someone off the street a … give them a basic education on the claims process and expect them to get it right. They will make stupid errors."
The inquiry heard successive budget cuts had also resulted in the DVA reducing the VRB's office space, which forced the board to shut down its registries in Perth and Adelaide and run all its tribunal hearings out of Melbourne and Brisbane.
"I can remember some fairly large fights with DVA over the size of our tribunal premises … they would be happy for us to be in a broom closet if they could," Mr Humphreys said.
Lifeline 13 11 14
Open Arms 1800 011 046
