We have talked about the typical fee agreement when you are applying for Social Security disability benefits before. But I am often asked what is maximum someone can charge?

Social Security regulations set a cap for attorneys fees.  Originally, the fee cap was $4,000, then $5,300, and as of June 2009, the cap is $6,000.

Unless the representative is charging fees under a fee petition, the most the lawyer can charge is 6,000. Or, if you are reading this before June 2009, $5,300. 

For more information, check out all the articles dealing with attorney’s / lawyer’s fees.

A “fee petition” is a way your lawyer asks Social Security for fees for his services.

I though attorneys were paid a percentage of what I get?

Percentage-based contingency fee agreements are the most common way attorneys get paid in Slocial Security cases. However there are two ways an attorney might get paid.

Fee agreements based on a percentage of back benefits:

If you win, the attorney gets 25% of your back benefits up to a $6,000 cap (this is an increase from the $5,300 cap in effect before June 2009). The 25% or $6,000  is a standard fee agreement that Social Security will almost always approve if the case is won and results in back benefits.

Fee agreements based on a fee petition:

This is the wild west of fee agreements. Your attorney has to itemize his time and ask Social Security to be paid a certain amount. Social Security will approve whatever it sees fit, which may be more or less than $6,000.

When are fee petitions used?

Typically, fee petitions are required when the attorney works on an overpayment case. However, they are also necessary you hired two attorneys and the first attorney has not withdrawn or has not waived fees. This often comes up when a person has moved and had to hire a new attorney.

Fee petitions are also used if a person disagrees with Social Security approving the standard 25% fee agreement.  If that happens, the attorney must petition Social Security to have his or her fees approved.

Read more about attorney’s fees and fee petitions.

Meet the most expensive “associate” in most law firms.  More expensive than a regular lawyer.  More expensive than the named partner.  It’s … the photocopier.

I was recently reviewing the charges for a one of my clients who was previously represented by a national law firm.  Do you know how much they were charging for copies? .35 cents a page!

That’s not all! Here is their price sheet:

$0.35 per page for photocopies

$1.00 per page for faxes

$2.50 per long distance phone call

This adds up fast! In many law offices, the photocopier earns more per hour for the firm than the lawyers!

Next time you talk to a lawyer, do not just ask about fees, ask about the expenses!

• How much will you charge me for copies?
• How much will you charge me for faxes?
• How much will you charge me for long distances calls? 
• What other expenses will I have to pay?
• What are the average expenses in a case like this.
• And, here is the big question, what is the maximum I might have to pay?

Many lawyers will set a cap on the expenses and if they cannot charge you more than the cap without your prior approval.  This prevents run-away, surprise charges at the end of the case. 

Since going digital (”paperless”), I have done away with a lot of these charges which make clients feel like they are being nickel and dime-ed. Here are my standard charges:

$0 for copies

$0 for faxes

$0 for long distance telephone calls

$0 for postage

Yes, these things cost my office some money, but so far my clients have not abused my goodwill, so I do not charge them for these services.

99% of the time, I just ask my clients to pay for the cost of their medical records. And, if my clients can get their records on their own, there may be no extra charges. 

How about you? What kinds of things is your lawyer charging you for?

I have previously written about how Social Security (usually) pays your lawyer directly if you win your Social Security disability case.

But did you know that Social Security charges to do this.  The Florida Social Security Disability Blog (in my old stomping grounds of Ocala and Gainesville), discusses the Social Security “user fee.”

The Social Security Act requires SSA to charge an assessment or “user fee” to a representative who receives all or part of his or her fee through direct payment from SSA. The Social Security Protection Act of 2004 (Public Law No. 108-203) capped the user fee at the lower of either a flat rate dollar amount or 6.3 percent of the amount of the fee payable from past-due Title II and/or Title XVI benefits. The flat rate dollar amount is adjusted periodically based on the cost of living. Currently, the flat rate dollar amount cannot exceed $79.

Yup, Social Security charges $79 to send your attorney a check.  But, do not worry!  It does not come out of your benefits.  The money comes out of the attorneys fees and your lawyer cannot charge the fee back to you!

Pop Quiz: Do you save money by waiting to hire a lawyer/attorney until your hearing is scheduled?

Answer:  No.

In a normal Social Security contingency fee agreement, you pay the same amount whether you hire an attorney a year before the hearing, or a week before the hearing.

Most Social Security disability cases are taken on a contingency fee agreement:  25% of the back benefits up to a $5,300 $6,000 cap. The new $6,000 cap goes into effect in June 2009.  Click here for more information about fee agreements in Social Security cases.

The main difference is how much time your attorney will have to help you!

Hiring an attorney early on has a lot of benefits:

• The attorney has more time to review and prepare your case.
• The attorney has more time to get you ready to answer the judge’s questions at the hearing.
• The attorney has more time to develop your medical evidence.

So, the question is:

If you are going to pay the same amount in legal fees, would you rather have an attorney working for you for 12 months helping you get ready for your hearing, or do you want to pay the same amount and just get a week’s worth of work?

Social Security lawyer Jonathan Ginsgerg has a great article about when NOT to fire your attorney and some of the unexpected consequences of kicking your lawyer to the curb!

A good point Jonathan brings up is that you may have a hard time finding a new lawyer willing to take your case:

Many lawyers are reluctant to accept cases where there has been a previous representation. Ethical, experienced lawyers do not want to get a reputation as “case stealers.

There is a second reason why lawyers are reluctant to take on a case that was previously the responsibility of another lawyer. Fees. …  [I]f more than one lawyer has filed an entry of appearance … [b]oth the new lawyer and the old lawyer will be asked to file a Fee Petition…

In my office, I rarely take on cases where there has been another lawyer unless that lawyer is willing to waive his fees (in which case I could use a Fee Agreement). Fee Petitions are time consuming and, in my opinion, they also do not reflect the value of a good lawyer’s services.

I have been the second, or even the third Social Security lawyer for some of my Colorado clients.  As Jonathan says, having to do a fee petition adds a lot of time to a case.  But, when I believe in a case, I will do it for my client.

Also, Jonathan cautions that if you are thinking of firing your attorney, make sure you do not do it for something the lawyer has no control over.  For example:  how long it takes to get your case decided.

Delays in Social Security cases are not the lawyer’s fault and there is little, if anything that the lawyer can do about the delays. The delays in Social Security disability cases are a function of the number of claims filed in your area.

In general, if you are not happy with how things are going on your Social Security case, talk to your attorney.  Let him or her know what is bothering you.  Any good attorney should  be willing to sit down with you (and your family) and discuss your concerns, frustrations and complaints.

Give your lawyer a chance to respond and make some changes.

ON THE OTHER HAND, I believe most people know if their lawyer is doing a good job for them or not. Have any of these things happened to you?

• You cannot get an appointment scheduled with the lawyer.
• When you call, you get passed to a legal assistant.
• The lawyer won’t return your phone calls.
• When you talk to the lawyer, he or she does not know what is happening in your case.

Ultimately, you may be paying the lawyer thousands of dollars on your case.  You deserve someone who will work for you.  So, clear the air with your lawyer, make sure the problems are within the lawyer’s control.  But, if you know your lawyer is not working for you, go ahead and find a better lawyer.

Jonathan has a lot of great material which I have only touched on.  Read the rest of his excellent article here.

Have you had a terrible or terrific experience with a lawyer?  Share it in the comments!

What if i hire a lawyer and they don’t do anything?

What if I am not happy with the lawyer?

I don’t want to be stuck with a big bill.

Fortunately, Social Security takes a lot of the worry out of hiring a lawyer.

You only pay if you win.

Most attorneys who specialize* in Social Security disability cases work on a contingency fee basis.  You only pay attorney fees if you win.  If you do not win, you do not have to pay attorney fees. The exception to this is in cases where there are no back benefits for the attorney to take fees out of, for example, overpayment cases.  In those cases, the attorney petitions Social Security at the end of the case to approve fees for the attorney’s services.  Social Security, not the attorney, decides what you have to pay.

Social Security puts a maximum cap on what you have to pay if you win.

Social Security caps the percentage an attorney can charge and the total maximum an attorney can receive for fees. An attorney can charge no more than 25% of the back benefits in the case, up to a maximum of $5,300 $6,000. You can read more about attorneys fees in Social Security cases here. This $5,300 cap may increase at some point in the future, but it probably wont be any time soon.  As of June 2009, the fee cap is increased to $6,000.

Social Security has to approve any fees an attorney charges you.

Not only does Social Security regulate the percentage and maximum fee an attorney can charge, you do not owe any fees until and unless Social Security approves the attorney’s fees. Not only does the attorney have to win your case, Social Security has to approve the amount your attorney will be paid.

The only way an attorney gets paid is by getting results for you.

Because of the regulations Social Security has in place, the only way attorneys can get paid is by winning. There is no padding hours, no extra jobs to be done, no “rust coating on the undercarriage”  The attorney only gets paid if you win.

This gives Social Security disability attorneys a LOT of incentive to work to get the best result for you!

Updated March 26, 2009.  CC photo credit: stephmcg

*Disclaimer: Colorado does not certify lawyers as “specialists” in any field.

Social Security fee agreements take one of two forms:

1. Contingency based: If you win, the attorney gets 25% of your back benefits up to a $5,300 $6,000 cap. The “25% or $5,300 $6,000″  fee agreement is a standard fee agreement that Social Security will almost always approve if the case is won and results in back benefits.
2. Fee Petition. This is the wild west of fee agreements. The representative has to itemize his or her time and ask Social Security to be paid a certain amount. Social Security will approve whatever fees it sees fit, which may be more or less than $5,300 $6,000.

2009 UPDATE: As of June 2009, the fee cap is increased to $6,000.

If an attorney asks you to sign a fee agreement that is not either for a 25% contingency, or based on a fee petition, watch out!

Why would an attorney require a fee petition based fee agreement?

One reason is that some cases, such as overpayment cases, have no back benefits.  So, the 25% fee agreement will not work (25% of 0 equals 0). In those cases, an attorney has to do a fee petition and may require a retainer which is held in a trust account until the case is over and SSA approves fees.  This is discussed in detail here.

Other times, an attorney will require a fee petition fee agreement because he or she wants to charge more than the $5,300 $6,000 cap.  If this makes you angry, hold on a moment. There are attorneys who take “lost cause” cases – cases where a person is trying to prove a disability started 10, even 20 years ago; cases which have taken more than 8 years with a the cases having multiple appeals to the Appeals Council and even District Court.  In those exceptional cases, a fee petition requesting fees in excess of the cap is reasonable. However, in most “regular” Social Security cases, the $5,300 $6,000 cap protects the client from overpaying for legal services.

Tip:  keep in mind this is only for fees (paying the representative for his/her time and experience. This does not include reimbursing the lawyer for expenses (any money the lawyer spends to develop the case, e.g. costs for medical records).  Expenses are separate from fees and you may have to pay expenses even if you do not win (and do not owe any fees).

Social Security regulates what a representative can charge.

Social Security recently loosened their rules about who can practice in front of the Social Security Administration. Until recently, only lawyers could provide representation in front of Social Security and charge a fee.  Now, non-lawyers can set up shop and provide representation on Social Security claims.

However, the cardinal rule is that a representative (lawyer or non-lawyer), cannot charge any fees unless it is approved by Social Security.

Unfortunately, this is where some non-lawyer representatives play fast and loose. They may charge you some money up front and may not refund it if they lose the case.  Some people do not ask for the money because, “well, they took my case and they tried their best.” However, under Social Security regulations, a representative cannot charge any fee (remember, this does not include the representative’s expenses in building the case) unless it is approved by the Social Security Administration.

Of course, you may have the same problem with a lawyer.  But, because of the higher level of regulation lawyers work under, they are are less likely to scam you.

I personally feel that since you are not paying any less for a non-lawyer on a Social Security case, you are generally better off getting a lawyer to represent you.

However, the touchstone of choosing a representative is deciding who is best able to help you.  Here are articles about questions to ask when choosing a representative.  Article 1.  Article 2.

Updated 03/26/09.

I have tried to give you as much information as I can about Social Security overpayment / repayment cases, because the chances of finding an attorney to work with you are not very good.

Many Social Security attorneys get paid out of the back benefits they win for the client (typically 25% up to a cap of $5,300.00 $6,000 as of June 2009).  But, when you have an overpayment case, the best outcome is you will owe $0.00.  25% of $0.00 is $0.00.

In other words, there is nothing for the attorney to take a percentage of, if they win. If you want legal help on an overpayment case you will probably have to pay some money up front. This may be between $1,000 and $3,000 depending on the complexity of the case. While my office does handle Social Security overpayment cases, they make up a small part of my Social Security practice because most people cannot afford the retainer.

Also, many attorneys do not take overpayment cases because of the extra requirement of petitioning Social Security to approve fees.  This takes extra time, beyond the time spent proving the case, just to try to get paid.

Is it worth hiring an attorney on an overpayment case?

Whether paying the retainer is worthwhile for you will depend on how much money you owe Social Security.

If you only owe $1,200, paying an attorney $1,000 probably does not make much sense.  But, if Social Security says you owe $15,000, then it may be worthwhile to pay an attorney for help.

Social Security has to approve any fees an attorney charges you.

When I say, “pay the attorney,” that is just short hand.  What I really mean is that you provide a retainer that is held in trust until the end of the case and the fee petition is ruled on by Social Security.

Under Social Security regulations, an attorney can almost never take any fee unless it is approved by Social Security. Note:  this requirement only applies to fees: paying for the attorney’s time.  Social Security does not have to approve what you owe your attorney for expenses:  money spent developing the case.

When you hire an attorney for a Social Security case, if you pay a retainer toward fees, the attorney can never take fees out of that retainer unless Social Security approves the fees.  You will know if Social Security has approved any fees because they will send you a letter, usually anywhere from 1 to 6 months after the case ends, telling what fees, if any, they have approved for the attorney.  If Social Security denies fees, they attorney must return the retainer.

What happens to the interest?

Good question!  In Colorado and many other states, there are special accounts called IOLTA (Interest on Lawyers Trust Accounts).  These are “pooling” accounts for holding multiple trusts when the amount of money is not large enough, or will not be held long enough, to warrant its own account.  Any interest earned is paid to that state’s IOLTA foundation and the money goes toward information and education about the legal system; not, I am sad to say, mountaintop retreats for retired lawyers. Ah well, a lawyer can dream, can’t he?

In Colorado, the IOLTA accounts are called COLTAF (Colorado Lawyers Trust Account Foundation) accounts.  So, you may hear COLTAF or IOLTA if you deal with a lawyer in Colorado.

Article updated May 13, 2009.

Nate Craig of Truth of the Matter Asserted has a great article on how easy Social Security makes it for you to hire and pay for an attorney:

Social Security cases are paid on a contingency basis, which means that the attorney can only collect a fee when you are successful in winning your case. … Currently this amount is 25% of the claimant’s owed back benefit or $5,300, which ever is the least amount. … If you are not succesful, you owe the attorney nothing [and Social Security] will send the attorney’s fee directly to the attorney…

In my opinion, this is a great deal. Of course, you can take that with a grain of salt, since I make my living representing people on disability claims in Colorado.

If you win, you pay 25%  of whatever back benefits you are owed. And, the attorney’s fees are capped at $5,300 $6,000.   If you do not win, you pay nothing — other than the attorney’s expenses in developing your case (usually between $100 and $200). Basically, you are simply reimbursing the attorney for any money the attorney spends in building your case. However, you are not paying the attorney for his or her time unless you win.

Can you imagine only paying a doctor if he makes you better, or only paying a mechanic if the squeak or rumble goes away? And then, you only pay after  all the work has been completed — a year or more later?

That is the deal you get when you hire a Social Security attorney! The attorney invests his or her time in developing your case in the hope that he or she can win your case, and gets paid by Social Security out of the back benefits that you win.

In exchange, you get the help of someone who regularly handles Social Security cases. This may be your first case, or you may have applied several times. But, wouldn’t you like to have the help of someone who has done hundreds of cases to be there beside you, guiding and helping you?

Read the rest of Nate’s article here.

Disclaimer: Colorado does not certify lawyers as “specialists” in any field.

Updated 05/02/09: fee cap increasing to $6,000 in June 2009.

You call one attorney looking for help on a Social Security problem.

I can’t help you.

You call another attorney.

We aren’t taking any new Social Security cases.

You make one more call.

We don’t do Social Security cases anymore.

You may soon not be able to find an attorney to take a Social Security case. Why? Social Security is dropping the ball on processing a form which allows attorneys to be paid. And if attorneys cannot get paid for their work helping people with Social Security problem, they won’t be able to keep taking Social Security cases.

Social Security disability attorneys typically work on the standard Social Security fee agreement: 25% of back benefits, up to a $5,300.00 cap. If they lose, they do not get paid. Social Security pays the fees directly to the attorney. As a client, the only thing you may need to pay, are expenses related to the case such as the cost of medical records.

Beginning in 2007, Social Security required attorney’s who want to be paid by Social Security if they win to file a new form: SSA-1695 Identifying Information for Possible Direct Payment of Authorized Fees. Without this form, Social Security will not pay the attorney.

Here is the problem: Social Security is not processing the 1695 forms attorneys send in. This means the attorneys cannot be paid by Social Security.

The National Organization of Social Security Claimant’s Representatives (NOSSCR) issued a release on January 29, 2008 stating:

.. many district offices are not routinely sending the acknowledgment form, although they should be. …. In other words, because there is no SSA-1695 form on record, your fees will not be withheld.

So, we only get paid if we win, but even if we win, we still may not get paid. You can guess what this will mean for the number of attorneys willing to take Social Security cases.

This can be fixed if the local Social Security offices process the 1695 form by entering the information and sending back an acknowledgment form. But, with many local offices overwhelmed and understaffed, will this really be a priority?

Am I being alarmist? This has happened in other areas of law. Try to find an attorney to handle a Federal Workers’ Compensation case. Or, look at VA cases. Until recently, the most an attorney could charge in a Veterans Administration case was $10, which pretty much guaranteed you could not find an attorney to help you fight the VA.