Summary
reducing fees from $15,053.25 to $11,400 for a de facto hourly rate of $500 — 2.5 times counsel's normal hourly rate
Summary of this case from Ellick v. BarnhartOpinion
No. SA-03-CA-755-RF.
May 12, 2005
ORDER GRANTING PLAINTIFF'S APPLICATION FOR ATTORNEY'S FEES
BEFORE THE COURT is Plaintiff's Attorney's Motion for Attorney's Fees under 42 U.S.C. § 406(b), filed on March 29, 2005, along with response and reply briefs. Based upon a careful review of the parties' arguments and the applicable law, the Court will GRANT Plaintiff's Motion for Attorney's Fees Under 42 U.S.C. § 406(b) (Docket No. 24).
BACKGROUND
The Court previously granted Plaintiff's appeal from the Commissioner's benefits denial, reversed the Commissioner's decision, and remanded the cause to the agency for an additional hearing. Plaintiff was awarded $81,413.00 in past-due Title II benefits. The Court also considered Plaintiff's motion for attorney's fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), which it granted on March 15, 2004. The Court awarded Plaintiff $3,180.60 in attorney's fees under the EAJA on that date (Docket No. 23). Plaintiff's attorney now seeks an award of attorney's fees under Section 406(b). Counsel seeks $15,053.25 for representation related to his benefits claim at the district court level.
42 U.S.C. § 406(b). Plaintiff's attorney earlier requested $5,300.00 under Section 406(a) for work done at the administrative level.
DISCUSSION
On March 29, 2005, Plaintiff's attorney filed the instant motion for attorney's fees, requesting additional fees under Section 406(b). This section provides that a court may award a "reasonable" attorney's fee for an attorney's successful representation of a plaintiff for Title II benefits before that court. These fees are payable out of, and not in addition to, the benefits recovered and may not exceed 25 percent of past-due benefits.
Gisbrecht v. Barnhart, 35 U.S. 789, 792, 795 (2002).
Section 406 provides the exclusive regime for obtaining fees for successful representation of Social Security benefits claimants. "Collecting or even demanding from the client anything more than the authorized allocation of past-due benefits is a criminal offense." However, the EAJA can also be used in conjunction with Section 206 to increase the portion of past-due benefits the successful Social Security claimant may pocket. Under the EAJA, a party prevailing against the Government in court, including a successful Social Security benefits claimant, may be awarded fees payable by the United States if the Government's position in the litigation was not "substantially justified." As noted above, the Court already considered an earlier request from Plaintiff for fees under EAJA and granted this request. (Docket No. 23).
Id. at 795-96.
Id. at 796 (citing §§ 406(a)(5), (b)(2); 20 C.F.R. §§ 404.1740-99 (2001)).
Id. See also 28 U.S.C. § 2412.
As the Supreme Court discussed in Gisbrecht, Congress has harmonized fees payable by the Government under EAJA with fees payable under Section 406(b) and provided that fee awards may be made under both statutes, but the claimant's attorney must "refund to the claimant the amount of the smaller fee." EAJA awards thus offset an award under Section 406(b), so that the amount of the total past-due benefits the claimant receives will be increased by the amount of the EAJA award.
Gisbrecht, 535 U.S. at 796 (citation omitted).
Id.
The Gisbrecht Court focused on the attorney-client contingent fee agreement as the starting place for calculating a reasonable rate. Indeed, the Supreme Court recognized that contingent fee agreements are the most common types of fee arrangements between attorneys and Social Security claimants.
Id. at 799-809.
Id. at 800.
Contrasting attorney's fee calculations based upon the contingent fee agreement in place with the traditional lodestar method of calculating attorney's fees, the Gisbrecht Court noted that Section 406(b) is also different in another way: it does not authorize the prevailing party to recover fees from the losing party. "Section 406(b) is of another genre: It authorizes fees payable from the successful party's recovery." Confronting the ultimate question before it of whether Section 406(b) displaced contingent-fee agreements as the primary means by which fees are set for successful representation of Social Security benefits claimants in court, the Supreme Court concluded that it does not. The Court continued:
Id. at 802.
Id.
Id. at 807.
Rather, § 406(b) calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases. Congress has provided one boundary line: Agreements are unenforceable to the extent that they provide for fees exceeding 25 percent of the past-due benefits. Within the 25 percent boundary, as petitioners in this case acknowledge, the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered.
Id. ns. 15-17 (citations omitted).
Plaintiff's counsel moves for an award of fees under Section 406(b), seeking $15,053.25 from Plaintiff's recovery of past-due benefits. As counsel notes in his brief, he must show that this requested fee is reasonable.
Plaintiff's counsel starts as appropriate with the contingent fee agreement in place governing his representation of Plaintiff. Counsel submits evidence that Plaintiff retained him on October 20, 2000 pursuant to an agreement that counsel would receive 25 percent of past-due benefits if the claim was successful. Counsel argues that the requested fee is reasonable because it reflects the contingent nature of the recovery. Counsel urges that this type of cases have a significant risk of loss, citing statistics that generally support this view. Counsel also reminds the Court repeatedly that it is a crime under Section 406(b)(2) to charge a non-contingent fee related to a claim for Title II benefits. Counsel also argues that Plaintiff's case specifically had a substantial risk of loss, having been denied at four levels of previous agency review.
Plf. counsel's Mot. at 8, Ex. C.
The Government responds to counsel's request, stating at the outset that it is not opposed to counsel receiving a reasonable fee for representation before the Court. However, the Government expresses concern that the Court does not have before it an appropriate itemization of counsel's time spent litigating Plaintiff's claim at the district court level. The Court finds that this objection is without merit for reasons set forth in note 17, particularly when counsel for Plaintiff states clearly in his Reply brief that he spent 22.8 hours on Plaintiff's claim at the district court level.
In the Government's Brief in Response, the Government asserts that its attorney contacted Plaintiff's counsel the day before the response brief was due to obtain an itemization of the time spent on Plaintiff's claim. The Government attorney complains that the eleven pages of computerized time records provided by Plaintiff's counsel in response are unhelpful to assessing what time was reasonably spent at the administrative level and what was spent at the district court. The Government attorney also submits that Plaintiff's "extensive and unclear computerized time entries hinder the Court's ability to conduct a meaningful review of his fee application."
It his Reply brief, counsel for Plaintiff clarifies that the Government attorney specifically requested an itemized time statement showing all the time spent on the case at both the administrative and federal court levels. Counsel queried the Government attorney about this request, since the Court has no authority to award any attorney's fees for representation at the agency level under 42 U.S.C. § 406(a). Plaintiff's counsel states that he eventually complied with the Government request and argues that the Government cannot object to his fee request based upon the specifically-requested information.
In addition to objecting to the documentation before the Court, the Government objects to counsel's request for fees as unreasonable on its face. Applying counsel's 22.8 hour figure to counsel's request for $15,053.25 in fees, the Government protests that an award of this size would result in an effective fee of $660.23 per hour, which it asserts is unreasonable. The Government reminds the Court that it is counsel for Plaintiff's job to show that the requested fee is reasonable and that the main issue is whether counsel's request for fees before the Court is "reasonable in light of the services rendered." The Government notes that Plaintiff's counsel has stated that his normal, non-contingent fee in a civil case is $200 per hour, the prevailing rate for civil litigation in Bexar County, Texas. The Government protests that the requested, effective rate of $660 per hour would provide counsel with more than three times his usual, non-contingent fee rate.
The Court, carefully considering all of these arguments and the posture of the case before it, finds that a fee award under Section 406(b) is appropriate under the circumstances. Comparing the relief secured with the amount of time expended, the Court agrees with the Government that the requested fee would result in a rate that would be higher than reasonable given the time expended. However, the Court recognizes the contingent nature of the fee agreement in place, as honored by the Supreme Court in Gisbrecht. The Court is also conscious that this is a difficult type of case and that this particular Plaintiff's claims had been repeatedly denied, making recovery less certain.
Given all of these factors, the Court determines that an award of $11,400 under Section 406(b) would be appropriate in these circumstances. The Court reaches this figure by multiplying a rate of $500 per hour by the number of hours expended. The rate of $500 per hour is 2.5 times counsel's normal, non-contingent fee rate of $200 and the Court finds that it adequately captures the risks associated with contingent fees and those inherent in taking this particular case.
As a result, the Court will award Plaintiff's counsel $11,400 under Section 406(b) for his work in successfully representing Plaintiff in his disability benefits claim for past-due benefits before the Court. As noted by counsel for both sides and the Gisbrecht Court, this award will be offset by the EAJA award entered already in the amount of $3,180.60. This will result in an out-of-pocket payment to Plaintiff's counsel in the amount of $8,219.40, an amount the Court considers appropriate under the circumstances before it.
CONCLUSION
Accordingly, the Court ORDERS that Plaintiff's second Application for Attorney's Fees under 42 U.S.C. § 406(b) (Docket No. 24) be GRANTED.
It is further ORDERED that Plaintiff pay his counsel $8,219.40 out of the recovery he receives for past-due Title II benefits from the United States.