I am often asked about how attorneys are paid on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) (technically non-attorney representatives are paid the same way, but see about the “Dangers of Non-Attorney Reps in Social Security”). First, any fee charged or collected by a representative must be approved by the Social Security Administration. It is a federal crime otherwise!
Next, any attorneys can seek a fee under a “Fee Agreement” or a “Fee Petition.” Most attorneys utilize the Fee Agreement method in most circumstances because it is the most convenient method. Under federal statute, if a Fee Agreement is utilized then the attorney can charge a fee that is the LESSER of 1) 25 percent of the past-due benefits resulting from Client’s claim(s) or 2) the dollar amount established pursuant to 42 U.S.C. § 406(a)(2)(A), which is currently $6,000.00, but which may be increased from time to time by the Commissioner of Social Security. Past-due benefits are the total amount of money that Claimant (and beneficiary(ies)) become entitled to for SSDI and SSI benefits. At the time the case is approved, the Fee Agreement is usually approved and then attorney fee is supposed to be automatically withheld from past-due benefits and paid directly to the attorney.
Many attorneys utilize a two-tiered fee agreement, which means that the 25% up to $6,000 limit applies on all cases where a favorable decision is obtained at the administrative level up to and including an initial hearing before an ALJ. If subsequent appeals and hearings are necessary to obtain a favorable decision, including proceedings in Federal Court, Attorney may seek approval of a higher fee (often in the amount of 25% of past-due benefits with no specific dollar maximum) through a Fee Petition.
In a Fee Petition, the attorney sends in a form to the SSA requesting a certain fee and giving support for that fee such as an itemization of hours expended on the matter. A Fee Petition is also necessary where more than one attorney or representative has been involved in the case. For example, where a claimant fires one attorney and then hires another. The Fee Petition method takes a lot longer to get approved and paid.
If you need more information about a Social Security Disability/SSI, personal injury, EEOICPA, long or short-term disability, VA disability, Railroad Retirement Board disability, or a workers compensation matter, please contact the Law Offices of Tony Farmer and John Dreiser for a free case evaluation. We can be reached at (865) 584-1211 or (800) 806-4611 or through our website. Our office handles claims throughout Tennessee.