Before hiring a Social Security disability attorney, you might be concerned with how the attorney will be compensated. Federal regulations provide that the Social Security Administration (SSA) has authorization to decide the amount of the fee, if any, that an attorney may charge and receive. There are only two routes to obtaining this fee: the attorney either files a fee agreement with the SSA or submits a fee petition to the SSA.
The Fee Agreement
If you and your disability attorney signed a fee agreement, your attorney will get paid a percentage of your past-due benefits if you win your claim.
Requirements for a Valid Fee Agreement
The SSA will approve a fee agreement if:
- The fee charged in the agreement does not exceed 25% of the past-due disability benefits you are awarded or a specified dollar cap, whichever is less. The maximum dollar amount of the fee may not exceed the lesser of 25% of past-due benefits, or $6,000. (For agreements approved after February 1, 2002 but before June 22, 2009, the maximum dollar amount of the fee could not exceed the lesser of 25% of past-due benefits or $5,300.)
- You win your claim, at least partially. In other words, the fee agreement is based on the contingency that you win your case, or at least part of it. For example, if you applied for both SSD/SSDI and SSI but received only SSD/SSDI benefits under Title II, the SSA can still approve the fee agreement. If you don't win any benefits, the SSA won't approve the fee agreement.
- The disability claim results in past-due benefits due to you. If you don't win any past-due benefits, perhaps because the SSA processed your claim quickly and found that your date of disability onset was fairly recent, the SSA won't approve the fee agreement. (See below for more on past-due benefits.)
Process for Submitting the Fee Agreement
Your attorney must submit a written agreement to the SSA before the date your disability claim is favorably decided. The SSA uses the date shown on the notice of the first favorable decision or determination to decide if the fee agreement has been submitted on time. If you have filed for both Social Security disability benefits under Title II (SSDI or SSD) and Supplemental Security Income (SSI) under Title XVI, the fee agreement is due before the date of the first favorable decision comes under either program.
In addition, you (or your legal guardian or representative payee) and your disability attorney must have signed the agreement. The attorney may use a stamped or photocopied signature in lieu of his actual signature. However, the SSA will not accept a fee agreement stamped only with the attorney's firm name.
The Fee Petition
The second route for obtaining attorney fees is through the fee petition process. Unlike fee agreements, an attorney files a fee petition after the attorney's services in the case have ended. There is no express limit on the amount of the attorney's fee under a fee petition.
When Is a Fee Petition Used?
Fee petitions are ordinarily used in the following situations.
- You fired your attorney.
- The attorney withdrew from your case before the SSA favorably decided the claim.
- You and the attorney had no written fee agreement.
- The SSA did not approve the fee agreement.
Attorneys are not barred from requesting a fee under the fee petition process even if your disability claim is ultimately denied. However, if you and the attorney signed a contingency fee contract where the attorney agreed to charge and collect a fee only if the SSA favorably decided your claim, and the SSA's decision is unfavorable, then the attorney may not collect a fee under the fee petition process. The attorney can submit a fee petition to the SSA after a fee agreement is denied only if you won your disability claim.
If multiple attorneys from different law firms have been involved in the case, each attorney who wants to charge and collect a fee must file a separate fee petition, unless the attorney has waived his or her fee.
Requirements of a Fee Petition
In the petition, the attorney must describe the specific services that you have been provided by the attorney and his or her office. The attorney must send a copy of this fee petition and any attachments to the SSA and to you. Based on this petition, the SSA will approve a reasonable fee. To determine the fee, the SSA will look at the following factors:
- the extent and type of services provided
- the complexity of the case
- the level of skill and competence required in providing the services
- the amount of time spent on the case
- the results the attorney achieved
- the level of appeal the claim went up to and the level at which the attorney began to represent you, and
- the amount the attorney requested for his or her services, not including expenses.
Direct Payment of Attorney Fees by the SSA
You should take note that the SSA has set a program in place for direct payment of attorney fees by the agency. Under this program, the SSA will withhold up to 25% of your past-due benefits for payment of all or part of the authorized fee. To qualify for this direct payment, there must be an approved fee agreement or fee petition, and you must be entitled to past-due benefits. If the SSA withholds an attorney fee from your benefits, the SSA will collect a service charge from the attorney. This service charge is 6.3% of the fee amount paid. The attorney cannot ask you to pay for this service charge. If you are not entitled to past-due benefits (but you owe because the SSA approved his or her fee petition), then you must pay the attorney fee out of your current monthly disability benefits.
Payment of Out-of-Pocket Expenses
Although the SSA's authorization is required for payment of attorney fees, it is not required for the payment of an attorney's out-of-pocket expenses. These expenses may include the cost of making copies, postage, and obtaining your medical record or birth certificate. The SSA does not allow these expenses to include the cost of paralegal or secretarial services, in-house experts, review of fees, or any share of the attorney's overhead or utility costs. If it appears to the SSA that an attorney is attempting to skip the fee authorization process by designating his or her services as out-of-pocket expenses, or if the expenses appear unreasonable, then the SSA may require the attorney to provide proof of the out-of-pocket expenses. Before hiring an attorney, you should discuss with your attorney whether there will be out-of-pocket expenses in addition to the attorney's fee.
Amount of Past-Due Benefits
Most disability applicants receive at least several months' worth of past-due benefits. Past-due benefits include the total amount of benefits you are owed, up to but not including the month that a favorable decision was made. (A favorable decision includes a favorable initial determination, request for reconsideration, hearing decision, Appeals Council decision, or a decision issued after a court proceeding.) In cases where your benefits have stopped as a result of an unfavorable determination, but you are continuing to receive benefits pending the appeal, these benefits are not included in the amount of past-due benefits.
There can be a large amount of past-due benefits that accrue in SSD/SSDI cases. In these cases, you might be entitled to receive disability benefits for up to an additional 12 months immediately before the month your application was filed. You qualify for this additional 12-month period of benefits if you file your application after the first month you are entitled to benefits, and you have filed an application for either disability benefits or auxiliary benefits (spousal or children's benefits based on the earnings record of someone entitled to disability benefits).
Even in SSI cases, past-due benefits can quickly accumulate, even though you can't receive benefits for those months you were disabled before you submitted a disability application. Because it can take the SSA months to decide your claim, you could be owed several months of past-due benefits by the time your claim is decided. (The SSA reported that the average processing time in 2010 for an initial SSI or SSDI determination was 111 days.) Therefore, since it will usually take at least three months for the SSA to review your initial disability application, it is likely that you will have accrued past-due benefits once your application is finally approved.
Learn more about disability back pay.