2. May a Representative Charge for Time After the Favorable Decision in Social Security Cases?

This is Part II of a series on fee petitions in Social Security cases.  We previously addressed fee petitions as including travel time.  To recap:

When the fee agreement process does not apply, a representative can charge and receive a fee only upon authorization of the Commissioner. Before 1991, the fee petition process was the norm. Now the fee petition process is the exception to the rule. 42 U.S.C. § 406(a)(1) describes the exception to the rule. The fee petition process applies whenever the fee agreement process does not with limited exceptions. HALLEX I-1-2-51. The fee petition process is set out in the regulations. See, 20 C.F.R. §§ 404.1720 and 416.1520. Subsections (b) and (c) of those two sections both provide for the petition, decision, and review process. This raises the question of the parameters of agency discretion in setting fees.

May a Representative Charge for Time After the Favorable Decision?

A claimant generally contracts for the pursuit of benefits.  A period of disability or a finding of disability does not pay the bills or put food, clothing, or shelter in the possession of the claimant for benefits.  The regulatory factor – the purpose of the program – obligates a retained representative to complete the representation process to make sure that the claimant receives all of the benefits awarded by a favorable decision or determination of the agency.          

The model fee agreement language obligates the representative to secure past-due benefits to the claimant.[i]  The model fee agreement brings the interests of the claimant and the representative into harmony after the issuance of a favorable decision or determination.  Both the claimant and the representative have a pecuniary interest in maximizing the past due benefits payable to the claimant to increase the recovery of the claimant and the representative share of that recovery.

To preclude a representative from fulfilling the implied term of the model fee language would frustrate the reasonable expectations of the claimant and provide a financial disincentive to the representative to complete the work on the case.  While it may behoove a non-party to the agreement not to burden the agency with getting the math right, such a path would constitute an ethical breach of the fiduciary obligations of the retained representative and deprive the claimant of the benefit of the social contract – the disability benefits promised by the Act.

The constraints on the time and scope of the fee agreement are a matter of contract.  ABA Formal Opinion 93-379.  If the claimant and representative desired to terminate the work of the professional on the day that the agency issues a favorable decision or determination, then that critical term would need to be included in the fee agreement.  At least for lawyers, it would constitute an unethical act to detach representation only yards from the finish line. 

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[i] See https://www.ssa.gov/representation/model_fee_agreement_language.htm. 

1. Fee Petitions and Travel Time in Social Security Cases

As a practical matter, fee petitions submitted to the Social Security Administration do not bill for time, they bill for a specific result.  It constitutes a substitute for the expedited fee or fee agreement process.  The statute establishes the three criteria as (1) a written agreement filed with the Commissioner before a decision is made; (2) the fee is set at the lesser of $4,000 or 25% of the past due benefits;[i]and (3) the decision made is favorable to the claimant.  Failure of any one of the three conditions preclude the Social Security Administration from approving the fee agreement under the “expedited fee process.”  42 U.S.C. §§ 406(a)(2)(A); 1631(d)(2)(A). When that happens, the representative must file a fee petition including an itemization of time.   

When the fee agreement process does not apply, a representative can charge and receive a fee only upon authorization of the Commissioner.  Before 1991, the fee petition process was the norm.  Now the fee petition process is the exception to the rule.  42 U.S.C. § 406(a)(1) describes the exception to the rule.    The fee petition process applies whenever the fee agreement process does not with limited exceptions.  HALLEX I-1-2-51.  The fee petition process is set out in the regulations.  See, 20 C.F.R. §§ 404.1720 and 416.1520.  Subsections (b) and (c) of those two sections both provide for the petition, decision, and review process.  This raises the question of the parameters of agency discretion in setting fees.  

May a Representative Charge for Travel Time? 

A question arises whether a representative may legitimately bill for time associated with travel or waiting at the hearing office for the agency to call the matter.  The agency has no published policy or statement about billing for travel time.  “A lawyer’s time and advice are his stock in trade.”  Abraham Lincoln. 

The American Bar Association discussed billing practices for fees, disbursement, and other expenses.  ABA Formal Opinion 93-379 (December 6, 1993).  The Formal Opinion posits examples of a lawyer appearing on three matters on the same day in the same courthouse; flying cross-country for a deposition on a matter and simultaneously working on a brief for another client; and using research conducted for one client to the benefit of representation of another client.  The Formal Opinion quotes the comment to Model Rule 1.2 to the effect that the scope of services may be limited by agreement.  The Formal Opinion then answers the three questions:  a lawyer appearing on three cases may not bill for all the time associated with travel and attendance to all three clients; a lawyer may not bill for travel and preparation of a motion;[ii] and use of recycled pleadings does not permit billing again for the same time spent in the past. 

If Abraham Lincoln made a correct statement about a lawyer’s time and the client has retained a representative to handle a claim that requires travel, then travel time is compensable.  The ABA Formal Opinion assumes without discussion that travel time is compensable just cautions against double billing for the time.  Ethics and Time-Based Billing cites to the ABA Formal Opinion for the proposition that a lawyer may only bill for the time actually spent.  Michael Downey, Ethics of Time-Based Billing, Law Practice Today (ABA Law Practice Management Section 2006).[iii] 

Some have suggested that the regulatory availability of reimbursement for expenses precludes billing for time.  See 20 C.F.R. § 404.999c.  That regulation discusses the reimbursable travel expenses.  Billing for time and billing for expenses constitute two separate and discrete billable items.  It would constitute an unreasonable exercise of billing discretion to charge the client for expenses which the Social Security Administration has promised to pay by binding regulation.  But expenses for gasoline and depreciation of a private vehicle certainly constitute a subject for reimbursement, the vehicle and its consumables do not constitute the lawyer’s stock in trade; his time constitutes his stock in trade.  Lincoln. 

A representative can and should charge for reasonable travel time associated with representation of a claimant.  Claimants have an interest in retaining the representative of his/her choice without regard to the agency's ability to constrain that choice by depriving that person of the liberty to compensate the representative for all the time associated with that representation.  No ethical limitation exists to preclude the claimant form making that choice or from the representative to request compensation for the time expended. 

This takes on greater importance where the claimant and the representative never contemplate compensation for any particular allotment of time.  The claimant contracts with the representative to compensate out of a specific percentage of past due benefits.  While the amount of time expended constitutes a regulatory factor, that regulatory factor is never dispositive of the eight factors listed.[iv] 

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[i] Effective February 1, 2002, the Commissioner increased the fee cap to $5,300.  Effective June 22, 2009, the Commissioner increased the fee cap to $6,000.  See GN 03940.003.  ODAR sometimes suggests that it is not bound by POMS.  It is a factual resource regardless of the wisdom of advocating an agency publication has the net effect of deluding the public about what is and is not agency policy. 

[ii] The Formal Opinion appears to countenance watching a movie on the airplane, a purely personal endeavor.  This author submits that personal departure precludes billing for that time because the lawyer could review and re-review the file and other papers related to the client’s interests during a plane flight. 

[iii] Available at http://apps.americanbar.org/lpm/lpt/articles/mgt01064.html. 

[iv]  They are: (1) the purpose of the program; (2) services provided; (3) complexity of the case; (4) level of skill and competence required in providing the services;  (5) amount of time spent on the case; (6) results the representative achieved; (7) level(s) in the administrative process; and, (8) amount of the fee requested.  20 C.F.R. §§ 404.1725(b)(1) and 416.1525(b)(1).   HALLEX I-1-2-57.