No. 01-131 

In the Supreme Court of the United States 

GARY E. GISBRECHT, BARBARA A. MILLER, NANCY 
SANDINE, AND DONALD L. ANDERSON, PETITIONERS 

v. 

LARRY G. MASSANARI, ACTING COMMISSIONER 
OF SOCIAL SECURITY 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE NINTH CIRCUIT 

BRIEF FOR THE RESPONDENT IN OPPOSITION 

THEODORE B. OLSON 
Solicitor General 

Counsel of Record 

ROBERT D. MCCALLUM, JR. 

Assistant Attorney General 

WILLIAM KANTER 
FRANK A. ROSENFELD 

Attorneys 

Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

QUESTION PRESENTED 

Section 406(b) of Title 42, United States Code, 
provides that, when a claimant for benefits under Title 
II of the Social Security Act obtains a favorable court 
judgment awarding benefits, the court may award 
directly to the claimant’s attorney a reasonable attor- 
ney’s fee as a deduction from the claimant’s back- 
benefits award, in an amount no greater than 25% of 
the back-benefits award. The question presented is 
whether the court, when calculating that reasonable 
attorney’s fee, should use an hourly-based “lodestar” 
method (which multiplies the hours that the attorney 
worked by the reasonable hourly rate, with certain 
other adjustments), or should employ a rebuttable pre- 
sumption that the attorney should receive 25% of the 
back-benefits award, the maximum award permitted by 
the statute. 

(I) 

TABLE OF CONTENTS 

Page 

Opinions below ............................................................................... 
1 

Jurisdiction ...................................................................................... 1 

Statement ........................................................................................ 2 

Argument ........................................................................................ 8 

Conclusion ....................................................................................... 19 

TABLE OF AUTHORITIES 

Cases: 

Allen v. Shalala, 48 F.3d 456 (9th Cir. 1995) .................... 

9, 11 

Bowen v. Galbreath, 485 U.S. 74 (1988) ............................. 

2, 17 

Brown v. Sullivan, 917 F.2d 189 (5th Cir. 1990) .............. 

8-9 

City of Burlington v. Dague, 505 U.S. 557 (1992) ............ 

3 

Cotter v. Bowen, 879 F.2d 359 (8th Cir. 1989) .................. 

9 

Coup v. Heckler, 834 F.2d 313 (3d Cir. 1987) .................... 

4, 9 

Craig v. Secretary, Dep’t of Health & Human 

Servs., 864 F.2d 324 (4th Cir. 1989) ................................... 

8 

Freeman v. Ryan, 408 F.2d 1204 (D.C. Cir. 1968) ........... 

4 

Hopkins v. Cohen, 390 U.S. 530 (1968) .............................. 

4 

Hubbard v. Shalala, 12 F.3d 946 (10th Cir. 1993) ........... 

9 

Kay v. Apfel, 176 F.3d 1322 (11th Cir. 1999) .................... 

9 

McGuire v. Sullivan, 873 F.2d 974 (7th Cir. 1989) .......... 

9, 10 

Ramos Colon v. Secretary of Health & Human 

Servs., 850 F.2d 24 (1st Cir. 1988) ...................................... 

9, 14 

Rodriguez v. Bowen, 865 F.2d 739 (6th Cir. 1989) ........... 

9, 10 

Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261 

(D.C. Cir. 1993) ....................................................................... 

4 

Venegas v. Mitchell, 495 U.S. 82 (1990) ............................. 

18 

Wells v. Sullivan, 907 F.2d 367 (2d Cir. 1990) .................. 

9, 14 

Statutes and regulations: 

Act of Aug. 5, 1985, Pub. L. No. 99-80, § 3, 99 Stat. 

186 ............................................................................................. 3 

(III) 

IV 

Statutes and regulations—Continued: 

Page 

Equal Access to Justice Act: 

28 U.S.C. 2412(d) ................................................................... 

2 

28 U.S.C. 2412(d)(1)(A) ......................................................... 

3 

28 U.S.C. 2412(d)(2)(A) (1994 & Supp. V 1999) ................ 

3 

Social Security Act, Tit. II, 42 U.S.C. 401 et seq. .......... 

2, 3, 8, 

9, 11, 16, 17, 18 
42 U.S.C. 405(g) ................................................................. 

3 

42 U.S.C. 406(a)(1) ............................................................ 

17 

42 U.S.C. 406(a)(2) ............................................................ 

17 

42 U.S.C. 406(a)(2)(A) ...................................................... 

16 

42 U.S.C. 406(a)(2)(A)(ii) ................................................. 

16 

42 U.S.C. 406(b) ........................................................... 

passim 

42 U.S.C. 406(b)(1) ............................................................ 

2 

42 U.S.C. 406(b)(1)(A) (1994 & Supp. V 1999) ............. 

2, 12 

42 U.S.C. 406(b)(2) ............................................................ 

2 

Tit. XVI, 42 U.S.C. 1382 et seq. ........................................... 

2 

42 U.S.C. 1983 ............................................................................ 

18 

42 U.S.C. 1988 ............................................................................ 

18 

20 C.F.R.: 

Section 404.1725(b)(1)(ii)-(iv) .......................................... 

17 

Section 404.1725(b)(2) ....................................................... 

17 

Miscellaneous: 

S. Rep. No. 404, 89th Cong., 1st Sess., Pt. 1 (1965) ............ 14 

In the Supreme Court of the United States 

No. 01-131 

GARY E. GISBRECHT, BARBARA A. MILLER, NANCY 
SANDINE, AND DONALD L. ANDERSON, PETITIONERS 

v. 

LARRY G. MASSANARI, ACTING COMMISSIONER 
OF SOCIAL SECURITY 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE NINTH CIRCUIT 

BRIEF FOR THE RESPONDENT IN OPPOSITION 

OPINIONS BELOW 

The opinion of the court of appeals (Pet. App. 1-11) is 
reported at 238 F.3d 1196. The decisions of the district 
courts (Pet. App. 12-16, 17-22, 23-32, 33-41) are unre- 
ported. 

JURISDICTION 

The judgment of the court of appeals was entered on 
November 27, 2000. A petition for rehearing was 
denied on April 20, 2001 (Pet. App. 42-43). The petition 
for a writ of certiorari was filed on July 19, 2001. The 
jurisdiction of this Court is invoked under 28 U.S.C. 
1254(1). 

(1) 

2 

STATEMENT 

1. Title II of the Social Security Act, 42 U.S.C. 401 et 
seq., establishes a special rule applicable to efforts by 
attorneys to collect fees from their clients for repre- 
sentation in court in any case in which a claimant seeks 
old-age, survivor, or disability benefits under Title II of 
the Act.1 Section 406(b) of Title 42 sets forth the exclu- 
sive method by which an attorney may obligate a claim- 
ant for Title II benefits to pay an attorney’s fee.2 
Under Section 406(b), a fee for an attorney is proper 
only when “a court renders a judgment favorable to a 
claimant.” 42 U.S.C. 406(b)(1)(A) (1994 & Supp. V 
1999). The fee is determined by the court, as part of its 
judgment. Ibid. The court is to determine “a reason- 
able 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 ” the favorable 
judgment. Ibid. Once the court has set the fee, the 
Commissioner of Social Security ordinarily deducts the 
amount of the fee from the claimant’s payment of past- 
due benefits, and pays the fee directly to the attorney. 
Ibid. 

A prevailing claimant for Title II benefits may also 
seek an attorney’s fee award under the Equal Access to 
Justice Act (EAJA), 28 U.S.C. 2412(d), in any case in 

1 No provision of the Act governs attorney’s fee requests for 
litigation seeking Supplemental Security Income (SSI) benefits 
under Title XVI of the Act (42 U.S.C. 1382 et seq.). See Bowen v. 
Galbreath, 485 U.S. 74 (1988). 

2 “[N]o other fee may be payable or certified for payment for 
such representation except as provided in this paragraph.” 
42 U.S.C. 406(b)(1)(A) (1994 & Supp. V 1999). “Any attorney who 
charges, demands, receives, or collects” a fee “in excess of that 
allowed by the court” under Section 406(b)(1) may be charged with 
a misdemeanor. 42 U.S.C. 406(b)(2). 

3 

which the Commissioner’s position in the litigation was 
not “substantially justified.” 28 U.S.C. 2412(d)(1)(A). 
Any EAJA fee is paid by the government, rather than 
deducted from the claimant’s past-benefits award. Con- 
gress expressly provided that an award under Section 
406(b) of the Social Security Act “shall not prevent an 
award of fees and other expenses under section 
2412(d).” Act of Aug. 5, 1985, Pub. L. No. 99-80, § 3, 99 
Stat. 186. Congress also required that “the claimant’s 
attorney refund[] to the claimant the amount of the 
smaller fee.” Ibid. Thus, an EAJA award to the claim- 
ant is used to offset an award under Section 406(b), so 
that the amount that the claimant receives for past-due 
benefits will be reduced only by the amount that the 
Section 406(b) award exceeds the EAJA award. Cer- 
tain provisions in EAJA limit the size of an award, 
including the express limit of fees to $125 per hour, 
which may be exceeded based on an increase in the cost 
of living. See 28 U.S.C. 2412(d)(2)(A) (1994 & Supp. V 
1999). Moreover, because EAJA is a fee-shifting stat- 
ute, under which the defendant pays the plaintiff ’s at- 
torney’s fees, the “lodestar” calculation of the fee— 
which is the product of the hours reasonably spent by 
the attorney and the applicable hourly rate—may not 
be enhanced to take into account that the attorney took 
the case on a contingent basis, that is, that the attorney 
agreed not to charge a fee if the client loses. See City of 
Burlington v. Dague, 505 U.S. 557 (1992). 

2. Petitioners brought four separate actions in the 
United States District Court for the District of Oregon 
under 42 U.S.C. 405(g), seeking social security disabil- 
ity benefits under Title II.3 All four petitioners pre- 

3 Although the claimants are named as the petitioners in this 
case, the real parties in interest on the petition are the attorneys, 

4 

vailed on the merits of their claims, with the district 
courts in each case reversing the decision of the 
Commissioner to deny benefits. Pet. App. 5. All four 
petitioners then sought attorney’s fee awards against 

not the claimants they represent. Counsel seek to diminish the 
claimants’ net awards of past-due benefits for their own benefit. 
The claimants are not separately represented. Nevertheless, for 
ease of reference, we will refer to counsel’s arguments in the peti- 
tion as those of petitioners. 

The Commissioner is the respondent to the petition because of 
his role as the defendant in the underlying claims for benefits, but 
he ordinarily does not have a direct financial stake in the outcome 
of this petition, for any increase in an award of attorney’s fees 
under Section 406(b) would usually be deducted from the claim- 
ant’s back-benefits award, not paid by the government. The Com- 
missioner thus performs a function similar to that of a trustee for 
the benefits claimant. Nevertheless, in the vast majority of the re- 
ported cases similar to this one, the Commissioner has appeared, 
filed briefs, and argued to limit the fee awards, with little or no 
comment from the courts of appeals that his role should be limited. 
One exception is Coup v. Heckler, 834 F.2d 313, 325 (3d Cir. 1987), 
in which the court called for a more restricted role for the Com- 
missioner (whose functions were then exercised by the Secretary 
of Health and Human Services). Only the Commissioner, however, 
is in a position to present to the courts an opposition to counsel’s 
fee request, for a social security disability claimant is unlikely to 
hire new counsel to litigate the fee issues. In an earlier case in this 
Court involving a dispute over attorney’s fees under Section 
406(b), the Court raised no question over the standing of the then- 
Secretary of Health and Human Services to argue for a narrower 
fee award. See Hopkins v. Cohen, 390 U.S. 530 (1968); see also 
Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1265 n.1 (D.C. Cir. 
1993) (concluding that government has standing to argue against 
approval of attorney’s fee award out of common fund, even though 
government has surrendered control of the fund); Freeman v. 
Ryan, 408 F.2d 1204, 1206 (D.C. Cir. 1968) (per curiam) (similar). 

5 

the Commissioner under EAJA, which all four district 
courts granted.4 

Counsel also moved for fee awards under Section 
406(b). Attorneys Tim Wilborn and Ralph Wilborn rep- 
resented petitioners in all four cases, and in three of the 
four cases, they asked for the statutory maximum 
award of 25% of petitioners’ back benefits. See Pet. 
App. 19, 30, 33.5 The employment contracts signed by 
all four petitioners state that they agreed to pay 
counsel 25% of past due benefits recovered, with no 
mention of any other method for calculating fee pay- 
ments, such as an hourly rate method. Id. at 69, 74, 79, 

84. Counsel also submitted affidavits, from themselves 
and from other lawyers, asserting that it is the stan- 
dard practice, in Oregon and across the country, for 
counsel to undertake social security litigation on a 
contingency basis, with the claimant agreeing to pay 
counsel 25% of their retroactive benefits. Id. at 56, 60, 
88, 89, 91. 

Counsel also submitted excerpts from an Oregon 
State Bar Economic Survey (the Flikirs Report), giving 
ranges of hourly rates for different types of lawyers, by 
geographic location in the State, years of practice, and 
subject-matter areas of practice. Pet. App. 93-97. The 
Flikirs Report found, among other things, that the 
Oregon statewide median rate for all lawyers is $130 
per hour, and that the range in Portland is $25-$300 per 

4 Anderson was awarded $5866.84 under EAJA (Pet. App. 15); 
Gisbrecht was awarded $3339.11 (id. at 17); Miller was awarded 
$5164.75 in fees and $80.42 in expenses (id. at 27); Sandine was 
awarded $6836.10 in fees and $253.16 in expenses (id. at 33). 

5 In the fourth case, Anderson, the Wilborns asked instead for 
$10,013.50, calculated at $175 per hour, a sum that would have been 

7.8% of the back benefits award. Pet. App. 12. 

6 

hour. Id. at 94. Lawyers with 4-6 years’ experience 
(such as Tim Wilborn, principal counsel in these cases, 
see id. at 45) have a median rate statewide of $115 per 
hour ($125 per hour in Portland). Id. at 95. 

3. In all four cases, the district courts denied coun- 
sel’s claims for fee awards in substantial part, and in 
particular denied counsel’s request for the statutory 
maximum of 25% of the back-benefits award. Each dis- 
trict court determined the fee awarded to counsel by 
using the lodestar method (multiplying a reasonable 
number of hours spent by a reasonable hourly rate for 
the lawyer’s local market). Pet. App. 12-14, 18-19, 24- 
25, 29-30, 35. Each court also rejected counsel’s argu- 
ments that the market rate is 25% of the back-benefits 
award. Id. at 19-21, 24-25, 30-31, 36-38; see also id. at 14 
(also rejecting $175 per hour rate in Anderson). In- 
stead, three of the four courts adopted a rate of $125 
per hour for Tim Wilborn. Id. at 21, 31, 39.6 The courts 
also refused to enhance the hourly rates to take in 
account the contingent basis of the fees. Id. at 14, 21- 
22, 26, 39-40. 

4. Petitioners appealed in all four cases, which the 
court of appeals consolidated for argument and decision. 
Pet. App. 5. The court of appeals affirmed the fee 
awards. Ibid. 

The court explained that its prior precedent made 
clear that it follows the lodestar method of calculating 
fees under Section 406(b). See Pet. App. 6. The court 
noted that the Fourth, Fifth, and Eighth Circuits also 
follow the lodestar method, but that the Second, Sixth 
and Seventh instead follow what it called the “contin- 

6 The Anderson court set Tim Wilborn’s rate at $150 per hour. 
Pet. App. 15. The Miller court set a separate rate for Ralph Wil- 
born at $150 per hour. Id. at 31. 

7 

gency” method, under which the court treats as pre- 
sumptively reasonable the agreement between the 
claimant and the attorney to pay the attorney a per- 
centage of the recovery. The court also observed that it 
has previously “noted the split of circuits and has re- 
jected the contingency method expressly.” Id. at 6 n.2. 

The court rejected petitioners’ argument that the 
“market rate” that should be used to calculate fees 
under the lodestar method is 25% of the past-due bene- 
fits. The court reasoned that to do so would “in es- 
sence” mean that it would be adopting the contingency 
method, even though it had previously rejected that 
method. Pet. App. 7. To the extent that petitioners 
“are attempting to blur the distinction between the 
lodestar and contingency methods,” the court held, 
“their argument is unavailing.” Ibid. The court next 
found that the district courts did not abuse their 
discretion in setting hourly rates at $125 and $150 per 
hour, as the Oregon State Bar survey shows those rates 
to be the average hourly rates for lawyers of their 
experience. Id. at 8. 

The court further rejected petitioners’ argument that 
it should increase the lodestar to reflect the contingent 
nature of their fee agreements, holding that the Ninth 
Circuit had already rejected counsel’s argument that 
contingency should be considered based on the riski- 
ness of social security cases as a class. Pet. App. 8-9. 
The court also noted that petitioners “do not argue that 
any of these four cases was particularly risky on an 
individual basis.” Id. at 9 n.3. The court remarked that 
to enhance the lodestar rates to take into account the 
fact that lawyers sometimes lose their cases and thus 
do not get paid under Section 406(b) would mean 
“essentially asking victorious claimants to subsidize the 
claims of losing claimants by taking large portions out 

8 

of disabled people’s recoveries to fund the representa- 
tion of other claimants.” Id. at 9 (internal quotation 
marks and brackets omitted). 

ARGUMENT 

The decision of the court of appeals is correct and 
does not conflict with any decision of this Court. The 
decision does, however, implicate a conflict among the 
circuits. Nevertheless, the “lodestar” approach to at- 
torney’s fees followed by the court of appeals in this 
case represents the majority view as well as the correct 
rule, which continues to be adopted by additional cir- 
cuits. By contrast, no court of appeals has adopted the 
contrary “contingency” rule in more than a decade, 
although one circuit has adopted the “contingency” rule 
in an en banc decision. Moreover, the ways in which 
the two different rules operate in practice, which vary 
somewhat from circuit to circuit, substantially reduce 
the actual effect of the difference between the two 
approaches. Finally, the burden of having different 
rules in the different circuits has not caused practical 
operational problems for the Commissioner. Accord- 
ingly, under all the circumstances and despite the split 
in authority, further review is not warranted. 

1. Petitioners correctly point out (Pet. 11-14) that 
the circuits have reached differing conclusions as to 
whether the “reasonable fee” provision of Section 
406(b) requires application of the lodestar method. As 
petitioners explain (Pet. 12-13), at least six other courts 
of appeals follow the Ninth Circuit’s view that attor- 
ney’s fees in Title II litigation should be calculated by 
the lodestar method.7 Another circuit has not explicitly 

7 The court of appeals cited cases from the Fourth, Fifth, and 
Eighth Circuits. Pet. App. 6 n.2; see Craig v. Secretary, Dep’t of 
Health & Human Servs., 864 F.2d 324 (4th Cir. 1989); Brown v. 

9 

required the lodestar method, but has rejected the 
contingency method.8 In contrast, only three circuits 
have held that the attorney’s fee in Title II cases should 
be determined by some percentage of the back-benefits 
award, rather than based on a lodestar calculation.9 But 
while the Second and Seventh Circuits quickly adopted 
the contingency model in the immediate wake of the 
Sixth Circuit’s decision in Rodriquez v. Bowen, 865 F.2d 
739 (1989) (en banc), no court of appeals that has con- 
sidered the issue since 1990 has done so. Instead, each 
such court of appeals since then has expressly rejected 
the contingency model. 

10 The trend is therefore away 
from the contingency model in favor of the lodestar 
model that the court of appeals followed below. 

Moreover, the practical difference between the two 
rules is somewhat less than might at first appear, 

Sullivan, 917 F.2d 189 (5th Cir. 1990); Cotter v. Bowen, 879 F.2d 
359 (8th Cir. 1989). In addition, the Third, Tenth, and Eleventh 
Circuits follow the lodestar rule. See Coup v. Heckler, 834 F.2d 
313 (3d Cir. 1987); Hubbard v. Shalala, 12 F.3d 946 (10th Cir. 
1993); Kay v. Apfel, 176 F.3d 1322 (11th Cir. 1999). 

8 Ramos Colon v. Secretary of Health and Human Servs., 850 
F.2d 24, 26 (1st Cir. 1988) (per curiam) (noting that, “[a]lthough the 
statute allows for a 25 percent maximum, it will often be the case 
that a reasonable fee is a much smaller amount,” and that “a court 
is not required to give blind deference to [a] contractual fee agree- 
ment, and must ultimately be responsible for fixing a reasonable 
fee for the judicial phase of the proceedings”) (internal quotation 
marks omitted). 

9 These are the Second, Sixth, and Seventh Circuits. See Wells 

v. Sullivan, 907 F.2d 367 (2d Cir. 1990); Rodriquez v. Bowen, 865 
F.2d 739 (6th Cir. 1989) (en banc); and McGuire v. Sullivan, 873 
F.2d 974 (7th Cir. 1989). 

10 See Kay, 176 F.3d at 1325 (Eleventh Circuit); Allen v. 
Shalala, 48 F.3d 456, 458 (9th Cir. 1995); Hubbard, 12 F.3d at 948 
(Tenth Circuit). 

10 

because under certain circumstances, courts applying 
either method have been willing to adjust the fee in the 
direction of the other method. In Rodriquez, for 
example, the Sixth Circuit held that a fee less than the 
presumptive 25% of the award would be allowed in at 
least two circumstances: “those occasioned by improper 
conduct or ineffectiveness of counsel” (such as delay), 
and “situations in which counsel would otherwise enjoy 
a windfall because of either an inordinately large bene- 
fit award or from minimal effort expended.” 865 F.2d at 
746. 

11 In addition, at least one of the circuits that follow 
the contingency model has declined to adopt an explicit 
presumption in favor of an award of 25% of the back 
benefits, in part out of concerns about unequal bargain- 
ing positions between claimants and their attorneys. 
See McGuire v. Sullivan, 873 F.2d 974, 981 (7th Cir. 
1989) (“If, for instance, there is evidence that the client 
did not know she could negotiate other terms than a 
twenty-five percent contingency, then the contract 
should not be enforced.”). But if, as petitioners main- 
tain, social security attorneys universally seek a 25% 
contingency agreement from claimants (see Pet. 9), that 
very possibility that claimants effectively cannot obtain 
representation on other terms suggests that the Sev- 
enth Circuit, upon further consideration of the matter, 
might refuse to enforce such agreements on a routine 
basis. 

On the other hand, some courts that follow the 
lodestar method under Section 406(b) have been willing 

11 Moreover, the court of appeals in Rodriquez remanded the 
cases before it to the district courts for redetermination of the fees 
(including one case in which the district court had awarded 25% of 
the recovery to the attorney); it did not simply order payment of 
25% to the attorneys in those cases. 865 F.2d at 747. 

11 

to enhance the fee award above the strict hourly rate 
model, for reasons that include contingency. For exam- 
ple, in Allen v. Shalala, 48 F.3d 456 (1995), the Ninth 
Circuit reversed a district court’s award of fees in part 
and remanded the case because the district court had 
ruled that it is always impermissible to allow any 
enhancement to reflect contingency. See id. at 460. 
The Ninth Circuit does not allow routine enhancement 
of fees in social security cases to reflect the contingent 
nature of those cases as a class, see Pet. App. 8-9, but it 
will allow a contingency enhancement in a case that is 
“particularly risky on an individual basis.” Id. at 9 n.3. 
Thus, the lodestar method does not flatly prevent an 
attorney from demonstrating to a court that unusual 
factors in a case warrant a 25% fee, even if the number 
of hours expended and the typical hourly rate for such a 
case would yield a smaller fee. 

Finally, although the application of different fee rules 
in different circuits may lead to claimants with similar 
claims obtaining different net recoveries based on the 
circuit in which they live, any unfairness is ameliorated 
somewhat by the fact that claimants can generally 
receive at least what they bargained for. Moreover, in 
most of these cases, the party left to litigate the issue 
of fees is the Commissioner (see page 4, note 3, supra). 
The Commissioner has not experienced substantial 
operational difficulties in the decade since the circuits 
have adopted the varying methods of calculating fees. 
Accordingly, practical considerations and administra- 
tive burdens do not counsel significantly in favor of 
immediate review. 

2. a. Petitioners contend (Pet. 16-18) that Section 
406(b) requires the courts to treat as presumptively 
reasonable, and therefore controlling, any agreement 
between a claimant for Title II benefits and counsel to 

12 

pay the attorney 25% of the claimant’s back benefits 
that are awarded by the court. That contention is in- 
correct. Section 406(b) provides that the court may 
determine and allow “a reasonable fee for such repre- 
sentation,” with no mention of any deference that the 
court owes to the terms of the lawyer’s employment 
agreement. The statute also provides that the rea- 
sonable fee allowed by the court must not be “in excess 
of 25 percent of the total of the past-due benefits to 
which the claimant is entitled.” 42 U.S.C. 406(b)(1)(A) 
(1994 & Supp. V 1999). 

Thus, the statute requires both 
that the court determine a reasonable fee, and that 
the fee be no greater than 25% of the back-benefits 
awarded. 

12 

If it were appropriate, as petitioners contend, for the 
courts to presume that 25% of the claimant’s back bene- 
fits is the proper award in any case in which the claim- 
ant and the attorney had agreed to that arrangement, 
then the statute’s requirement that the court determine 
a “reasonable” fee would lose much of its meaning. The 
25% level, which Congress intended as a ceiling, would 

12 Petitioner maintains (Pet. 14-16) that Section 406(b) requires 
contingency fee agreements, and so Congress presumably intended 
the courts to defer to the agreements arrived at between attorneys 
and clients, subject to the 25% ceiling. Section 406(b) does not by 
its express terms, however, require contingency-fee agreements. 
It does require a contingency fee, in that any award of attorney’s 
fees must depend on the claimant’s prevailing in court (and must 
be limited to, at most, 25% of the award to the claimant), and it also 
prohibits other arrangements such as non-contingent hourly fees. 
But a court may award a fee under Section 406(b) even if the 
claimant and the lawyer have not entered into an arrangement 
setting a determinate contingency-fee percentage. The claimant 
and the lawyer may agree, for example, that the lawyer will 
receive whatever reasonable fee the court will award, subject to 
the 25% cap. 

13 

become the presumptive floor as well simply because 
the parties had agreed to that level (and lawyers would 
likely insist on a fee of 25% of the award in most cases). 
But if Congress had wanted to authorize a 25% fee 
award in every case (or almost every case), it would 
have been easy for Congress to have so provided 
directly. Section 406(b) does not say, however, that 
counsel will get 25% of the award unless that amount is 
inequitable and unreasonable. Rather, it says that the 
court will determine the “reasonable fee” to be awarded 
to counsel, and that the fee in any event must not 
exceed 25% of the back-benefits award. The touchstone 
of the statute is thus a determination by the court as to 
the reasonable fee, with 25% the upper limit; the 
touchstone is not 25%, with reasonableness as an 
exception. Thus, the fact that Congress limited fees to 
a percentage of the award to the claimant suggests that 
Congress assumed that fees would be awarded based on 
the hours of work performed. 

b. The legislative history of Section 406(b) provides 
no support for petitioners’ argument that Congress in- 
tended a regime in which lawyers would presumptively 
receive a 25% fee award. Congress adopted the fee 
provision of Section 406(b) to prevent abusive fee prac- 
tices of lawyers in social security cases. The Senate 
Report explained the Senate Finance Committee’s 
findings as follows: 

It has come to the attention of the committee that 
attorneys have upon occasion charged what appear 
to be inordinately large fees for representing claim- 
ants in Federal district court actions arising under 
the social security program. Usually, these large 
fees result from a contingent-fee arrangement under 
which the attorney is entitled to a percentage (fre- 

14 

quently one-third to one-half) of the accrued bene- 
fits. Since litigation necessarily involves a consider- 
able lapse of time, in many cases large amounts of 
accrued benefits, and consequently large legal fees, 
are payable if the claimant wins his case. 

S. Rep. No. 404, 89th Cong., 1st Sess., Pt. 1, at 122 
(1965). 

A presumption that the attorney’s fee award should 
be 25% of the back benefits would be contrary to the 
concerns that Congress expressed about lawyers’ ex- 
tracting “inordinately large fees” from claimants. Con- 
gress acted on the understanding that lawyers who 
handle social security cases have unequal bargaining 
power vis-à-vis claimants, which could allow lawyers to 
extract unfairly generous terms in their representation 
contracts. Thus, a contingency fee agreement at which 
the lawyer and the client arrive is by no means 
necessarily or presumptively “reasonable” as Congress 
understood that term in Section 406(b). Consequently, 
those courts that follow the contingency method are 
mistaken when they suggest that “the best indicator of 
the ‘reasonableness’ of a contingency fee in a social 
security case is the contingency percentage actually 
negotiated between the attorney and client, not an 
hourly rate determined under lodestar calculations.” 
Wells v. Sullivan, 907 F.2d 367, 371 (2d Cir. 1990). To 
the contrary, Congress gave the courts the responsibil- 
ity of determining a reasonable fee precisely because it 
concluded that claimants were not able freely to negoti- 
ate attorney’s fees but rather were often compelled to 
agree to “inordinately large” contingent fee arrange- 
ments with fixed percentages. See Ramos Colon v. 
Secretary of Health and Human Servs., 850 F.2d 24, 26 
(1st Cir. 1988) (per curiam) (emphasizing that “a court 

15 

is not required to give ‘blind deference’ to [a] contrac- 
tual fee agreement” under Section 406(b)). 

c. Under the lodestar method of calculating a “rea- 
sonable” attorney’s fee, an objectively reasonable attor- 
ney’s fee is determined based on documentation of the 
hours that the attorneys reasonably spent on the case, 
and identification of the fair hourly rate charged by 
lawyers of similar skill, experience, and reputation in 
the local market. Under that method, the fee awarded 
will fairly reflect the value of the services rendered 
by the attorney. Attorneys are also likely to receive 
roughly similar compensation in cases of similar com- 
plexity. 

By contrast, petitioner’s rule that presumptively 
allows a 25% attorney’s fee can lead to different com- 
pensation for attorneys in cases where the attorney’s 
efforts were almost identical. For example, the back- 
benefits award from which the contingency fee is 
deducted can vary considerably, depending on the 
monthly benefit level that the particular claimant seeks 
(which in turn varies based on the claimant’s income 
when he was working and the number of years in which 
he contributed payroll taxes to the system), whether 
the claimant has dependents who will also be entitled to 
back benefits, and whether the claimant seeks benefits 
for an open-ended period of time or instead for only a 
closed period of time (if, for example, his medical 
condition improved at a later date). On the other side of 
the coin, cases yielding the same amount of back 
benefits would produce the same attorney’s fees under 
petitioners’ method, even if the work that counsel put 
into the case varied considerably. Thus, a case where 
counsel filed a short complaint and a short summary 
judgment memorandum, with both containing 
substantial amounts of boilerplate, would generate the 

16 

same fee as a case in which counsel had to file lengthy 
briefs before the magistrate judge, the district court, 
and the court of appeals, with oral hearings at each 
level. Even if, under a contingency method, fees might 
be reduced from the 25% level in extreme cases to pre- 
vent gross overcompensation of attorneys, petitioners’ 
position nonetheless presents a significant risk that the 
attorney’s compensation will bear little correlation to 
the efforts expended. 

d. Petitioners argue (Pet. 18-23) that application of 
the lodestar method of determining a reasonable fee 
under Section 406(b) is inconsistent with supposedly 
more generous methods for calculating attorney’s fees 
in other social security cases, including work done in 
Title II cases at the administrative level and cases 
seeking supplemental security income (SSI) benefits. 
That contention is wide of the mark. 

First, as petitioners explain (Pet. 20-21), under 42 
U.S.C. 406(a)(2)(A), counsel have the option, when 
seeking a fee for services rendered at the administra- 
tive level in Title II cases (such as for the hearing 
before the administrative law judge), of using a special 
expedited method for calculating fees. Under that 
expedited method, the Commissioner will approve any 
fee agreement between the claimant and counsel if the 
agreement calls for a fee that “does not exceed the 
lesser of ” 25% of the past-due benefits or $4000. 
42 U.S.C. 406(a)(2)(A)(ii). Petitioners overstate the 
significance of that provision, however. In a relatively 
simple case that is resolved favorably to the claimant at 
the administrative level, the back-benefits award will 
likely be far lower than it would be after litigation, and 
thus 25% of those benefits would produce a relatively 
small fee. But in more complex cases where substantial 
delay has generated higher amounts of back benefits, 

17 

counsel would likely not choose the expedited-fee 
option of Section 406(a)(2), but instead would seek 
certification of “a reasonable fee” by the Commissioner 
under Section 406(a)(1). If counsel makes a fee request 
under that provision, the Commissioner will “not base 
the amount of fee [he] authorize[s] on the amount of the 
benefit alone, but on a consideration of all the factors 
listed in” 20 C.F.R. 404.1725(b)(2). Those factors are 
similar to the traditional lodestar factors, including 
“[t]he complexity of the case,” “[t]he level of skill and 
competence required” of the attorney, and “[t]he 
amount of time the [attorney] spent on the case.” 20 
C.F.R. 404.1725(b)(1)(ii)-(iv). 

Petitioners point out (Pet. 19-20) that, in cases in 
which claimants seek SSI benefits, attorney’s fees are 
not limited by statute at all. But, as petitioners also 
point out, the Commissioner does not withhold a 
portion of the SSI back benefits and pay it directly to 
counsel, as he does in Title II cases. Nor may courts 
order the Commissioner to make any such withholding 
or direct payment to counsel in SSI cases. See Bowen 

v. Galbreath, 485 U.S. 74 (1988). Thus, attorneys who 
handle SSI cases take considerable risks of nonpayment 
or underpayment, compared to those who handle Title 
II cases. Successful SSI claimants are, by definition, 
low-income individuals with few assets. Lawyers 
handling SSI claims may often find it difficult to collect 
fees from their clients, even after the clients receive a 
back-benefits award. By contrast, the fee awarded in 
Title II litigation is made part of the court award and 
may be payable to the attorney directly by the Com- 
missioner. Thus, while the fee that a lawyer may 
recover in SSI cases may be less restricted by law than 
the fee for Title II court litigation, as a practical matter 

18 

it may be considerably easier for the Title II lawyer to 
recover the fee. 

e. Petitioners’ reliance (Pet. 17-18) on Venegas v. 
Mitchell, 495 U.S. 82 (1990), is unavailing. In Venegas, 
the Court held that 42 U.S.C. 1988, which authorizes 
the district court to award a reasonable attorney’s fee 
to a prevailing party in an action brought under 42 
U.S.C. 1983, as part of the costs payable by the losing 
party, does not of its own force prevent the attorney 
and the client from agreeing to a larger, contingent fee 
(or prevent a court from enforcing such a contingent-fee 
agreement). As the Court explained, “there is nothing 
in [Section 1988] to regulate what plaintiffs may or may 
not promise to pay their attorneys if they lose or if they 
win.” 495 U.S. at 86-87. The Court also emphasized 
that “Section 1988 makes the prevailing party” (rather 
than the lawyer) “eligible for a discretionary award of 
attorney’s fees,” and so the party is free to waive, 
settle, or negotiate with his counsel (or an opposing 
party) the attorney’s fee that might be awarded under 
Section 1988. 

These points are inapposite to Section 406(b). Unlike 
42 U.S.C. 1988, Section 406(b) manifestly does limit the 
freedom of an attorney and client to arrive at terms for 
the attorney’s compensation: the attorney’s fee must 
be contingent on the client’s recovery, and must be no 
greater than 25% of the award. Section 406(b) there- 
fore does not embody any broad principle of deference 
to the freedom of social security claimants and their 
attorneys to arrange for the attorney’s compensation. 
Moreover, the attorney’s fee awarded under Section 
406(b) is payable to the attorney, not the client, and 
accordingly is also more subject to regulation. 

19 

CONCLUSION 

The petition for a writ of certiorari should be denied. 

Respectfully submitted. 

THEODORE B. OLSON 
Solicitor General 

ROBERT D. MCCALLUM, JR. 

Assistant Attorney General 

WILLIAM KANTER 
FRANK A. ROSENFELD 

Attorneys 

OCTOBER 2001