I have tried to give you as much information as I can about Social Security overpayment / repayment cases, because the chances of finding an attorney to work with you are not very good.
Many Social Security attorneys get paid out of the back benefits they win for the client (typically 25% up to a cap of $5,300.00 $6,000 as of June 2009). But, when you have an overpayment case, the best outcome is you will owe $0.00. 25% of $0.00 is $0.00.
In other words, there is nothing for the attorney to take a percentage of, if they win. If you want legal help on an overpayment case you will probably have to pay some money up front. This may be between $1,000 and $3,000 depending on the complexity of the case. While my office does handle Social Security overpayment cases, they make up a small part of my Social Security practice because most people cannot afford the retainer.
Also, many attorneys do not take overpayment cases because of the extra requirement of petitioning Social Security to approve fees. This takes extra time, beyond the time spent proving the case, just to try to get paid.
Is it worth hiring an attorney on an overpayment case?
Whether paying the retainer is worthwhile for you will depend on how much money you owe Social Security.
If you only owe $1,200, paying an attorney $1,000 probably does not make much sense. But, if Social Security says you owe $15,000, then it may be worthwhile to pay an attorney for help.
Social Security has to approve any fees an attorney charges you.
When I say, “pay the attorney,” that is just short hand. What I really mean is that you provide a retainer that is held in trust until the end of the case and the fee petition is ruled on by Social Security.
Under Social Security regulations, an attorney can almost never take any fee unless it is approved by Social Security. Note: this requirement only applies to fees: paying for the attorney’s time. Social Security does not have to approve what you owe your attorney for expenses: money spent developing the case.
When you hire an attorney for a Social Security case, if you pay a retainer toward fees, the attorney can never take fees out of that retainer unless Social Security approves the fees. You will know if Social Security has approved any fees because they will send you a letter, usually anywhere from 1 to 6 months after the case ends, telling what fees, if any, they have approved for the attorney. If Social Security denies fees, they attorney must return the retainer.
What happens to the interest?
Good question! In Colorado and many other states, there are special accounts called IOLTA (Interest on Lawyers Trust Accounts). These are “pooling” accounts for holding multiple trusts when the amount of money is not large enough, or will not be held long enough, to warrant its own account. Any interest earned is paid to that state’s IOLTA foundation and the money goes toward information and education about the legal system; not, I am sad to say, mountaintop retreats for retired lawyers. Ah well, a lawyer can dream, can’t he?
In Colorado, the IOLTA accounts are called COLTAF (Colorado Lawyers Trust Account Foundation) accounts. So, you may hear COLTAF or IOLTA if you deal with a lawyer in Colorado.
Article updated May 13, 2009.