Sometimes a disability case will require multiple hearings, an appeal to the Appeals Council, or even a trip to federal district court. These sorts of cases can drag on for many years and require a lot of work for disability attorneys. In these situations, a lawyer is permitted to file a fee petition with Social Security to allow their fee to exceed the maximum of $6,000.
Basic Fee Agreements
First, the basics: Federal law generally limits the fees charged by Social Security disability attorneys to 25% of your backpay, or $6,000, whichever is lower. Back payments are benefits that accrued while you were waiting for Social Security to approve your case. The amount of your backpay depends on your onset date of disability, when you filed for benefits, and whether you're applying for SSDI or SSI. (To learn more, see Nolo's article on how SSDI back benefits are calculated.)
Typically, SSA withholds one-quarter of your past-due benefits and pays the money directly to your attorney. The direct payment of fees saves disability recipients the hassle of arranging to pay their attorneys, and allows attorneys to receive payment without needing to bill their clients and wait for the money. The fee is capped at $6,000 but is often much less, especially if you are approved for benefits without having to wait for a hearing. Under the contingency fee arrangement required by Social Security, your attorney may not charge a fee unless your case is successful.
In order to collect fees from a client, an attorney is required to submit a fee agreement to Social Security. The fee agreement spells out the terms of the contingency fee and must be signed by both attorney and client.
In a few situations, your attorney may be able to charge more than the $6,000 cap. Here are some examples:
- You fired your attorney and hired a second attorney.
- You are denied benefits at the disability hearing level and your lawyer appeals to the Appeals Council or to federal court.
A common situation that requires a fee petition is where a claimant has a former disability lawyer who did not waive his or her fee when the client hired a new lawyer. When this occurs, the current disability attorney need to file a fee petition with Social Security so that the fee can be apportioned between the two attorneys. If both lawyers did a significant amount of work, Social Security may approve a fee higher than $6,000.
To charge a higher fee, your lawyer must submit a "fee petition" to Social Security and Social Security must approve it before the lawyer can ask you for the additional fees.