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Originally Posted On: https://cannondisability.com/blog/attorney-fees-in-disability-cases/
WHAT DOES A SOCIAL SECURITY ATTORNEY COST?
Attorney fees may be on your mind if you need to apply for SSD benefits. If you have a severe medical condition that prevents you from working, then you may be wondering how to win benefits through the Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) program. You should apply for benefits if you have been off work for one year or you expect to be off work for one year or more. Cannon Disability Law can help you through the application and appeal process for your benefits.
Most people worry about the cost of hiring an attorney. This article will answer your questions about what an attorney costs. Hopefully, once you know that you can hire an attorney with no money up front, then you will realize what a good idea it is. Also, this article will discuss why you should hire an attorney with the legal experience you need to win SSDI and SSI benefits.
ATTORNEY FEES WILL BE 25% OF YOUR BACK DUE BENEFIT
Attorney fees in Social Security cases are controlled by the government. The SSA sets and approves the amount of the attorney fee. For example, a judge must approve all attorney fees at the hearing level.
The SSA has capped attorney fees in Social Security cases at 25% of your past due or back benefit or $7200, whichever is less. This is the most your attorney can charge if your case is won at the hearing level or below.
For example, if your attorney wins your SSDI case and your back benefit is $10,000, then the attorney fee will be 25% of the back benefit, or $2500. In such a case, you would not pay the $7200 cap. Instead, the attorney fee is 25% of the back benefit, which is less than the cap. You pay the lesser amount. This is what happens in most SSDI and SSI cases.
YOU ONLY PAY ATTORNEY FEES IF YOU WIN BENEFITS
In another example, if your attorney wins your SSDI case and your back benefit is $100,000, the attorney fee is not $25,000, which is 25% of the back benefit. Instead, the attorney fee would be $7200. Because $7200 is the most your attorney can charge you after winning your case at the hearing level or below. That is true even if 25% is higher than the $7200 cap.
Additionally, your attorney can only charge an attorney fee if they win your case. In other words, if you do not win your benefits, then you do not pay an attorney fee. This means that your attorney has worked for up to two years on your case for free. So, if you don’t get benefits, your attorney doesn’t get paid. Obviously, your attorney has a good incentive to win your case. This attorney fee is known as a contingency fee.
WHAT IS A CONTINGENCY FEE IN SOCIAL SECURITY CASES?
A contingency fee is exactly what is sounds like: a fee that is “contingent” on you winning your benefits. This type of attorney fee is usually used in cases where the person hiring the lawyer does not have upfront money or money to bring a lawsuit. For example, many personal injury lawyers accept these fee arrangements. However, most of those attorneys charge 33% of the overall award.
In SSDI and SSI cases, since the SSA sets the fee cap, your attorney cannot charge more than 25% or the cap of $7200. You should be aware that most SSDI and SSI cases do not have a large back benefit. Therefore, in most cases the attorney fee will be around $3,000 to $4,000, which would be 25% of the back benefit. It is the rare case that will pay an attorney fee of $7200.
WHAT HAPPENS ON APPEAL?
However, some SSDI and SSI cases, which go into an appeal process, take years to resolve. In cases that go beyond the administrative hearing, to the Appeals Council or Federal Court, your lawyer can charge a higher attorney fee by filing a fee petition. The reason for this is that the attorney is doing years of work at the appeal level.
For example, if you lose your case at the hearing level, then you can appeal your case to the Appeals Council. Likewise, if you lose there, you can file a case in Federal Court. In both instances, your lawyer will spend many hours, over the course of years, litigating your case.
In those situations, your lawyer can submit a fee petition to the Social Security Administration. A fee petition can ask for the SSA’s permission to charge at attorney fee that is up to 25% of your back benefit. But again, only if the lawyer wins the case.
WHAT HAPPENS TO THE ATTORNEY FEE IF YOU HIRE MORE THAN ONE ATTORNEY?
Some people like to change horses in midstream. You may hire a lawyer and then change your mind and hire a different lawyer. If you hire a new lawyer, then the first lawyer can still charge an attorney fee. In those cases, both lawyers must file a fee petition in order to be paid. Of course, this assumes that you win your benefits, because neither lawyer can be paid if you don’t win your case.
As the client, you can request that your first attorney withdraw from your case and agree to not to collect an attorney fee. If you request it, your first lawyer does need to withdraw from the case. However, your lawyer does not have to agree to withdraw from attorney fees. If they do not, then the judge will decide, based upon the fee petitions that both attorneys file, the amounts that each attorney will be paid. Normally that decision is based on the number of hours and effort that each attorney has put into winning the case.
WILL YOUR FIRST LAWYER WITHDRAW FROM ATTORNEY FEES?
Most lawyers are willing to withdraw from fees if you ask them to do so. However, if you already have a hearing date and your lawyer filed your SSD application, worked for two years, and collected all your medical records, then they probably won’t withdraw from fees.
If the second lawyer takes the case to the hearing, she will only be able to file a fee petition for the time spent at the hearing. Therefore, it is the first lawyer who the judge will pay more money, because they have spent the most time on the case.
The second attorney probably won’t be paid much. Therefore, if your first attorney doesn’t withdraw from fees, it will be hard to find a second attorney who is willing to accept your case. Most attorneys do not want to win a case only for another attorney to be paid the attorney fee.
WHAT IS A TWO TIER FEE AGREEMENT
Some Social Security lawyers use a “two tier” fee agreement. A “two-tier” fee agreement allows the attorney to submit a fee petition if the claim is denied at the ALJ hearing, but your attorney then appeals the case to the Appeals Council or Federal Court. A fee agreement like this allows your attorney to petition for more attorney fees at the higher levels of appeal without signing a second contract with you.
Your attorney, if the case is won at the Appeals Council or Federal Court, will file a fee petition after your case ends. In the fee petition, your attorney must describe the hours that she has spent on your case. The attorney must send a copy of this fee petition to the SSA and to you. If you disagree with something in the fee petition, then you can object to it by writing to the SSA.
On successful appeals before a Federal Court, attorney fees are capped at 25% of the back benefit. Recently, the U.S. Supreme Court held in Culbertson v. Berryhill, 586 U.S. 304 (2019), that the cap of the latter set of fees at the federal level, does not include the former set of fees at the administrative level. Even if your attorney wins your case on appeal, Social Security still decides the amount of the attorney fee. If the attorney fee is too high or doesn’t reflect the amount of time spent on the case, then the SSA can refuse to approve the fee.
THE SSA HAS TO APPROVE THE ATTORNEY FEES
The SSA will only approve an attorney fee if it is reasonable. To determine how much a reasonable fee would be in a particular case, the SSA looks at the following factors:
- the extent and type of services provided by the attorney
- complexity of the case
- level of skill and knowledge required to provide the legal services
- amount of time spent on the case
- the result of the case – did the attorney win?
- if the amount the attorney charges is reasonable
The reason that the SSA controls the final approval of attorney fees is to protect the client. Congress and the SSA assume that attorneys might take advantage of clients and charge too much money. So, they require all attorney fees to be approved by the judge.
Unfortunately for attorneys, this means that a case that is won at a higher level of appeal, like the Appeals Council or Federal Court, goes back to the judge who denied the case to decide the attorney fee. The judge may be upset over her decision being overturned by a higher court. So, the judge could take that out on the attorney by not approving the attorney fee.
Some would argue that by controlling attorney fees, Congress and the SSA have made it harder for people to find an attorney. Obviously, there are many points of view on the issue of attorney fees.
YOUR ATTORNEY CAN CHARGE YOU FOR THE “COSTS” OF YOUR CASE
Attorney costs are another factor in Social Security Disability claims. Knowing what to expect can help you make a decision about hiring an attorney to handle your Social Security claim. For example, if you talk to an attorney and they say they are going to charge you thousands of dollars for costs, then don’t hire them. Yes, there are costs in every case, like getting medical records. But in most cases, the costs for your case are less than $100.
The SSA has to approve your fee agreement before your lawyer can collect fees. However, approval is not needed to collect out-of-pocket expenses or the actual costs of your claim. Before hiring an attorney, talk to them about any expenses that you may owe them in addition to their attorney fee.
You will probably have to pay costs, even if you lose your case. For example, getting a copy of your medical records costs money. Your attorney will pass that cost on to you since it is your case. You must pay the costs of your case, even if you do not win benefits.
“COSTS” AND EXPENSES THAT YOUR ATTORNEY CAN AND CANNOT CHARGE
Likewise, your attorney can also charge you for copy fees, postage costs, traveling expenses, filing fees, and other costs like these. Costs can also include getting evidence for your case, such as your medical records or medical reports. Some attorneys may send you to an exam with a doctor and obtain a medical report. If so, you would then pay the cost of the exam and getting the report. Talk to your attorney about these possible costs.
Additionally, understand that your attorney is not allowed to charge you for certain types of costs, such paralegal and secretary services. Also, they cannot charge you for a review of attorney fees on a fee petition. These costs must be paid by the attorney as they are the cost of doing business.
The SSA will simply not approve the attorney fee if they think your attorney is billing you more than they should. Since the SSA reviews all attorney contracts, it is not likely that your attorney is trying to charge you too much for costs.
THE SSA WILL PAY YOUR ATTORNEY FEES DIRECTLY (MOST OF THE TIME)
In SSDI and SSI cases, the SSA will pay your attorney fee directly to the attorney. The SSA has a program in place for direct payment of attorney fees from back due or past due benefits. Under this program, the SSA keeps part of your past due benefits for payment of the authorized attorney fee. They only do this, of course, when you have won your benefits.
Sometimes, the SSA simply fails to take out the attorney fee and send it to you instead. In those cases, you must still pay the attorney fee. You will know if this happens by reading your Notice of Award.
In your Notice of Award, it will state how much money your will receive on a monthly basis. It will also outline how much money you will receive for your back benefit. Then, there will be a paragraph stating that 25% of your back benefit is going to pay the attorney fee. If the Notice of Award doesn’t contain this language, then it will state they accidentally paid you the attorney fee. Next, your attorney will call you and ask you to pay the attorney fee once you receive your back benefit award.
If the SSA withholds an attorney fee from your benefits, then the SSA will collect a service charge from the attorney. This service charge is 6.3% of the fee amount paid. Your attorney cannot ask you to pay for this service charge.
IS IT WORTH THE ATTORNEY FEES TO HIRE A LAWYER IN YOUR SSD & SSI CASE?
It isn’t easy to get Social Security benefits. The application process can be frustrating. Mostly, because it can take years. But, having an attorney throughout this process is worth it. It is our belief that when you have an attorney handling your case, the SSA makes sure they follow their own procedures.
Additionally, when you have an attorney with Social Security legal experience, they will have access to the SSA’s decisions throughout SSA’s five step review process. They can submit medical evidence that may be missing from your case.
There is evidence that hiring an attorney with experience raises your chances of winning your SSDI and SSI benefits by 30%. It is also smart to hire an attorney to help you at your hearing. After all, you are the star witness at your hearing. If you hire an attorney with experience, then they can prepare you to testify. Learn more about how to prepare for your SSD hearing.
WHAT WILL BE THE COST IF YOU DO NOT HIRE AN ATTORNEY?
You may think that paying an attorney any amount of money out of your back benefit is too high of a cost. However, since your chances of winning your case are higher when you have an attorney, why not hire a good lawyer to help you?
The lawyers and staff at our law firm have over 30 years of experience dealing with the SSA every day. We have won over 20,000 SSDI and SSI cases. So, it is not our first rodeo. But, it may be yours. You need a lawyer with experience to show you the ropes.
It makes sense to hire an attorney to help you when you only have to pay them if they win your case. Your lawyer is taking the risk at losing money, not you. It isn’t as though you are going to lose your case, not be paid benefits, and then still owe the attorney a large amount of fees. It is a win/win situation or a nobody wins situation. Since that is the case, you should make a smart move and hire an expert. Hire the best lawyer you can find.
WHEN WILL YOUR RECEIVE YOUR MONEY?
YOUR FIRST MONTHLY PAYMENT
Your monthly SSD and/or SSI benefits begin shortly after the SSA finds you should be paid benefits. For example, if your case goes to hearing and the SSA judge grants your case, then your monthly benefits begin shortly after your receive the judge’s decision in the mail. Typically, it takes 1-2 months after the decision for your monthly SSD and SSI benefits to begin.
You should make sure that the SSA has your checking account information. The SSA uses direct deposit to deliver your check. They don’t usually send paper checks in the mail anymore. You can update your checking information online on the Social Security’s website.
Another thing that can delay your first check is failing to do an SSI update. If you are going to receive SSI benefits, then the SSA must call you and ask you financial questions. Remember, SSI requires you to have a medical condition that prevent you from work and they require you to meet their income and asset rules. The SSA needs to check to make sure you meet the income and asset rules before they pay you benefits.
These questions determine whether you meet the income and asset rules for SSI benefits. Learn more information about SSI benefits. If you receive SSI benefits, then you can also get Medicaid. Medicaid is a form of health insurance. Find out more information about Medicaid benefits.
YOUR PAST DUE BENEFIT PAYMENT
It can take a number of months before you receive your past due benefit check. It is the ALJ’s written decision that triggers SSA’s time period in which to process your check. Usually, it takes a few months after the written decision arrives in the mail for your first check to start.
It is possible to receive your past due benefits before your first monthly payment starts. But, it is not likely. It usually takes 4-6 months for the SSA to process your past due payment check. During that time you should make sure the SSA has your checking account information so they can deposit your check.
You will know that the SSA is processing your past due payment because you will receive an award letter. This letter is the Notice of Award letter.
In the letter, the SSA explains how they figure out how much money you will receive in past due benefits. Read the letter carefully. Check the math. SSA sometimes makes mistakes. If you have an attorney, they should check the amount of your past due benefit too.
DO PAST DUE BENEFITS COME IN A LUMP SUM?
All SSDI past due benefits pay out in one lump sum. This amount pays to you through direct deposit. The amount transfers from the SSA into your checking account.
However, past due SSI benefits pay out differently. The SSA will pay a past due SSI payment in one lump sum. However, they will only do so if it is a small amount. Typically, that amount is under $2000.
If your past due SSI payment is larger than $2000, then the SSA will split the past due benefit amount into three payments and spread them out over time. For example, if the past due benefits that the SSA owes you is more than 3 times the maximum monthly SSI benefit amount, then you will receive three separate partial past due payments. Part of the reason for this three part payment is that is keeps you eligible for the SSI benefit.
THREE PAYMENTS OF SSI BENEFITS AT SIX MONTH INTERVALS
In 2023, the maximum monthly federal SSI payment is $914. In 2024, the maximum SSI payment is $943 for an individual. The maximum amount for a couple who are both in SSI benefits in 2024 is $1415. If your past due SSI payment is three times this amount, then your past due benefits will pay out in three payment every six months.
The first two payments can’t be more than three times your maximum monthly benefit. The final payment due to you is paid in the third payment, no matter the past due amount.
The SSA has some exceptions to paying your SSI past due benefit payments in three separate checks. For example, if you are not expected to live more than 12 months, you can get your SSI past due benefit in one lump sum.
Additionally, it is possible for SSA to increase the first and second payments if you need funds to buy a home. Also, they will consider giving you more money if you need to pay for necessary medical needs. Or, they will give you more money if you need to pay off debts related to housing, clothing or food. If this applies to you, then you should contact your local SSA office. Your lawyer cannot do this for you. You have to call the SSA and explain your financial situation.
CAN THE IRS TAX PAST DUE SSD BENEFITS?
Supplemental Security Income (SSI) past due benefits and SSI monthly payments are not taxed.
However, SSDI benefits ARE subject to tax. Also, so is your past due SSDI benefit payment.
If you receive a large amount of SSDI past due benefits, it could put your income into a higher tax bracket. If that is the case, it might result in a tax bill for you. However, the IRS won’t penalize you for getting what could possibly be two years of past due benefits in one year. Instead, the IRS allows you to prorate the back payment amount of the number of years the back payment covers. For example, if 30% of your back payment is attributed to the current tax year, you only have to report 30% on your tax return.
Likewise, you may deduct the amount of your attorney fee at the same prorated level. For example, if your SSD attorney received $2500.75 in fees, you could deduct $2500.75 in the current tax year.
The SSA Social will send you a form called the SSA-1099 for each year you receive benefits. Cannon Disability urges you to seek the advice of a tax professional.
CAN YOU GET PAST DUE BENEFITS FROM PRIOR SSD APPLICATIONS?
The answer is yes. You can get past due or back due SSD benefits from prior applications, because SSA law allows a judge to reopen prior applications.
For example, if the SSA reopens your prior application and your onset date is prior to the previous application date, then you might be able to win more past due benefits.
SSA law allows them to reopen your first application if you file a second application within one year of the date of the denial on the first application. You can reopen the first application “for any reason.”
For example, pretend you filed your first application on January 1, 2021. Then, you were denied by the SSA on March 1, 2021. After the denial you did not appeal. Instead, you decide on January 1, 2022, to file a second application. Because your second application is within one year of the denial date, March 1, 2021, of the first application, it is possible to reopen your first application.
When you file your second application, you can request that the SSA reopen your prior application. However, whether or not the judge will reopen your prior application is up to the judge. If you want to win a prior application, then it is good to hire an attorney to represent you. Your attorney will try to win all of your past due benefits.
WHAT IS A FREE REVIEW?
As you can see, SSDI and SSI benefits and attorney fees are complex. If you apply for benefits, then you want to win all of the Social Security benefits that you are due.
Our law firm believes you should hire a law firm with the experience to obtain all of your ongoing and past due SSD benefits. We offer a free review of your case. But, what does this mean?
For most people who want to become clients, it means we will talk to you about your case over the phone. We will not charge you to examine the merits of your case. Most lawyers do charge an attorney fee to review your case. We do not.
Please understand, however, that a free review of your case is not the same thing hiring us. First, we examine the merits of your case based upon the facts you give us. Second, we might ask you to send us medical records or your SSA paperwork. We do this so we can understand the details of your case. Even if we ask for more information, it does not mean we accept your case.
You will know if you hire our legal team because we will send you our contract. We will also send you other SSA paperwork to fill out. You must return your paperwork to us immediately. If you do not sign and send the paperwork back, then we are not acting as your law firm.
WE CHARGE ATTORNEY FEES WHEN WE WIN
If you want to receive all of your past due SSDI benefits, then you should hire an attorney. An attorney can help you apply for SSD benefits.
Studies show that you are three times more likely to win benefits if you hire an attorney. Winning past due benefits can result in more money for you. In order to hire our law firm, all you need to do is call or contact us. We offer a free review of your case over the phone. And, it doesn’t cost anything to call us.
Better yet, it also doesn’t cost you any upfront money to hire us. Why? Because you only pay us an attorney fee if we win your case. If we win your SSDI case, then you pay the attorney fee out of your back benefit. If you do not win, then there is no attorney fee to pay.
As discussed earlier, the attorney fee has a cap or a limit. The SSA sets the attorney fee at 25% of the back benefit or the attorney fee cap. You pay whatever fee is less. And, only if you win.
WHAT ARE THE COSTS OF YOUR CLAIM?
If there are costs in your case, then you must pay them. But usually those costs are less than $200. Once we win your case, the attorney fee comes from your back benefit. However, the costs of your claim do not come out of your back benefit. The costs are paid by you and are in addition to your attorney fee. If you do not win your benefits, then you do not pay an attorney fee. However, you may still owe your attorney the costs in your case. Talk to your attorney about an estimate of what your costs will be.
We represent clients in many states. For example, we have clients in Nevada, Utah, Idaho, Colorado and California. You can learn more here about Idaho SSDI benefits. Colorado SSD and SSI benefits information is also on our website.
Likewise, we have information you filing an application for SSDI and SSI benefits in California. Find out more about Nevada SSD benefits. Also, learn more about Utah SSD benefits. We also have more information about California SSD benefits.
No matter where you live, we will answer your questions about attorney fees and your benefits. We want to be your legal team. If you have questions, then give us a call today.
OUR LAW FIRM CAN HELP YOU WIN BENEFITS
We want to see you win all of your ongoing and past due benefits. We also want to let you know that every attorney charges the same amount of money in Social Security cases. Therefore, you will spend the same amount of money for an attorney with years of experience as you will on a new attorney. As such, you should hire the attorney with the most experience!
Many law firms claim they practice Social Security law, but it isn’t really true. Instead, they dabble in SSD cases. Usually the main focus of their practice is some other area of law, like personal injury. Our firm is not like that. We are experts in Social Security law.
If you are curious about your benefits, then we will walk you through your options. Our attorneys and staff can help also you apply for your SSDI and SSI benefits. We can also appeal a denial of benefits. Finally, one of the most important things that we do is collect the medical records that the SSA needs to grant your case.
HIRE OUR TEAM FOR OUR EXPERT LEGAL EXPERIENCE
Additionally, if you want to learn more about the lawyers and staff at our law firm, then read our About Us page. There you will find more information about Andria Summers. She can help you choose your Medicare plan. Also, she has over 20 years of experience with our law firm.
Dianna Cannon has over 30 years of experience helping clients win benefits. She has a license to practice law in multiple states, including Utah and California. Brett Bunkall also has years of legal experience winning SSI and SSD benefits. We are experts at what we do. You can trust us to help you win your benefits.
In the past 30 years, we have won over 20,000 SSDI and SSI cases for our clients. Also, we help our clients make sure they are getting all of their benefits, including Medicare and Medicaid benefits.
If you need help at any time during your Social Security case, then contact us. Take advantage of our free review of your case. Put our legal experience to work for you and don’t worry about attorney fees. You will only pay attorney fees if we win your benefits for you.
