Tuesday, December 15, 2020

Fees for Representing Claimants -- Administrative -- How Much?

 Thirty years ago, Congress amended the representation section of the Social Security Act to establish a presumptive reasonable fee not to exceed 25% of the past due benefits or $4,000, whichever is less.  The US Inflation Calculator states that $4,000 in 1990 is worth $7,964.16 in 2020 dollars.  The current fee cap of $6,000 is behind by 30%.  Social Security informs the representative community that the average fee is less than $4,000 so there is no need for a fee cap increase.  The average will always be lower than $6,000 because that is the maximum and there are cases where very small fees are paid -- initial application paid with one or two months of past due benefits accrued, for example.  

Fees have fallen behind the cost of living by 30%.  And that is the good news.  The bad new starts with the recognition that the CPI includes consideration of Other Services.  Other Services in turn includes Legal Services.  The cost of legal services since 1990 have either lagged inflation, tracked inflation, or outpaced inflation.  Those are the three possible answers.  The correct answer is the third one:  the cost of legal services have outpaced inflation just as education and medical care have outpaced inflation.  I see a hand in the back, "by how much?"  Good question but you won't like the answer.  

Legal services has a base calculation of 100 for December 1986.  As of November 2020, the CPI-U for legal services had risen to 369.112.  We can compare that to the CPI-U for all goods with a base of 1982-84 at 100 to a current value in November 2020 of 260.817.  Using an earlier point in time, the all goods CPI represents 161% inflation.  The legal services inflation is 269% since 1986.  "Goodness gracious, are you kidding me?"  Sorry, I don't make it up, I just report the numbers.  The CPI data tool is here.  

The next question is simple, what does $4,000 worth of legal services in 1991 cost today?  The answer is disturbing:  $11,379.90.  See Historical Pricing for Legal Services.

Before the 1990 amendments, the presumptive fee was $3,000 maximum.  That was the extent of ALJ discretion.  Anything more than that required RCALJ approval.  A fee of $3,000 in 1989 would require $9,691.33 in todays dollars to buy the same quantity and quality of legal services.  That $3,000 fee ceiling was in effect in December 1985 when I got my license.  A 1986 fee requires $11,059 in November 2020 to buy the same quantity and quality of legal services.  

Are some representative overpaid for their potted plant posture during hearings?  Yes.  Should the fee caps get raised to attract the same caliber of legal talent as other areas of law?  Yes.  

The Commissioner should raise ALJ discretion to $15,000 on fee petitions.  The Commissioner should raise the fee agreement process ceiling to $9,000.  Claimants deserve that caliber of representation.  

"You get what you pay for."  

___________________________

Suggested Citation:

Lawrence Rohlfing, Fees for Representing Claimants -- Administrative -- How Much?, California Social Security Attorney (December 15, 2020) https://californiasocialsecurityattorney.blogspot.com/2020/12/fees-for-representing-claimants.html


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