In the

United States Court of Appeals

For the Seventh Circuit

No. 10-3746

JAYNE A. MATHEWS-SHEETS,

Plaintiff-Appellant,

v.

MICHAEL J. ASTRUE, Commissioner of Social Security,

Defendant-Appellee.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:08-cv-1426-WTL-DML—William T. Lawrence, Judge.

ARGUED JUNE 14, 2011—DECIDED AUGUST 5, 2011

Before POSNER, ROVNER, and WOOD, Circuit Judges.

POSNER, Circuit Judge. After prevailing in this suit

for social security disability benefits, the plaintiff asked

for an award of attorney’s fees of $25,200. The district

judge cut the amount down to $6,625. He thought

the hours her lawyer had spent on the case excessive

and sliced them from 112 or 116 (we’re about to see that

it’s unclear how many hours the lawyer was seeking

compensation for) to 53. Although the judge’s explana-
2 No. 10-3746

tion for this drastic cut was skimpy, it was skimpy in part

because he had simply adopted objections made by

the Social Security Administration’s lawyer—and those

objections were compelling. They included objections to

1.5 hours that the plaintiff’s lawyer claimed for preparing

requests for extensions of time, 6 hours for preparing the

fee petition, 10 hours for preparing the reply brief in

support of the fee petition, and 16 hours for preparing a

two-page letter. It is not that any of the items were improper, see Commissioner v. Jean, 496 U.S. 154 (1990); it was

that the amount of time that he had spent on each one

was excessive. Moreover, he had added the 10 hours

for the brief to 106 hours for his other work on the

case even though the number of hours that he sought

compensation for, before the addition of the hours spent

on the reply brief, was 112. The judge wasn’t sure

whether he was asking for compensation for 106, 112, or

116 hours (or perhaps 122: 112 plus 10) The biggest

chunk of time for which he sought a fee award—85.5

hours—was for writing two briefs, and as the judge

pointed out “the majority of [the contents of] those briefs

related to arguments that were wholly without merit.”

The judge also thought the hourly rate the lawyer was

seeking—$225—excessive, and cut that down to the rate

specified in the statute (the presumptive ceiling, as

we’re about to see)—$125. Although the lawyer’s argument for a higher rate was weak, the judge rejected it on

an improper ground.

The Equal Access to Justice Act, which is the basis for

awarding attorney’s fees in this case, provides that the

award “shall be based upon prevailing market rates for
No. 10-3746 3

the kind and quality of the services furnished, except

that . . . attorney fees shall not be awarded in excess of

$125 per hour unless the court determines that an

increase in the cost of living [since 1996, when the current

version of the Act was passed] or a special factor, such as

the limited availability of qualified attorneys for the

proceeding involved, justifies a higher fee.” 28 U.S.C.

§ 2412(d)(2)(A)(ii). This is an unusual form of feeshifting statute, and rather chintzy; the usual form just

specifies “reasonable attorneys’ fees.” The departure

from it in the Equal Access to Justice Act is attributable

to the Justice Department’s reservations, shared by

a number of members of Congress, about forking over

government money to people litigating against the government. See H.R. Rep. No. 96-1418, 96th Cong., 2d Sess. 7

(1980); 126 Cong. Rec. 28,644-47 (1980). The Act’s final

form reflects this concern.

Most time spent by lawyers seeking social security

disability benefits for their clients is spent at the administrative level, and fees awarded under the Equal Access

to Justice Act are limited to work performed in the judicial proceeding challenging the administrative denial of

benefits. See Sullivan v. Hudson, 490 U.S. 877, 891-92 (1989);

Raines v. Shalala, 44 F.3d 1355, 1358 (7th Cir. 1995).

But the Social Security Act provides for awarding a

“reasonable fee” to compensate a lawyer who successfully

represents a client in the administrative proceeding.

42 U.S.C. § 406(a)(1). And if a denial of benefits at the

administrative level is successfully challenged in the

district court, the court may award a “reasonable fee”

under the Social Security Act for the lawyer’s work in the
4 No. 10-3746

judicial-review proceeding, though that fee may not

exceed 25 percent of the total past-due benefits that the

claimant received as a result of the court’s decision. 42

U.S.C. § 406(b)(1)(A). If the court awards fees under both

the Social Security Act and the Equal Access to Justice Act,

as it is allowed to do, only the larger of the two

awards may be collected. McGuire v. Sullivan, 873 F.2d 974,

977 n. 1 (7th Cir. 1989); Weakley v. Brown, 803 F.2d 575, 580

(10th Cir. 1986). (Otherwise the lawyer would be paid

twice for the same work.) The cases we’ve just cited say

that Congress decreed this result, although all they cite

is the House Report that we cited earlier, which is not

legislation. But they are right—there is legislation, just

not codified. Act of August 5, 1985, Pub. L. No. 99-80, § 3,

99 Stat. 183, 186 (1985); see Savings Provision Note to

28 U.S.C. § 2412.

In his initial submission the plaintiff’s lawyer based

his request for an hourly fee greater than $125—namely

$225—on a claim that it was the prevailing market rate

for his services to his client. But he failed to indicate

whether he meant the prevailing market rate for lawyers

in social security disability cases or some general average

of lawyer fees in the region in which he practices. And he

did not mention the cost of living or any other “special

factor.” The government in its brief in response opposed any fee award in excess of $125 an hour. The

lawyer filed a reply brief in which he divided the Consumer Price Index for 2009, when the bulk of his work

on the case was done, by the CPI for 1996, when the

statutory rate (which had been $75 an hour) was raised

to $125, and multiplied the quotient by $125, which
No. 10-3746 5

yielded $170. At argument he told us that he used the

CPI for “midwestern towns with 50,000 inhabitants”; he

practices law in the Village of Frankfort, Illinois, population 18,000. The reply brief does not indicate that he

actually used that measure and our own computation

indicates that $167 is the correct number, but we

won’t quibble over $3 an hour.

The reply brief gave no reason for choosing the CPI

over other inflation measures, nor explained why an

inflation adjustment was appropriate in this case. The

lawyer repeated his request for $225 an hour on the

ground that that was the prevailing market rate,

but presumably he meant to be asking for $170 as a

fallback if the judge refused to award him the

prevailing rate.

The Equal Access to Justice Act does not authorize an

award of the prevailing hourly rate, as such, unless it is

less than $125 an hour. For that matter it doesn’t

authorize an award of $125 per hour, or even $125 plus

inflation. The $125 rate is a presumptive ceiling; to

justify a higher rate the plaintiff must point to inflation

or some other special factor. Floroiu v. Gonzales, 498

F.3d 746, 749 (7th Cir. 2007) (per curiam); Muhur v.

Ashcroft, 382 F.3d 653, 656 (7th Cir. 2004); Healey v. Leavitt,

485 F.3d 63, 68-71 (2d Cir. 2007). If he points to inflation

he still must show that it actually justifies a higher fee;

for while it might seem obvious that a statutory price

ceiling should be raised in step with inflation, to do that as

a rote matter would produce windfalls in some cases.

Inflation affects different markets, and different costs in
6 No. 10-3746

the same market, in different ways. The framers of the

Equal Access to Justice Act were right therefore not to

create an entitlement to an inflation adjustment; the

lawyer seeking such an adjustment must show that inflation has increased the cost of providing adequate legal

service to a person seeking relief against the government.

Bryant v. Commissioner of Social Security, 578 F.3d 443, 450

(6th Cir. 2009); May v. Sullivan, 936 F.2d 176, 178 (4th

Cir. 1991) (per curiam); Headlee v. Bowen, 869 F.2d 548, 552

(10th Cir. 1989); Baker v. Bowen, 839 F.2d 1075, 1084 (5th

Cir. 1988); but cf. Johnson v. Sullivan, 919 F.2d 503, 505

(8th Cir. 1990) (intimating a presumption in favor of a cost

of living adjustment). No such showing was made.

But the district judge did not reject the request for a

higher fee on the basis of the weakness of the lawyer’s

argument. Instead he said that the information in the

reply brief about cost of living had been submitted “too

late.” Although the general rule is indeed that arguments

made for the first time in a reply brief are forfeited,

Narducci v. Moore, 572 F.3d 313, 324 (7th Cir. 2009), the

judge didn’t invoke the rule—and anyway it was inapplicable. Remember that the lawyer asked for $225 an

hour in his opening brief. The government’s brief in

response said it was too much. The lawyer replied that

it wasn’t too much because inflation brought the $125

statutory presumptive maximum to $170 in real terms.

That was a non sequitur; a cost of living adjustment

that raised the statutory fee to $170 provided no basis

for an award of $225. The lawyer named no other factor. And he didn’t help his case by arguing that he didn’t
No. 10-3746 7

even have to request a cost of living increase—that it is

tacked on automatically to the statutory fee, the way

postjudgment interest is automatically tacked on to an

award of damages. An inflation adjustment must, as we

said, be justified by reference to the particular circumstances of the lawyer seeking the increase. Suppose inflation had not affected the wages he pays his clerical employees, or had been offset by advances in law-office

technology or changes in the standards and procedures

of the Social Security Administration that made it

cheaper to litigate claims for disability benefits.

That said, a fee of $125 for legal services rendered in

2009 in a social security disability appeal seems awfully

low, especially when multiplied by the cut-down level

of hours allowed by the district judge to yield a total

fee award of $6,625. Can a contested social security

case really be litigated to judgment in a district court at

a cost in legal fees of so minute an amount? Even at

$170 an hour the total fee award would be only $9,010.

In the circumstances, as we have explained, it was not

improper for the lawyer to request the cost of living

increase for the first time in his reply brief. The

judge’s stated reason for rejecting the enhancement—

that the request was untimely—was thus invalid. His

mistake in invoking forfeiture, and the meagerness of the

fee award, which resulted in part from that mistake,

persuade us that he should take a further look at the

plaintiff’s request for a cost of living adjustment.

But that should be the entire scope of the remand. The

plaintiff’s lawyer mentioned nothing other than inflation
8 No. 10-3746

that might justify a fee award above the statutory presumptive ceiling. It is doubtful that he could have identified another justification in this case.

The Supreme Court has held that the other special

factor mentioned in the statute—“the limited availability

of qualified attorneys for the proceeding involved”—is to

be interpreted narrowly, as being limited to necessary

skills or knowledge specialized to the area of law in

question, and that any nonenumerated special factor

must likewise be specialized to that area of law and so

can’t be just a factor of “broad and general application”

such as “the ‘novelty and difficulty of issues,’ ‘the

undesirability of the case,’ the ‘work and ability of counsel,’ and ‘the results obtained.’ ” Pierce v. Underwood, 487

U.S. 552, 572 (1988).

Rarely are special factors other than the two enumerated in the statute invoked. Some courts think undue

litigiousness by the government such a factor, e.g., Jean

v. Nelson, 863 F. 2d 759, 776 (11th Cir. 1988), but

usually that would just increase the number of hours the

plaintiff’s lawyer had to spend on the case rather than

the hourly rate. Controversy in the wake of the Supreme

Court’s decision in Pierce v. Underwood has focused on

whether a specialized legal practice is ipso facto a special

factor warranting a fee above the statutory fee—the

position of the Ninth Circuit, e.g., Nadarajah v. Holder,

569 F.3d 906, 912-14 (9th Cir. 2009) (immigration and

habeas corpus)—or whether, at the opposite extreme,

the specialty must be one requiring training in a field

outside American law—the position of the Fifth and
No. 10-3746 9

D.C. Circuits. See, e.g., In re Sealed Case 00-5116, 254

F.3d 233, 235-36 (D.C. Cir. 2001); Estate of Cervin v. Commissioner of Internal Revenue, 200 F.3d 351, 355 (5th Cir.

2000)).

Neither extreme is attractive. Most lawyers are specialists; if being a specialist is a sufficient ground for a fee

award above the statutory presumptive ceiling, the

ceiling is a dead letter. But to confine the limited-availability special factor to specialties requiring training

outside of American law is too confining. Judge Boudin

proposed an attractive middle ground in his opinion

for a panel of the First Circuit in Atlantic Fish Spotters

Ass’n v. Daley, 205 F.3d 488, 492 (1st Cir. 2000),

when he said that “the statute does not assign extra compensation by ‘fields’ but by asking the practical question whether in the case at hand lawyers qualified to

handle the case can be found for $125 [per hour] or

less . . . . [I]f a plaintiff can show that a particular . . . kind

of case . . . requires for competent counsel someone from

among a small class of specialists who are available

only for [more than $125] per hour, that seems to us

enough to meet the language of the statute, its purpose,

and the Supreme Court’s gloss [in Pierce].” Our opinions are consistent with Judge Boudin’s formulation,

Flouriou v. Gonzales, supra, 498 F.3d at 749; Muhur v.

Ashcroft, supra, 382 F.3d at 656; Raines v. Shalala, supra,

44 F.3d at 1361, if not quite so crisp. (For an

exhaustive review of the dizzying array of alternative

positions in the courts of appeals, see Former Employees

of BMC Software, Inc. v. U.S. Secretary of Labor, 519

F. Supp. 2d 1291, 1347-52 (Ct. Int’l Trade 2007).)
10 No. 10-3746

It might seem that because the cost of living special

factor is not automatic, the two enumerated special

factors merge; the lawyer arguing for a cost of living

increase must show limited availability of lawyers able

to handle such a case. But that is not correct. Inflation

might have an impact across a range of fields of practice

that would make it difficult to hire a competent lawyer

even in a rather routine case in a field of law by no

means esoteric; in such a situation a fee above the

statutory fee might well be justified. When inflation is

not a factor, the lawyer does have to show that there

is something special about the particular type of case

that justifies the higher fee. That special factor has not

been invoked in this case.

And so on remand the plaintiff’s lawyer will have to

show that without a cost of living increase that would

bring the fee award up to $170 per hour, a lawyer

capable of competently handling the challenge that his

client mounted to the denial of social security disability

benefits could not be found in the relevant geographical

area to handle such a case.

A final point: the district court ordered the fee award

paid to the lawyer rather than to his client, and the government objects, citing Astrue v. Ratliff, 130 S. Ct. 2521

(2010), where the Supreme Court held that the statutory

fee entitlement belongs to the party rather than to the

party’s lawyer. But the plaintiff in this case had assigned

her claim to a fee award to her lawyer in advance, and,

so far as appears, that was not the case in Ratliff, where

the government wanted to deduct from the fee award
No. 10-3746 11

a debt she owed. Some language in the Supreme Court’s

opinion suggests that assignment would make no difference: “The fact that the statute awards to the prevailing

party fees in which her attorney may have a beneficial

interest or a contractual right does not establish that the

statute ‘awards’ the fees directly to the attorney.” Id. at

2526. But elsewhere the opinion notes that the government “often paid EAJA fees directly to attorneys in cases

in which the prevailing party had assigned its rights in

the fees award to the attorney (which assignment

would not be necessary if the statute rendered the fees

award payable to the attorney in the first instance) . . .,

[though it] has since continued the direct payment practice only in cases where ‘the plaintiff does not owe a

debt to the government and assigns the right to receive the

fees to the attorney.’ ” Id. at 2529. The language we’ve

italicized suggests that if there is an assignment, the

only ground for the district court’s insisting on making

the award to the plaintiff is that the plaintiff has debts

that may be prior to what she owes her lawyer. There

is no indication of that in this case, so to ignore the assignment and order the fee paid to her would just

create a potential collection problem for the lawyer. See

United States ex rel. Virani v. Jerry M. Lewis Truck Parts &

Equipment, Inc., 89 F.3d 574, 579 (9th Cir. 1996).

Even if our interpretation of Astrue v. Ratliff is incorrect

and the judge should not have ordered direct payment

of the fee award to the lawyer, this cannot help the government. For it is seeking to alter the judgment and it

cannot do that without having filed a cross-appeal, e.g.,

American Bottom Conservancy v. U.S. Corps of Engineers,
12 No. 10-3746

2011 WL 2314757, at *7 (7th Cir. June 14, 2011), which it

has not done. On the contrary, it urges us in the conclusion of its brief to affirm the district court’s judgment—having said a few pages earlier that the judgment

is incorrect because it ordered payment to the wrong

person!

REVERSED AND REMANDED.

8-5-11