Monday, January 25, 2016

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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