Introduction
Claimants applying for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits may choose to work with a disability lawyer. However, before hiring a disability lawyer, it is essential to educate yourself about fee structures.
How Much Does It Cost to Hire a Disability Lawyer?
What is a Contingency Fee?
Disability lawyers typically work on a contingency fee basis, which means they only get paid if you win your case. This fee structure ensures that legal representation is available without upfront costs. The fee is a percentage of your back pay—the money you are owed from when you became eligible for benefits to when your claim is approved. This arrangement prioritizes the lawyer’s commitment to securing the best outcome for your case.
Disability lawyer fees are set and structured by the Commissioner of Social Security. Standard fee agreements allow fees to be calculated at 25% of a client’s past-due benefits (also known as backpay). Fees cannot exceed a cap of $9,200 per client.
For example, if a client’s backpay is $24,000, the attorney fee would be 25% or $6,000. If a client’s backpay is $10,000, the attorney fee is $2,500. If a claim is successful but awards no backpay, the attorney doesn’t receive any fee for their services. And if a claim is not successful, there is also no fee for the attorney’s services.
The Omnibus Reconciliation Act of 1990 (OBRA) set the original cap on fees under standard fee agreements at $4,000. The Act also gave the Commissioner of Social Security authority to increase the cap. The Commissioner raised the fee cap four times in the last 22 years up to its current maximum of $9,200 per client.
The Role of the SSA in Approving Contingency Fee Agreements
The Social Security Administration (SSA) reviews and approves all contingency fee agreements. This oversight ensures that the fee structure complies with federal regulations and is fair to claimants. Before a lawyer can receive payment, the SSA must approve the agreement, offering an extra layer of transparency and protection.
How Back Pay is Calculated
Attorneys only receive payment if back pay is awarded, meaning you won’t face any upfront costs. The SSA is critical in determining your disability onset date, which directly affects your back pay. For example, if the SSA rules that you are disabled going forward but not as of your alleged onset date, you will still receive benefits. Still, your lawyer will not receive payment for the time spent on your claim related to earlier periods. This safeguard ensures fairness for clients throughout the process.
Social Security Attorney Fee Cap
Currently, disability attorneys’ fees are capped at $9,200, or 25% of your back pay, whichever is less. The SSA sets this fee cap to prevent excessive charges and ensure that legal representation remains affordable for claimants.
If the cap increases, disability lawyers will incorporate the new fee cap language into their standard fee agreement. The increase, if any, will be minimal to avoid financial hardship for future claimants.
In addition to the fee cap mentioned above, claimants working with lawyers may incur small administrative costs related to medical records. Disability lawyers often retrieve medical records for their claimants, and their treating physicians charge a fee for copies. These costs are typically minimal (<$350), and most attorneys waive these fees if a claim isn’t successful.
There are exceptions to the fee cap, which may result in higher attorney fees. Typically, this only impacts claimants working with more than one lawyer or claimants who signed a two-tier fee agreement. We cover these exceptions in more detail below.
How Do Disability Lawyers Get Paid?
In most cases, disability lawyers work with standard fee agreements using the 25% backpay calculation we described above. However, lawyers also occasionally use a billing arrangement called a fee petition. The fee petition is precisely what it sounds like a process by which the disability lawyer petitions Social Security for a fee. In doing so, the lawyer submits an accounting of time spent on the claim and their requested hourly rate.
Fee petitions typically occur when a successful disability claimant works with more than one lawyer on their claim. Some clients work with a lawyer for some time, then fire that lawyer and hire a new one. In those cases, if the claimant is successful, the lawyers will split any approved fees and submit fee petitions for time spent on the claim.
When this occurs, the Administrative Law Judge (ALJ) reviewing the fee petitions typically splits the fee proportionately.
Other Out-of-Pocket Fees
While attorneys work on a contingency fee basis, minimal administrative costs may be associated with your claim. These could include fees for obtaining medical records or other necessary documentation, typically between $20 and $200, depending on the nature of your case. These costs are usually small and will be discussed upfront by your attorney.
Two-Tier Fee Agreements
In addition to fee petitions, some lawyers may use two-tier, non-standard fee agreements. If you work with a lawyer using this type of agreement, they will explain the contract in detail before you hire them. A two-tier agreement includes language which states that if the claim continues past a particular stage (typically past a hearing denial), the 25% backpay calculation is voided. Then, the attorney submits a fee petition for time spent on the claim.
Most disability claimants never encounter a two-tier agreement or have to worry about additional fees. But claimants who wish to pursue claims beyond a hearing and attorneys who offer this type of representation typically use a two-tier agreement. This allows lawyers to petition for a reasonable, non-capped fee and recover costs for the significant amount of time spent on the claim.
In closing, remember that no matter the structure, all disability lawyer fees must be reasonable and first approved by Social Security. As applicable, they are paid from a claimant’s awarded monthly benefits or back pay. Claimants are never “on the hook” for out-of-pocket lawyers fees. Clients pay nothing if they lose their claim.
Benefits of Hiring a Disability Lawyer
Hiring a disability lawyer significantly increases your chances of getting your claim’s approval. A lawyer can help gather the necessary medical evidence, prepare your application, and represent you at hearings, ensuring your case is presented effectively. By understanding the nuances of Social Security Disability law, your attorney can identify potential issues and address them proactively.
Making an Informed Decision
Choosing a disability lawyer involves understanding their fee structure and the benefits they provide. With no upfront costs, minimal administrative fees, and a payment system tied to your success, disability lawyers offer a valuable service. Evaluate your options carefully and ask questions to ensure you’re comfortable with your representation.
Conclusion
If you’re considering applying for Social Security Disability benefits, hiring an experienced disability lawyer can help maximize your chances of approval. Contact us today to schedule a free consultation and learn how we can guide you through the claims process.
