Source: http://www.ssa.gov/OP_Home/rulings/di/09/SSR80-20-di-09.html
Timestamp: 2015-05-24 05:10:32
Document Index: 340244262

Matched Legal Cases: ['§ 206', '§ 206', '§ 406', '§ 413', '§ 923', '§ 406', '§ 406']

SSR 80-20c
Disability Insurance SSR 80-20c: SECTION 413(b) (30 U.S.C. 923(b)) BLACK LUNG BENEFITS -- REPRESENTATION OF CLAIMANT -- FIXING AMOUNT OF ATTORNEY'S FEES -- ADMINISTRATIVE AND COURT PROCEEDINGS
20 CFR 410.686a-410.686d
WHITT v. CALIFANO, USDC, Fourth Circuit, Civil No. 77-2322 (7/12/79)
The Social Security Administration appealed the amounts of the attorneys' fees awarded by a district court to the claimants' attorneys in five Black Lung cases. It contended that the district court improperly gave consideration to and granted compensation, in part, for work done by the claimants' attorneys in administrative proceedings. The Social Security Administration further contended that if the time spent by the claimants' attorneys in administrative proceedings was disregarded, then the amounts of the attorneys' fees awarded were grossly excessive, considering the time spent by the claimants' attorneys in court proceedings. The fees awarded were close to the maximum allowable by statute. In remanding these proceedings to the district court for clarification, the circuit court held that although a district court, in awarding attorney fees, has considerable discretion in evaluating an attorney's services in court proceedings, it is neither to consider nor to make any allowances for the attorney's services in administrative proceedings. The circuit court further held that the power to award attorney fees for administrative proceedings rests solely with the Social Security Administration.
This is an appeal by the Secretary of Health, Education and Welfare [HEW] from the allowance by the district court of attorneys' fees to claimants' attorneys in five black lung cases.[1] Because the objections of the Secretary to the allowance in all the cases are similar, the cases were consolidated on appeal. We remand for further proceedings.
The Secretary urges that it is manifest the district judge in making the awards in the cases improperly gave consideration to and granted compensation, in part, for work done by claimants' counsel in administrative proceedings and that, if the time spent in representing the claimants in the administrative proceedings is disregarded, the amounts allowed are grossly excessive on the basis of counsel's time spent in representation of the claimants before the court. In support of these objections, the Secretary points to several petitions filed by counsel for the allowance of fees, in all of which counsel, in itemizing their services, and in allocating time spent in such services, include their services in the administrative proceedings. He, also, questions including in the statement of services charges for the preparation of the petition for a fee allowance and of the drafting of the order allowing a fee.[2] He would analyze the services of counsel largely in terms of time expended, as shown in the itemized statement of services as filed with the court by counsel. On that basis, he contends that, if the awards are restricted to services in the court proceedings, they vary in hourly charges from approximately $150 to about $520. He argues that this great disproportion in allowances, as based on time spent, bespeaks excessiveness. He complains, further, that the awards were all couched in the same language, except for title of case and adjustment of figures to conform to the facts of the particular case, and followed a standard "boiler-plate" form, in which the allowances represented somewhere between roughly 20 and 22 percent of the past-due benefits due in each case. It is apparently his position that this circumstance suggests that the allowance followed a pattern under which fees were awarded perfunctorily, close to the maximum allowable by statute, without a careful review of the services rendered by counsel in the particular case.
The legal objections raised by the Secretary were considered and decided in McKittrick v. Gardner (4th Cir. 1967) 378 F.2d 872, which has generally been regarded as the guiding authority governing the allowance of fees under the Social Security Act. It is unnecessary to repeat all the general considerations stated in that decision for governing the exercise of the district judge's discretion in the allowance of attorney's fees in cases such as these. We particularly emphasized in that case that, though, the district judge, in making his award of fees, is properly clothed with considerable discretion, he was neither to consider nor to make any allowance for services rendered by counsel in the administrative proceedings. That power to make allowances for those services rests solely with the Secretary. It follows that, lest the district court be misled about the extent of counsel's services, counsel, in listing the services, expressed in terms of hours expended for which he seeks allowance, should not include any itemization of services rendered in the administrative proceedings.
The Secretary argues vigorously that counsel for the claimants in these cases improperly rested their petitions for a fee substantially on the work performed in the administrative proceedings. He refers, as we have said, to the itemization of services filed by counsel with the district court. In one of the cases identified by the Secretary, where counsel asked for a fee of $4,500 and the district judge allowed $4,200, the hours expended on the administrative proceedings seem to have exceeded those allocated to the court proceedings by approximately three to one. This disparity in hours, he says, shows that a part of the substantial fee requested must have been allocated to the administrative proceedings.[3] These circumstances would indicate, the Secretary urges, that the judge, in making his allowances, looked to the total hours of work listed in their itemization by counsel, without possibly noting the differentiation between work done in the administrative proceedings and work in the court proceedings. It does not, of course, necessarily follow that counsel were seeking by their petitions and the district judge was making an award of fees, in part, for services in the administrative proceedings. The facts are such, however, as to make it appropriate for us to remand these proceedings to the district court for clarification.
In remanding, however, we would emphasize again that the allowance of fees in cases such as these is a matter that properly is committed to the discretion of the district judge, whose familiarity with the proceedings uniquely qualifies him to evaluate the services of counsel and to give appropriate weight to the considerations outlined by us in McKittrick.
(For the reader's convenience, the decision in McKittrick v. Gardner follows. Ed.)
HAYNESWORTH, Chief Judge:
In each of these cases, the Secretary objects to a routine allowance of attorney fees to lawyers representing claimants to social security benefits. In each instance the claimant prevailed in the District Court, and the Secretary does not question the lawyers' entitlement to reasonable fees. He complains only of the controlling significance given to contingent fee contracts in fixing the fees.
In the Crouch case, the District Court on November 18, 1966, because of a contingent fee contract, approved a fee of $656.37, which was twenty-five per cent of the accrued benefits. The District Judge wrote an opinion in which he declared that fees would be routinely allowed in accordance with contingent fee contracts if the contractual fee did not exceed twenty-five per cent of the accrued benefits, the claimant approved the payment and there was no affirmative indication of overreaching or unfairness. Our opinions in Lambert v. Celebrezze, 4 Cir., 361 F.2d 677, and Redden v. Celebrezze, 4 Cir., 361 F.2d 815, were construed as requiring an exercise of the Court's independent judgment only when the contractual fee exceeds the statutory maximum of twenty-five per cent.
In the McKittrick case, the District Court routinely approved a fee equal to twenty-five per cent of the claimant's accrued benefits. Subsequently, on November 2, 1966, a supplemental fee was allowed equal to twenty-five per cent of the accrued benefits due dependents, making the total approved bee approximately $1,752.00. The District Judge had been informed of the existence of a contingent fee contract, but the supplemental order allowing the additional fee rests only upon findings that there were accrued benefits payable to dependents and that neither claimant nor his wife objected to the allowance of an additional fee equal to twenty-five per cent of those benefits. There was no explicit determination of the reasonableness of the fee.
[1] Subsequent to the allowance of the fees in these two cases, we filed an opinion on rehearing of the Lambert and Redden cases. Redden v. Celebrezze, 4 Cir., 370 F.2d 373. There, we held that the maximum fee base included accrued benefits due dependents, but we also emphasized our reading of the statute[4] as requiring the court in every case to fix and determine a reasonable fee for services rendered in the court. We specifically stated, "Routine approval of the statutory maximum allowable fee should be avoided in all cases,"[5] and this is true whether or not the fee claim has a contractual basis.
Our holding on rehearing in Redden requires a vacation of the fee orders in these cases.
[2] As we attempted to point out in Redden, the statute requires the court to fix and allow a reasonable fee for services rendered in the judicial phase of the proceedings. It appears to contemplate no blind deference to contractual fee arrangements, and the congressional scheme, which places ultimate responsibility upon the court in every case, seems appropriate for a number of reasons.
The rate of accrual of benefits varies without any relation to the merits of the claim. It is fixed by such things as the claimant's prior earnings and the number of his dependents. The issue in the usual case is entitlement to benefits; their computation is rarely in question. Unlike personal injury actions, therefore, the amount of the recovery bears no relation to the lawyer's skill, effort or effectiveness.
If, in these cases, a contingent fee contract governs the amount of the fee, the dilatory lawyer is given a premium; the prompt, effective lawyer who move expeditiously is penalized. The regrettable delays in the final adjudication of these claims, in large measure, may be unavoidable, but they should not be compounded by incentives for procrastination and delaying tactics on the part of a claimant's attorney. The modest fees claimed here may be contrasted with those claimed in Redden, where the fee base exceeded $16,000. We attribute no responsibility to the lawyer in Redden for the delay which permitted the accrued benefits to reach that level, but it is obvious that in a similar case the size of the fee base would depend, to a substantial extent, upon the effectiveness of the lawyer's advancement of his client's cause with an inverse effect upon his fee. While most lawyers are conscientious, statutes need not encourage those who are not completely so to be less conscientious in the expeditious prosecution of the claims of their clients.
More importantly, the worth of the lawyer's services varies profoundly with his effort and its effectiveness. There are lawyers i this circuit, handling such claims, who file complaints in such general and summary form that a secretary could prepare them from office forms. The complaint is followed by a motion for summary judgment in a form appropriate for every case. Without the assistance of any brief or any exposition of the facts, the lawyer casts upon the court the burden of sifting the record and, unaided, of resolving any legal question which may be involved. Such lawyers, expending little or no effort as advocates of their clients' causes are atypical, but they do exist, and they do not deserve the same fee allowance as their more deserving brothers who conscientiously assist their clients and the courts.
It would be foolish to deny that the quantity and the quality of the services rendered by lawyers in such cases as these varies throughout a vast spectrum from very little to very great, and, after a favorable outcome, the least of them may be the quickest to declare to the client, "I won your case." Such a claimant is unlikely to object to an allowance of a fee in accordance with his contingent fee arrangement, for, rightly or wrongly, he will usually give the lawyer all of the credit for the success in winning an award of benefits for him. The Bar, as a whole, is a responsible, highly motivated group, but those whose performance depress its averages are not entitled to compensation of the same basis with equal reward as those whose performances elevate it.
Our decision here is governed by the statute, but such considerations as these lend support to the congressional purpose and our construction of it.[6] No one, of course, questions the appropriateness of congressional regulation of the fees payable in connection with an award of benefits under a comprehensive, statutory plan for the support of disabled persons.
The statute, as we construe it, imposes no great burden upon the courts. In the ordinary case, no evidentiary hearing is required. The district judge will know what assistance he received from the claimant's attorney. If, with little or no assistance, he is required to read the entire administrative record, discover the issues and do the basic research in his library before he approaches performance of his ultimate decision-making role, he will know it. He will know it if, in our adversary system, the lawyers have performed superbly or adequately, their function of eliminating irrelevancies, pointing up the issues to be decided and supplying the court with the legislative and judicial materials which he must have at hand when he reaches his ultimate conclusion. He will know, too, the worth of their analyses of the relevant materials, for he will have appraised them in depth in coming to his own decision. If the lawyer's performance has been somewhere in between the excellent and the wholly unacceptable, the judge will know it in all of its gradients. The judge who has decided a case, need hold no evidentiary hearing to determine the extent and quality of the assistance he received from the lawyers in reaching his conclusion and in preparing an opinion.
The judge may be assisted by a statement of the time spent by the lawyer, though such statements must be subordinate to the judge's evaluation of the lawyer's contribution to the decision. The evidence of a lawyer's fidelity and commitment to his client's cause, which is reflected in his performance in court, may be colored by reports or evidence of extra-legal financial and consultative services rendered by the lawyer to a claimant experiencing difficult, even insolvable, problems while awaiting receipt of the benefits he seeks. In short, the judge may receive supplemental reports and statements from the lawyer in aid of his fee claim, provided copies have been furnished the Secretary, but the controlling criterion will remain the quantity and quality of the lawyer's services as observed by the judge in the judicial proceedings.
Under these circumstances, an evidentiary hearing as a prerequisite to an order approving or allowing a fee should be rarely, if ever, necessary. There may be extraordinary cases in which the lawyer's claim may depend in part upon factual assertions which are questioned by the Secretary, but in the vast majority of cases, the judge's own observation of the lawyer's performance in the adjudicatory process will be a sufficient basis for his allowance of a reasonable fee.[7]
[3] While the judge must approve the reasonableness of the fee in every case and may not unquestioningly endorse contingent fee contracts providing for a fee of not more than twenty-five per cent of the accrued benefits, there is no prohibition against his consideration of the contingency of compensation. Availability of lawyers to such claimants is of the highest importance, and if a lawyer is to receive no compensation unless there is an award, his compensation is contingent whether or not he has a contract that says so. Most of the disability claimants have no other resources for the payment of fees. The contingency of compensation, whether it stems from an employment contract or results from the claimant's indigency, is highly relevant in the appraisal of the reasonableness of any fee claim. The effective lawyer will not win all of his cases, and any determination of the reasonableness of his fees in those cases in which his client prevails must take account of the lawyer's risk of receiving nothing for his services. Charges on the basis of a minimal hourly rate are surely inappropriate for a lawyer who has performed creditably when payment of any fee is so uncertain.
[4] In each case, therefore, the statute requires the court to fix and determine a reasonable fee. It may approve a fee in accordance with a contingent fee contract within the statutory maximum, if it finds, under all of the circumstances, that the fee is reasonable, and in its consideration of reasonableness it may consider all relevant facts and materials, including he contingency of compensation. We suggest no limitation upon the court's exercise of its discretion. We hold only that its discretion must be exercised in each case, without automatic or unquestioning acceptance of contractual arrangements.
It may be unfortunate that § 206(b) of the Act[8] appears to limit the court's allowance of a fee to the reasonable value of the lawyer's services in the court without regard to any services he may have rendered in the unsuccessful administrative proceeding.[9] In the usual case, when the District Judge has gone through the administrative record, he will have become familiar with the extent and the nature of the services rendered by the lawyer in the administrative phase of the case. At an appropriate time, the Congress might consider whether or not it is an unnecessary burden upon the lawyer to require him to prosecute two separate fee allowance applications, if one in the District Court would suffice. Meanwhile, as Chief Judge Aldrich observed in Menendez, "[t]here is nothing singular in the fact that counsel who appears in two forums should apply to each for the aliquot part of his total fee * * *."[10] Counsel for the Secretary assures us that the Secretary will allow a reasonable fee for services in the administrative proceedings if, though the Secretary's decision was adverse to the claimant, the claimant subsequently obtains an award as a result of the judgment of a court.
In vacating the judgments of the District Court because of the controlling significance attributed to the contingent fee contracts, and remanding these cases for further proceedings not inconsistent with this opinion, we intimate no opinion that the fees actually allowed in these cases are unreasonable.
[1] § 206(b) Social Security Act, 42 U.S.C. § 406(b), incorporated by reference, § 413(b), Federal Coal Mine Health and Safety Act 1969, as amended, 30 U.S.C. § 923(b).
"Whenever a court renders a judgment favorable to a claimant under this subchapter who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment, and the Secretary may, notwithstanding the provisions of section 405(i) of this title, certify the amount of such fee for payment to such attorney out of and not in addition to, the amount of such past-due benefits. In case of any such judgment, no other fee may be payable or certified for such representation except as provided in this paragraph."
[2] These services, expressed in time expended in the itemization of services, vary from 1-½ hours to 3 hours. Compensation for such services is not allowable under the statute.
See, however, Gagne v. Maher (2d Cir. 1979) 594 F.2d 336 at 343-44, where the court held that such time is compensable. In so doing, however, it cited with approval Prandini v. National Tea Co. (3d Cir. 1978) 585 F.2d 47, 52-54. In that case the allowance was approved because it was not a dilution of the amount to be received by plaintiff. The implication was clear in the opinion that if an allowance would operate to decrease the amount to be received by plaintiff an allowance for such time should not be allowed. Gagne was the same kind of case as Prandini. It would, therefore, seem that the instant cases in which the allowance of attorney's fees would be at the expense of the plaintiffs would not be covered by the rule as stated in either Gagne or in Prandini.
[3] Moreover, counsel candidly stated in argument that applications for the allowances of fees in connection with the administrative proceedings had not been filed because counsel were satisfied with the awards by the court.
[4] 42 U.S.C.A. § 406(b). 378 F.2d-55½
[5] 370 F.2d at 376.
[6] As indicated earlier, other considerations would be involved in an appraisal of the propriety and usefulness of contingent fee arrangements in personal injury and other tort actions. If such contracts should come under judicial scrutiny, the problem will probably by posed in terms of the reasonableness of the particular contract.
[7] The Secretary, of course, should be afforded an opportunity to be heard. He will have seen the pleadings and the briefs of the claimant's attorney and observed his performance. His comparative appraisal, with the benefit of his very broad experience, should be of assistance to the court.
[8] 42 U.S.C.A. § 406(b).
[9] Gardner v. Menendez, 1 Cir., 373 F.2d 488; Robinson v. Gardner, 4 Cir., 374 F.2d 949.
[10] Menendez, 1 Cir., 373 F.2d 488, 490.