Espada v. Commissioner of Social Security

Background

Lissette Espada applied for Social Security Disability benefits, but an administrative law judge denied her claim. After the Appeals Council denied review, Espada challenged the decision in federal court. The Commissioner later agreed to send the case back for additional administrative proceedings, and the court ordered the remand.

On remand, Espada demonstrated that she became disabled as of April 28, 2010. The Social Security Administration issued a notice awarding past-due disability benefits for the period from April 28, 2010, through February 5, 2015. The agency withheld 25 percent of the past-due benefits for attorney’s fees. It also withheld fees from past-due benefits awarded to Espada’s three eligible children.

Espada’s counsel had a contingency-fee agreement providing for a fee of 25 percent of her past-due benefits if the representation succeeded. Counsel previously received $4,300 under the Equal Access to Justice Act, a federal law that permits certain fee awards against the government. Counsel then moved under Section 406(b) of the Social Security Act for $25,000 in fees. Counsel also asked the court to subtract the earlier $4,300 award from the Section 406(b) amount rather than require a separate refund.

Legal standard

Section 406(b) permits a court to approve a reasonable fee for successful representation in federal court, subject to a limit of 25 percent of the claimant’s past-due benefits. The court must independently review a contingency-fee agreement to ensure that it produces a reasonable result. Relevant considerations include whether the agreement falls within the statutory limit, whether there was fraud or overreaching, whether counsel delayed the case, whether the fee is out of proportion to the work and result, and whether the fee would be an improper windfall.

A claimant’s lawyer may receive fees under both Section 406(b) and the Equal Access to Justice Act, but must refund the smaller fee to the claimant.

Court’s analysis

The court found that the requested fee was within the 25 percent statutory limit and that there was no evidence of fraud or overreaching. It also found that counsel did not unreasonably delay the proceedings, that Christopher Bowes was experienced in Social Security cases, and that the written submissions were specific and well supported. The court found that 24.9 hours of work was reasonable.

The court nevertheless found that the requested $25,000 fee would be unreasonable because it produced an effective hourly rate of $1,004.01. The court determined that $12,450, corresponding to an effective hourly rate of $500, adequately compensated counsel for the work, the risks of the contingency representation, and the successful result.

The court denied counsel’s request to offset the $4,300 in previously awarded Equal Access to Justice Act fees against the Section 406(b) award.

Disposition

The court granted in part and denied in part counsel’s motion for attorney’s fees. It awarded counsel $12,450. Upon receipt of that sum, counsel must refund the previously awarded $4,300 in Equal Access to Justice Act fees directly to Espada.