Typically, disability applicants who win benefits pay about $3,000 to $4,000 to their lawyers or representatives, and the fee comes out of the applicant's backpay. Fees are normally capped at $7,200, or 25% of the backpay, whichever is less. (Read our article on disability fee agreements to find out more about the usual fee.)
But some cases take years and go through extra levels of appeals, which requires more work for the lawyers. If you lose your disability appeal hearing and your lawyer appeals the case to Social Security's Appeals Council and federal district court, your lawyer will end up spending more time on your case than usual. In this situation, your lawyer is usually allowed to submit a fee petition to the Social Security Administration (SSA). A fee petition can ask for the SSA's permission to charge you more than the usual maximum fee of 25% of your backpay or $7,200.
In addition, there are several situations where a lawyer may file a fee petition to avoid not being paid at all.
Lawyers use fee petitions in the following situations to be able to collect payment.
Here are some special circumstances where attorneys can and can't use fee petitions.
More than one attorney worked on your case. 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 first attorney has agreed not to collect a fee. When two lawyers have worked on the case, the current lawyer should file a fee petition agreeing that the fee can be split between the two lawyers. If both lawyers did a significant amount of work, Social Security could approve a fee higher than $7,200.
Your case was denied. In some cases, attorneys aren't prevented 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 can't collect a fee under the fee petition process. The attorney can only submit a fee petition to the SSA after a fee agreement is denied if you won your disability claim.
Many disability lawyers set up all their fee agreements with two "tiers," in case your case goes beyond the ordinary timeline. A "two-tier fee agreement" allows the attorney to submit a fee petition if the claim is denied at the disability appeal hearing and the case is appealed to Social Security's Appeals Council and/or federal district court.
A two-tier agreement will generally call for the lawyer to be paid the usual maximum fee of 25% of your backpay, capped at $7,200, if you're approved at the initial application, reconsideration, or ALJ hearing stage, but allows the attorney to petition for fees beyond the $7,200 cap if the case goes further.
Unlike fee agreements, attorneys file fee petitions after their services in the case have ended. In the petition, the attorney must describe the specific services that the attorney has provided. The attorney must send a copy of this fee petition and any attachments to the SSA and to you. If you disagree with something in the fee petition, y ou can object to it by writing to the SSA.
There is no express limit on the amount of an attorney's fee requested under a fee petition, but Social Security ultimately decides the amount of the fee that an attorney receives. Sometimes Social Security will deny a fee petition if the fee is unreasonable or doesn't reflect the amount of time spent on the case.
The SSA will approve a fee only if it's reasonable. To determine how much a reasonable fee would be in a particular case, the SSA will look at the following factors:
Although the SSA's authorization is required before a lawyer can collect attorney's fees, it's not needed to collect an attorney's out-of-pocket expenses. These expenses may include the cost of making copies, postage, travel, and obtaining your medical records or birth certificate. Before hiring an attorney, you should discuss with your attorney whether there will be out-of-pocket expenses in addition to the attorney's fees.
Social Security doesn't 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. These costs must be paid by the attorney out of the attorney's fee. If it appears to the SSA that an attorney is attempting to skip the fee petition process by designating some services as out-of-pocket expenses instead of filing a fee petition, or if the expenses appear unreasonable, then the SSA may require the attorney to provide proof of the actual out-of-pocket expenses.
Payments under a fee petition can be paid directly by Social Security. The SSA has a program set in place for direct payment of attorney fees with past-due disability benefits. Under this program, the SSA will withhold part of your past-due benefits for payment of the authorized fee. (For an attorney to be paid under this system, 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 aren't entitled to past-due benefits but you owe your lawyer because the SSA approved a fee petition, you must pay the attorney fee out of your current monthly disability benefits.