Claimants applying for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits may choose to work with a disability lawyer. But before you make the decision to hire a disability lawyer, it’s important to first educate yourself about fee structures.
How Much Does a Disability Lawyer Cost?
Disability lawyer fees are set and structured by the Commissioner of Social Security. Standard fee agreements allow for fees to be calculated at 25% of a client’s past due benefits (also known as backpay). Fees cannot exceed a cap of $6,000 per client.
As an 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 twice in the last 26 years. First, from $4,000 to $5,300 in 2002 and then, up to $6,000 in 2009.
Fee Cap Increases
A typical disability claimant requires hours of legal service and ongoing case management support. Claims can span months and sometimes years. Many disability lawyers have left the practice due to low fees and the cost of representing claimants. Others continue to petition Social Security to raise the fee cap. But, as of this article’s writing, there is no plan from the Social Security Administration (SSA) to raise the fee cap.
If the cap increases in future, 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 also incur small administrative costs related to medical records. This is because disabilty 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 exactly 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 along with 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 and then later, 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, it’s common for the Administrative Law Judge (ALJ) reviewing the fee petitions to split the fee proportionately.
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 certain 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 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. They they are paid from a claimant’s awarded monthly benefits or backpay, as applicable. Claimants are never “on the hook” for out-of-pocket lawyers fees. And, clients pay nothing if they lose their claim.
Disability Lawyers Near Me
Are you looking for Social Security Disability lawyers in Greensboro, NC? The talented, client-focused disability attorneys at Collins Price, PLLC help individuals applying for or appealing denied Social Security disability benefits. Contact us today for a free consultation. There is no obligation to hire our firm and no fee if we don’t win your claim.