Opinion ID: 522231
Heading Depth: 2
Heading Rank: 3

Heading: Whether the contingency contracts were reasonable.

Text: 28 Although the contingency agreement should be given significant weight in fixing a fee, a district judge must independently assess the reasonableness of its terms. In the four cases before us, the district judges emphasized the contingency factor. However, in two of the cases the court did not give sufficient reasons why the Blankenship factors and the risk of loss in the case before it justified the contingency fee awarded. 29
30 The district court, in McGuire, awarded somewhat less than twenty-five percent of past-due benefits. In support of the award, the court took into consideration the skill, experience and reputation of Mr. Fobes, the difficulties of the case, as well as the successful result obtained. In addition, the court focused on the need for contingency arrangements to guarantee representation for social security claimants. The court pointed out that there had been similar awards in cases with similar results where lawyers have exhibited the skill, expertise and experience as that demonstrated by Mr. Fobes, No. 85-C-268-S, slip op. at 6 (W.D.Wis. Nov. 16, 1987). 31 The district court's analysis in its order denying Mr. Fobes' motion for EAJA attorney's fees shows the risk and the difficulty of the case. The court wrote that although Mr. McGuire was successful on his claim, there was also substantial evidence in the record to justify a contrary conclusion. No. 86-C-268-S, slip op. at 6 (W.D.Wis. Oct. 9, 1987). In addition, the court found that the Secretary had a solid and correct position on the facts, which showed that his position was substantially justified. Ibid. Such findings show the high risk of loss in the case, even if they were not made with regard to Mr. Fobes' contingency fee request. They are sufficient to show that the award was not an abuse of discretion. 32
33 In Gruber, the court included in its factor analysis several conclusions as to the riskiness of the case. The court noted that the case was a difficult one, that plaintiff's disability is an unusual one, the undesirability of the case shown by the fact that another attorney refused it and the skill of Mr. Fobes. 673 F.Supp. 970, 972 (W.D.Wis.1987). Although the 1984 Disability Amendments may have improved the chances of success of Ms. Gruber's claim, the court found that it was a difficult one. The fact that another attorney had refused to take the case shows that it was risky. Mr. Fobes filed objections to the court's sua sponte remand because of the delay caused by the arguably unnecessary remand and the fact that the remand for reconsideration of Ms. Gruber's second application did not resolve the issue of benefits from the time her first application was filed. Apparently, the 1984 Disability Amendments did not make the Gruber case easy. The court, therefore, did not abuse its discretion by approving the twenty-five percent fee. 34
35 In Green, the court outlined plaintiff's counsel's skill, his experience, reputation, and ability, awards in similar cases, the contingency of the fee, and the amount involved in the result obtained, No. 85-C-415-C, slip op. at 2 (W.D.Wis. Nov. 20, 1987), as factors in favor of the full twenty-five percent award. The court did not, however, give reasons why those factors justified such a large award in this case, such as whether or not this case was especially risky. 36 The fact that Mr. Fobes was awarded $3,489.79 for 3.24 hours of court-related work does not by itself show that the award is unreasonable. However, such a large award does require that the district judge make a careful review of the contingency agreement to determine whether or not the attorney has been granted an unreasonable windfall. See Rodriguez, 865 F.2d at 747. The small number of hours required to bring this case to final disposition is due in large part to the change in law caused by the passage of the 1984 Disability Amendments. The district court could, therefore, conclude that, although twenty-five percent was a reasonable percentage at the time the agreement was entered into, it is not reasonable in light of the change of law. The fact that another attorney had refused the case because of its difficulty is one factor which shows the risk of nonpayment at the time the case was taken on. 37
38 The district court in Marshall based its approval of a full twenty-five percent fee on the skill of Mr. Fobes, the uncertainty of victory in these cases, No. 84-C-740-C, slip op. at 2 (W.D.Wis. Dec. 11, 1987), the fact that the claimant made no objection to the fee payment, the existence of a contingency agreement and the results obtained. However, as in Green there were no reasons given justifying the substantial award in this case as compared to other social security cases. As in Green, the fact that Mr. Fobes received $5,600 for 5.6 hours of court-related service shows that the district court must carefully review the reasonableness of the twenty-five percent agreement in light of the risk of nonpayment.