United States District Court, W.D. Wisconsin
D. PETERSON District Judge
on the parties' joint motion, Dkt. 21, this court
reversed the Commissioner's decision denying plaintiff
Carl Heise's application for disability benefits and
remanded the case for further proceedings. Dkt. 22. The court
then awarded plaintiff's attorney, Dana Duncan, fees in
the amount of $4, 600 under the Equal Access to Justice Act
(EAJA), 28 U.S.C. § 2412. Dkt. 30. On remand, the Office
of Disability Adjudication and Review awarded plaintiff $127,
244 in past-due benefits.
Duncan petitions the court for a representative fee award in
the amount of $31, 811, pursuant to 42 U.S.C. § 406(b),
which is the 25 percent contingency fee to which Heise agreed
in writing. Dkt. 32-2, at 1. The Commissioner has indicated
that she does not oppose the award. But the circumstances of
this case, viewed in light of the law governing fee recovery
in social security cases, require that I reduce the award. I
do so even though Duncan is an experienced disability rights
attorney who achieved a very good result for his client.
42 U.S.C. § 406(b), the court may award a claimant's
attorney a representative fee for his or her work before the
court. This section of the Social Security Act provides that
“a prevailing claimant's fees are payable only out
of the benefits recovered; in amount, such fees may not
exceed 25 percent of past-due benefits.” Gisbrecht
v. Barnhart, 535 U.S. 789, 792 (2002). The requested fee
is within the cap, but I must nevertheless review it to
ensure that it is reasonable. Id. at 807, 809;
see also McGuire v. Sullivan, 873 F.2d 974, 980 (7th
Cir. 1989) (“A court may award a fee up to that
provided in the contract so long as the court has reviewed
evaluating a representative fee for reasonableness,
“the court may consider the character of the
representation and the results obtained, reducing an award if
. . . the fee is so large in comparison to the amount of time
counsel spent on the case such that the fee would constitute
a windfall to the attorney.” Koester v.
Astrue, 482 F.Supp.2d 1078, 1081 (E.D. Wis. 2007)
(citing Gisbrecht, 535 U.S. at 808). “In
determining what is a reasonable fee, the court should
consider: the time and labor required; the skill required;
whether the fee was contingent or fixed; the amount involved
and the result attained; the attorney's experience,
reputation, and ability; and awards in similar cases.”
Hodges-Williams v. Barnhart, 400 F.Supp.2d 1093,
1099 (N.D. Ill. 2005) (citing McGuire, 873 F.2d at
fee agreements often produce fees that reflect large hourly
rates which are not per se unreasonable. Contingent fee
arrangements account for the attorney's risk of
non-recovery, and awarding a fee consistent with the
parties' agreement motivates attorneys to represent
social security claimants who could not otherwise afford
counsel. “If courts regularly invalidated reasonable
contingency agreements in favor of a lodestar fee, then
attorneys would no longer enter into such agreements.”
McGuire, 873 F.2d at 980. Following this principle,
district courts across the country have awarded
representative fees that reflect varying hourly rates,
including $446, $625, $636, and even as high as $1, 500.
Koester, 482 F.Supp.2d at 1083 (collecting cases).
But when the contingent fee agreement would yield an
unreasonable windfall, courts have reduced the award under
§ 406(b) to an appropriate rate above the lodestar rate.
See, e.g., Schimpf v. Astrue, No. 06-cv-18,
2008 WL 4614658 (N.D. Ind. Oct. 16, 2008) (awarding a fee at
a reduced hourly rate of $583.50); Hodges-Williams,
400 F.Supp.2d at 1099-100 (awarding a fee at a reduced hourly
rate of $350).
Duncan's representation of Heise from beginning to end, I
do not think that a fee of just over $30, 000 is
unreasonable. If I consider all of the Duncan's time, the
equivalent attorney compensation rate is approximately $771
($31, 811 for 41.25 hours of work), which is on the generous
side of the reasonable scale. But if I consider only
Duncan's work before this court, where Duncan spent a
smaller proportion of his time, it would produce an hourly
rate of approximately $2, 217 ($31, 811 for 14.35 hours).
That amounts to an hourly rate that I would consider to be an
406, which provides for attorney fees for successful
representation of disability claimants, is bifurcated:
“§ 406(a) governs fees for representation in
administrative proceedings; § 406(b) controls fees for
representation in court.” Grisbrecht, 535 U.S.
at 794. The payment schemes under the two subsections are
different: § 406(a) provides that the Commissioner shall
award “a reasonable fee” for representation in
connection with the “claim before the Commissioner,
” but limits the fee to the lesser of 25 percent of
past-due benefits awarded or $6, 000. § 406(a); Maximum
Dollar Limit in the Fee Agreement Process, 74 Fed. Reg. 6080
(Feb. 4, 2009). Section 406(b), on the other hand, provides
that a court may award for representation “before the
court . . . a reasonable fee . . . not in excess of 25
percent” of past-due benefits awarded.
appears that I cannot consider the Duncan's work for
Heise from beginning to end. The circuits to have considered
the question hold that under § 406 “each tribunal
may award fees only for the work done before it.”
See Horenstein v. Sec'y of Health & Human
Servs., 35 F.3d 261, 262 (6th Cir. 1994). The bifurcated
fee-fixing procedure may be “inefficient, slow, and
troublesome, ” 2 Harvey L. McCormick, Social
Security Claims and Procedures § 16:69 (6th ed.
2009), but it makes at least arguable sense for each tribunal
to evaluate the value of the work before it, under the
compensation standards appropriate to that forum. So I will
limit my reasonableness evaluation to Duncan's work
before this court, and he can pursue the rest of his
contingency fee from the Commissioner. See
Horenstein, 35 F.3d at 262.
argues that his contingency fee is really equivalent to much
lower hourly compensation, either $207, $232, or $500. He
arrives at these rates by including various combinations of
attorney, paralegal, and administrative time for work
performed during the administrative proceedings, and also by
excluding the previously awarded $4, 600 EAJA fee award. The
court will not consider hours spent in administrative
proceedings, and the EAJA fee award must be included in the
total fee. See Schimpf, 2008 WL 4614658 at *3.
Although it is unclear whether administrative and paralegal
work can be compensated under § 406(b), see Thompson
v. Colvin, No. 13-cv-3570, 2016 WL 6585606, at *1
(D.S.C. Oct. 19, 2016) (collecting cases and discussing the
issue without deciding the question), it has been this
court's practice to consider only attorney work when
determining the compensation rate.
setting a reasonable fee, I recognize the special
circumstances of this case. Duncan expended most of his work
at the administrative level, and then achieved a very
efficient resolution of the appeal with a good summary
judgment brief, which prompted the Commissioner to join a
motion to remand the case. Both sides are to be applauded,
and I do not want to discourage efficiency and cooperation.
I will cut the contingency fee in half, to $15, 905.50. This
results in an effective hourly rate of just over $1, 100,
appropriately high to reflect the risk of non-recovery in
social security cases, Duncan's special efficiency in
this case, and, indirectly, the contribution of his paralegal
to his work in this court. As Duncan recognizes, this amount
must be offset by $4, 600, the amount of the EAJA fees that
he already recovered. Gisbrecht, 535 U.S. at 796.
This results in a fee award of $11, 305.50.
ORDERED that plaintiff's attorney's unopposed
petition for attorney fees pursuant to § 406(b), Dkt.
19, is GRANTED in part. The court approves a representative
fee award of $11, ...