99% of Social Security disability cases work under the following fee structure:
Contingency based: If you win, the attorney gets 25% of your back benefits up to a $6,000 cap. The “25% or $6,000” fee agreement is a standard fee agreement that Social Security will almost always approve if the case is won and results in back benefits.
But there is second fee structure in Social Security disability cases that you should be aware of:
Fee Petition. This is the wild west of fee agreements. The representative has to itemize his or her time and ask Social Security to be paid a certain amount. Social Security will approve whatever fees it sees fit, which may be more or less than $6,000.
If an attorney asks you to sign a fee agreement that is not either for a 25% contingency, or based on a fee petition, watch out!
Why would an attorney require a fee petition based fee agreement?
One reason is that some cases, such as overpayment cases, have no back benefits. So, the 25% fee agreement will not work (25% of 0 equals 0). In those cases, an attorney has to do a fee petition and may require a retainer which is held in a trust account until the case is over and SSA approves fees. This is discussed in detail here.
Other times, an attorney will require a fee petition fee agreement because he or she wants to charge more than the $6,000 cap.
Does this make you angry?
Consider this: there are attorneys who take “lost cause” cases:
- Cases where a person is trying to prove a disability 10, 20, even 30 in the past.
- Cases which have taken more than 8 years with a the cases having multiple appeals to the Appeals Council and even District Court.
In those exceptional cases, a fee petition requesting fees in excess of the $6,000 cap is reasonable.
However, in most “regular” Social Security cases, the $6,000 cap protects the client from overpaying for legal services.
Social Security CONTROLS what a representative can charge.
Social Security recently loosened their rules about who can practice in front of the Social Security Administration. Until recently, only lawyers could provide representation in front of Social Security and charge a fee. Now, non-lawyers can set up shop and provide representation on Social Security claims.
I personally feel that since you are not paying any less for a non-lawyer on a Social Security case, you are generally better off getting a lawyer to represent you.
Fees do not include expenses
Keep in mind this is only for fees (paying the representative for his/her time and experience. This does not include reimbursing the lawyer for expenses (any money the lawyer spends to develop the case, e.g. costs for medical records). Expenses are separate from fees and you may have to pay expenses even if you do not win (and do not owe any fees).