Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Salerno v. Colvin

United States District Court, Seventh Circuit

August 26, 2013

CHARLES JOSEPH SALERNO, Plaintiff,
v.
CAROLYN W. COLVIN, Acting Commissioner of Social Security, [1] Defendant.

MEMORANDUM OPINION AND ORDER

MARY M. ROWLAND, Magistrate Judge.

Plaintiff Charles Joseph Salerno filed this action pursuant to 42 U.S.C. § 405(g), seeking judicial review of the Commissioner's denial of his application for Disability Insurance Benefits. The parties have consented to the jurisdiction of the United States Magistrate Judge, pursuant to 28 U.S.C. § 636(c). On December 16, 2011, pursuant to sentence four of 42 U.S.C. 405(b), the Court reversed the decision of the Administrative Law Judge (ALJ) and remanded the case to the Commissioner for further proceedings. A supplemental hearing was held before the ALJ, and a fully favorable decision was entered on November 30, 2012. (Mot. ¶ 3). Plaintiff's Notice of Award, dated February 11, 2013, awarded $107, 132.90 in past-due benefits, of which $26, 783.23, or 25%, was withheld for attorney's fees. ( Id. ¶ 4). Plaintiff's Counsel now files a motion seeking $26, 783.23 in attorney's fees, pursuant to 42 U.S.C. § 406(b). (Mot. ¶ 6). The Commissioner argues that the fees are unreasonable and urges the Court to reduce the fee award. (Resp. 3). For the reasons set forth below, the Court grants the Motion.

I. DISCUSSION

A. Background

Counsel represented Plaintiff on his Social Security claim, both in administrative proceedings and in federal court, since September 2008. (Mot. ¶¶ 5, 12). He agreed to represent Plaintiff in his Social Security proceedings in federal court in exchange for up to 25% of any past-due benefits awarded to him by the Social Security Administration. ( Id. ¶ 5, Ex. 2). Under the fee agreement, if Counsel was unable to achieve a favorable result for Plaintiff, he would receive no compensation. ( See id. Ex. 2). Counsel documented 34 hours for work related to his representation of Plaintiff in federal court. ( Id. ¶ 11, Ex. 3).

B. Applicable Law

The Social Security Act prescribes the "exclusive regime for obtaining fees for successful representation" of an individual claiming benefits. Gisbrecht v. Barnhart, 535 U.S. 789, 795-96 (2002). Fees for representation during the judicial review stage are treated discretely from those for representation in administrative proceedings. Id. at 794 ("[42 U.S.C.] § 406(a) governs fees for representation in administrative proceedings; § 406(b) controls fees for representation in court"). Fees charged by claimant's counsel must be reasonable and the combination of § 406(a) and § 406(b) fees may not exceed 25% of claimant's past-due benefits.[2] 42 U.S.C. §§ 406(a)(2)(A)(ii)(I), 406(b). The Act also provides that any attempt to collect fees in excess of those provided by § 406 would constitute a criminal offense. Id. § 406(a)(5), (b)(2).

The Gisbrecht Court noted that "Congress sought to protect claimants against inordinately large fees' but also to ensure that attorneys representing successful claimants would not risk nonpayment.'" 535 U.S. at 805. The Supreme Court also recognized that Congress accepted contingency fee agreements as an "effective means of ensuring claimant access to attorney representation." Id. To balance these goals, the Supreme Court held that courts must review § 406(b) petitions for reasonableness and the petitioning attorney "must show that the fee is reasonable for the services rendered." Id. at 807. The Supreme Court described a reasonableness review as "based on the character of the representation and the results the representative achieved, " and described three situations in which courts have appropriately reduced fees as unreasonable: (1) the "representation is substandard, " (2) counsel's delay caused past-due benefits to accumulate "during the pendency of the case in court, " and (3) past-due benefits "are large in comparison to the amount of time counsel spent on the case." Id. at 808.

C. Analysis

The Commissioner contends that the Motion should be denied because Counsel did not provide the Court with his noncontingent hourly rate. (Resp. 3). In addition, the Commissioner calculates that for the 34 hours Counsel spent litigating this case, his hourly rate comes to more than $787 per hour. ( Id. ). The Commissioner argues that this rate "seems unreasonably high, even considering the services performed, the risk of loss and other relevant considerations.'" ( Id. ) (quoting McGuire v. Sullivan, 873 F.2d 974, 981 (7th Cir. 1989)).

The Court finds that Counsel is entitled to his requested fees. First, the Supreme Court did not mandate that counsel provide either the hours expended or a noncontingent hourly rate in order to assess reasonableness. See Gisbrecht, 533 U.S. at 808 ("[T]he court may require the claimant's attorney to submit... a record of the hours spent representing the claimant and a statement of the lawyer's normal hourly billing charge for non-contingent-fee cases.") (emphasis added). Moreover, because claimants do not have the resources to hire a representative on an hourly or fixed-fee basis, attorneys representing Social Security claimants generally rely on contingent-fee agreements. Here, because Counsel's "law practice has been concentrated in Social Security disability law for at least 25 years, and accordingly has been exclusively based on contingency fee arrangements rather than hourly billing[, he] has no hourly billing history to report." (Reply 2). Under these circumstances, the Court will not require Counsel to submit a standard hourly rate and accepts his hourly records as sufficient to assess his fees for reasonableness.

The Commissioner also contends that Counsel's effective hourly rate is unreasonably high. (Resp. 3). The Court disagrees. Judges within the Northern District of Illinois have evaluated and approved Social Security fee requests resulting in an effective hourly rate significantly higher than the $787 that Counsel requests. See, e.g., Anderson v. Astrue, No. 08 CV 613, 2011 WL 379042, at *2 (N.D. Ill. Jan. 27, 2011) (approving 25% contingent fee where Commissioner objected on ground that award would amount to an effective rate of $982.91 per hour); Reindl v. Astrue, No. 09 CV 2695, 2012 WL 4754737, at *3 (N.D. Ill. Oct. 4, 2012) (approving an hourly rate of $1, 164.51). And, if the Court takes into consideration the 30 hours Counsel spent on this case before the Agency (Mot. ¶ 12), and the EAJA fees that will be reimbursed to Plaintiff, [3] the contingency fee amounts to less than $320 per hour. See Reindl, 2012 WL 4754737, at *4 ("[T]he Commissioner's computation focuses solely on the 27.7 hours [counsel] spent on the proceedings in this Court, and does not take into account the 28.9 hours he spent in administrative proceedings both before and after the proceedings in this Court. Were we to look at all of the time [counsel] spent on [the plaintiff's] claim, the computed hourly rate would be $645.00 per hour."). Moreover, because only 35% of disability appeals result in benefit awards, see Martinez v. Astrue, 630 F.3d 693, 695 (7th Cir. 2011), Counsel's effective hourly rate for all Social Security disability claims cases handled is substantially less than the $787 per hour realized in this case.

Plaintiff also objects to Counsel's fee request. (Dkt. 52). Plaintiff states that he was under the impression that his fee agreement was capped at $5, 300. ( Id. 1). But the $5, 300 cap was only for Counsel's representation of Plaintiff in proceedings before the Agency. ( Id. 6) ("This contract and fee cover only representation before [the Social Security Administration] in connection with this claim."). When Plaintiff's claim was denied by the Appeals Council, Counsel explained to Plaintiff that if he wanted Counsel to represent him in federal court, a new representation and fee agreement was needed. (Dkt. 54 at 1, Ex. 1). Plaintiff was urged to have another attorney review the new contract for fairness, if he desired. ( Id. ). The new representation agreement included this language:

Any fees under this contract are subject to approval by the court. Fees under this contract, for this ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.