Martin on Social Security

Part 2 – Topics

Attorneys Fees Under Social Security Act

§ U 000. Attorneys Fees Under Social Security Act – In General

The Act allows claimant representation by a broad range of qualified persons, not requiring that they be attorneys.  It also provides that fees for such representation are subject to Agency review and approval.  No fee may be charged without Agency approval. This is true whether or not funds are withheld and whether or not the decision is favorable. The fee must be approved even if it is to be paid by a third party.  Social Security Ruling SSR No. 85-3 provides for an exception when the fee will be paid by a  nonprofit organization or government agency with the claimant having no liability to pay any part of it.

Fees for representation before a court reviewing an Agency determination, where the representative must be an attorney, are subject to approval by the court.

Fees that the Agency or a court approves are withheld and paid from any award of past due benefits up to 25% of those benefits when the representative is an attorney.  Amendments to the Act in 2004 extended the same treatment to attorneys fees for SSI representation and established a nationwide demonstration project providing fee withholding for qualifying non-attorney representatives.

Rev. 12/04

[Supporting and Elaborating References] [Related Sections: Part 1 - Part 2]

§ U 100. Attorneys Fees Under Social Security Act – Rate or Amount of Fees – In General

Whenever a court renders a judgment favorable to a claimant under Title II of the Social Security Act and the claimant was represented before the court by an attorney, the court may allow as part of its judgment a reasonable attorneys fee.  That fee may not exceed 25 percent of the total of the past-due benefits resulting from the judgment and is paid out of those benefits.

With Supplemental Security Income (SSI), attorney fees are not specifically limited by the Act to 25%.  However, the Agency is empowered to fix a maximum fee.

Rev. 9/95

[Supporting and Elaborating References] [Related Sections: Part 1 - Part 2]

§ U 110. Attorneys Fees Under Social Security Act – Rate or Amount of Fees – Special Consideration of Contingent Fee

In Gisbrecht v. Barnhart, 535 U.S. 789 (2002), the Supreme Court resolved a prior split among the circuits over the proper approach to determining the reasonableness of attorneys fees claimed under the Act for representation in court.  Under Gisbrecht the reasonableness determination begins with the contingent fee agreement rather than a baseline hourly rate (the “lodestar” method).  Nonetheless, the decision requires that the attorney demonstrate the reasonableness of that fee.  Factors warranting a reduction include poor quality representation and a fee that is excessive in relation to the time spent on the case.

Rev. 12/02

[Supporting and Elaborating References] [Related Sections: Part 1 - Part 2]

§ U 120. Attorneys Fees Under Social Security Act – Rate or Amount of Fees – Use of “Lodestar”

Gisbrecht v. Barnhart, 535 U.S. 789 (2002), rejected the approach of a majority of the circuits.  Under the “lodestar” approach, these circuits had focused almost exclusively on the reasonable hourly rate for work of this type and the number of hours required for the representation.  Those that followed this approach give little or even no explicit recognition to the contingent fee agreement the claimant had signed, under which there would be no fee without the award of benefits.

Rev. 12/02

[Supporting and Elaborating References] [Related Sections: Part 1 - Part 2]

§ U 200. Attorneys Fees Under Social Security Act – Past Due Benefits From Which Fees Are Payable

In Hopkins v. Cohen, 390 U.S. 530 (1968), the Supreme Court construed the Act’s ceiling on attorney’s fees, set at 25% of past-due benefits, as including not only the claimant’s benefits but those of other family members as well.

Prior to the 2004 amendments attorney fees for representing Supplemental Security Income (SSI) claimants could not be withheld from past due benefits. Because of this fundamental difference between the two programs, the offset rules affected the amount of attorney fees payable in concurrent SSI and Title II cases.

Rev. 12/04

[Supporting and Elaborating References] [Related Sections: Part 1 - Part 2]

§ U 300. Attorneys Fees Under Social Security Act – Fees for Work Before the Agency

While the Act provides for a fee award, to be paid out of benefits, for representation before the Agency, it places the determination of an appropriate award in the Agency.

A 1990 amendment to the Social Security Act created a second procedure for approving attorneys fees paid out of past due benefits resulting from an administrative appeal.  Fees agreed to by the claimant will generally be approved so long as they do not exceed 25% or a set dollar amount, initially established by the Act at $4,000.  Effective February 2002, the Agency increased that figure to $5,300.  The Act also provides that the attorneys fee calculation occurs prior to operation of the SSI offset.

In situations where relief other than past due benefits is sought or the fixed dollar cap is too low or the fee agreement fails in some other respect to meet the statutory requirements, the representative can still petition the Agency for approval of a “reasonable fee.”

Under a 1999 amendment, all fees paid by the Agency out of past due benefits are reduced by a 6.3% assessment to cover administrative costs.  That assessment was capped by the 2004 amendments at $75, an amount subject to subsequent automatic annual adjustment.  The figure for 2008 is $79.

Difficult issues concern allocation of responsibility between the court and Agency when a successful claim has involved both.  This is true when an attorney has represented a claimant in earlier administrative stages prior to judicial review and also when the court remands a case to the Agency for further proceedings and the attorney’s representation in that subsequent administrative proceeding is the issue.

The general view is that a court has no authority under the Act to award attorney’s fees for representing a claimant in administrative proceedings.  Courts do, however, consider the Agency’s award for administrative proceedings work before determining the reasonable fee for representation before them.

Rev. 11/07

[Supporting and Elaborating References] [Related Sections: Part 1 - Part 2]

§ U 400. Attorneys Fees Under Social Security Act – Class Actions

Since class actions often focus on prospective or injunctive relief they may present little basis for a fee award under the Act.  The Act’s provision for an award of up to 25% of past due benefits resulting from successful representation may, of course, in a class action yielding such relief permit an award.  Because of the awkwardness of the Act’s fee provisions in class actions, the Equal Access to Justice Act (EAJA) is especially important to attorneys involved in such litigation.

[Supporting and Elaborating References] [Related Sections: Part 1 - Part 2]