August 3, 2016

What is a Contingent Fee Agreement?

If you have applied for Social Security disability benefits and have been denied, you may have been advised to hire an attorney to help you appeal your case.  However, you might be worried that you can’t afford an attorney – after all, aren’t lawyers famous for charging high hourly rates for every second they spend on each case?  Fortunately, if you hire an attorney or representative to help you with your disability appeal, your case will be handled with a “contingent fee agreement.”

The Social Security Administration (SSA) has rules about how attorneys can charge clients for disability appeals.  Basically, if an attorney wants Social Security to approve his or her fee agreement, it must meet the following criteria:

Contingent fee agreement
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1. You (the client) only have to pay the attorney if your claim is granted (if you “win” your appeal).
2. If you win, the attorney receives 25% of any back pay you receive. (“Back pay” is the money you receive from Social Security to cover the benefits you should have received while you were waiting for your claim to be processed and/or your appeal to go through.)
3. If your claim is granted at the initial application, request for reconsideration, or hearing level, the attorney can receive no more than $6,000, no matter how much back pay you receive.
4. If you lose at the hearing level and have to appeal your case to the Appeals Council or file a claim in federal court, most attorneys have a slightly different fee structure. Typically in those cases, the attorney receives 25% of your back pay without the $6,000 cap.  However, the attorney will likely have to submit a statement (called a “fee petition”) showing how much time he or she spent on your case in order for the fee to be approved.

In my experience, the only difference among the fee agreements of attorneys who regularly practice Social Security disability law are the way each attorney handles the payment of other expenses.  Those other expenses include (but are not limited to) copying fees, travel expenses, and fees for medical reports from treating physicians.  For example, in almost every case I handle, we have to request medical records from clients’ providers so we can submit them as evidence prior to the hearing.  These copying fees can range from $20 to a few hundred dollars, depending on how many pages of records the provider sends.

My policy is to pay those copying fees without asking for pre-payment from my clients.  If the client’s claim is granted and he or she receives back pay, I then send a bill for any copying fees I paid on his or her behalf.  However, if we do not win the claim, I don’t require payment from the client.  Other than medical record copying fees, I do not pass on any other expenses to my client.  I am aware, however, that other attorneys ask for a “retainer” fee at the beginning of representation.  They keep this money in a trust account and use it to pay the client’s expenses as they arise.  Still other attorneys don’t ask for money up front, but they require their clients to pay the copying fees for the records they request on their behalf.  All of these approaches to dealing with expenses are legal and ethical, but I highly recommend asking an attorney how he or she handles payment of expenses prior to entering into a representation agreement.  Make sure you review and understand the fee agreement (and any other documents you are asked to sign) before signing it.

In my Indianapolis Social Security disability practice, we do not charge our clients a fee if they do not win their case.  Your initial consultation is absolutely free.  I do not ask for any money up front.  If you are my client, this should tell you I only take cases I think we can win.  Through many years of experience, I am familiar with the things the SSA is looking for in a disability claim.  I strive to let my clients know how they can better their claim.  I believe it is important to find an attorney or representative who is right for you.  You should find an attorney who is willing to answer all of your questions and help you understand what is going on with your claim, from your initial consultation through the conclusion of the case.

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