01-131 Gisbrecht v. Barnhart

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This conclusion is bolstered by Congress’ 1990 authorization of contingent-fee agreements under sec.406(a), which governs fees for agency-level representation. It would be anomalous if contract-based fees expressly authorized by sec.406(a)(2) at the administrative level were disallowed for court representation under sec.406(b). It is also unlikely that Congress, legislating in 1965, intended to install a lodestar method that courts did not develop and employ until years later. Furthermore, the lodestar method was designed to govern imposition of fees on the losing party. In such cases, nothing prevents the attorney for the prevailing party from gaining additional fees, pursuant to contract, from his own client. But sec.406(b) governs the total fee a successful Social Security claimant’s attorney may receive for court representation. Nothing more may be demanded or received from the benefits claimant.

Most plausibly read, sec. 406(b) does not displace contingent-fee agreements as the primary means by which fees are set for successfully representing Social Security benefits claimants in court. Rather, sec. 406(b) calls for court review of such arrangements to assure that they yield reasonable results in particular cases. Within the 25 percent boundary Congress provided, the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered. Courts have reduced the attorney’s recovery based on the character of the representation and the results the representative achieved. If the attorney is responsible for delay, for example, a reduction is in order so that the attorney will not profit from the accumulation of benefits during the pendency of the case in court. And if the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is similarly in order.

238 F.3d 1196, reversed and remanded.

Local effect:

The decision is consistent with current Seventh Circuit precendent, McGuire v. Sullivan, 873 F.2d 974 (7th Cir. 1989).

Ginsburg, J., Scalia, J., dissenting.