How can attorneys charge in a Social Security Disability case?
A fee agreement is a written statement signed by the claimant (client) and the claimants appointed representative (attorney) fee for services rendered before the Social Security Administration (SSA). This written statement details the fee arrangement between the parties. The appointed representative must submit the fee agreement before the date of the first favorable determination (decision). If the representative submits a fee agreement before the date SSA makes a favorable decision, SSA will approve the fee agreement at the time of the favorable decision if the statutory conditions for approval are met and no exceptions to the fee agreement process apply.
There is a federal statute (law) that states how appointed representatives (attorneys) can charge in Social Security Disability claims. See 42 U.S.C. 206. In other words, SSA regulates how attorneys charge in disability claims. The fee cannot exceed the lesser of 25 percent of the past-due benefits or the fee limit set by the Social Security Commissioner. The current statutory fee limit is $9,200. For a fee agreement to be approved, the claim or action must result in a fully or partially favorable decision, and the claim must result in past-due benefits.
A practical example of this in action would be as follows. Client and Lawyer sign a fee agreement, and Lawyer represents Client on a claim for disability benefits filed November 1, 2023. In December 2024, SSA finds the Client disabled as of January 2020, and this results in SSA owing “past due benefits” of $2,000 per month, from November 2022 through November 2024 ($48,000 total past due benefits). In this scenario, the maximum fee allowed would be the statutory limit of $9,200. SSA would send Attorney a check for $9,200 and would send Client the remainder, or $38,800. The fee amount allowed would actually be less than 25 percent ($12,000) in this scenario, due to the statutory limit being reached.
In another example, assume Client and Lawyer enter a fee agreement in January 2020, and Lawyer represents Client through an application and multiple appeals and hearings on the same claim, only for SSA to ultimately deny the claim in January 2025. Here, there was never an approval. Therefore, there would be no attorney fees. Assume the same circumstances, but that SSA approves the case effective January 2025 (i.e. finds the claimant not disabled all the way through the date of decision, but disabled as of that date). Although this is an approval, there are no “past due benefits” on the claim, and again, there would be no attorney fees.
What is a “two-tiered” fee agreement?
SSA permits a claimant and the claimant's representative to submit a fee agreement that includes a provision limiting the agreement's application to services through a specific level of the administrative appeals process. Such an agreement would provide, in essence, for a two-tiered fee structure. The SSA decision maker ascertains, at the time of the favorable decision, which tier of the fee structure applies, and either approves or disapproves the fee agreement based on the current level of appeal. The decision maker will approve such an agreement if, considering the tier that applies to the level at which the claim was first favorably decided, the agreement meets the statutory conditions for approval and none of the exceptions apply. The decision maker will disapprove the agreement if, considering the tier that applies to the level at which the claim was first favorably decided, the agreement does not meet the statutory conditions for approval (e.g., the agreement does not limit the fee to the statutory maximum). SSA provides sample two-tiered fee agreements for representatives to use in its SSA 1693 Form and sample language in SSA POMS GN 03940.005.
EXAMPLE: The claimant and representative submit a fee agreement that provides the following: If SSA favorably decides the claim(s) at or below the first Administrative Law Judge (ALJ) hearing decision, the fee shall be the lesser of 25 percent of past-due benefits or the maximum specified dollar amount established by the Commissioner pursuant to section 206(a)(2)(A) of the Social Security Act. (Tier One). If the claim progresses beyond that level of the administrative appeals process, the representative will request a fee through the fee petition process. (Another example of alternative language for the second clause is “If the claim progresses beyond the first hearing decision, the representative will request a fee of 25 percent of the claimant's past-due benefits.”) (Tier Two).
If the applicable clause is the first clause, the requirement of § 206(a)(2)(A)(ii) of the Act is satisfied (i.e., the fee requested did not exceed the statutory maximum, and SSA will approve the agreement if it meets all other conditions for approval and no exceptions apply. If the second clause applies (e.g., the ALJ issues the first favorable decision following a remand by the Appeals Council (AC)), § 206(a)(2)(A)(ii) of the Act would not be satisfied and the ALJ will disapprove the fee agreement because the representative has not agreed to limit the fee to the statutory maximum. When the fee agreement is disapproved, to charge and collect a fee, the representative then submits a fee petition that includes the services and time spent in conjunction with the case.
What about other costs?
There are no “filing” costs (i.e. price paid to SSA) through the first four decision levels (application, reconsideration, Administrative Law Judge hearing, or Appeals Council review). If a claimant appeals an Appeals Council denial, there can be filing fees in Federal District Court. However, the great majority of claims never make it to the Federal District Court level, and there may be applicable exceptions where the court can waive the filing fee (such as for indigent claimants).
There can be costs associated with attaining medical records, but this is dependent on the state in which the treatment was rendered. For instance, Ohio medical providers must provide a free copy of the medical records to the attorney or client if the records are requested to support a disability claim, per Ohio statute. Thus, claimants that get all of their medical treatment in Ohio will have no costs for medical records.
In Pennsylvania, medical providers can only charge a flat fee of $35.50 per provider when the records are requested for the purpose of supporting a disability claim, per Pennsylvania law. In practice, much of these costs for medical records are paid by SSA at the early stages of the proceedings. Further, at the hearing stage the attorney can request SSA to get the records directly from many PA providers, again eliminating most to any costs. The Rules of Professional Conduct passed by the Supreme Court of Pennsylvania permit lawyers to advance such costs and expenses on behalf of the client and to make repayment of the costs contingent upon the outcome of the matter. In other words, the lawyer can pay for the medical records up front and then request repayment later only if the case was successful. In practice, the end result is that clients that attain the majority of their medical treatment in Pennsylvania often pay no to very little (around one or two hundred dollars) for medical records, and they only repay those costs to the attorney if the case is successful.
Other potential costs would include such items as the cost of medical treatment and testing, which the client and/or the client’s medical insurance would be responsible for.