Crawford v. Astrue

586 F.3d 1142, 2009 U.S. App. LEXIS 24126, 2009 WL 3617989
Court of Appeals for the Ninth Circuit·Decided November 4, 2009·No. 06-55822, 06-55954, 06-56284·Published·Cited by 877 cases

Opinions

Opinion by Judge BETTY B. FLETCHER; Partial Concurrence and Partial Dissent by Judge CLIFTON; Dissent by Judge BEA.

BETTY B. FLETCHER, Circuit Judge:

We review three consolidated appeals that present one overarching issue: Did the district court follow the mandate of Gisbrecht v. Barnhart, 535 U.S. 789, 122 S. Ct. 1817, 152 L.Ed.2d 996 (2002), in determining the amount of attorneys’ fees awarded to lawyers who successfully represented Social Security disability insurance (“SSDI”) claimants in federal court under contingent-fee contracts? 1 We hold in each case that it did not. We vacate the district courts’ orders and grant the attorneys the contingency-based fees they requested.

I.

In each of the three cases presented for review, the Social Security Administration (“SSA”) denied a claim for benefits. Each claimant retained an attorney to challenge the administrative action in federal court. Each of the three claimants was represented by a different attorney: Brian C. Shapiro represented Clara Crawford; Young Cho represented Ruby Washington; and Denise Bourgeois Haley represented Daphne M. Trejo. All three attorneys were affiliated with the Lawrence D. Rohlfing (“Rohlfing”) law firm, which specializes in Social Security matters. In each case, the claimant signed a written contingent-fee agreement under which the attorney would be paid 25% of any past-due benefits awarded to the claimant. The district court remanded each case back to the SSA, which eventually awarded substantial past-due benefits to each claimant. The attorneys subsequently filed motions in the district court pursuant to 42 U.S.C. § 406(b) requesting fees of less than the 25% of past-due benefits for which their attorney-client fee agreements provided. In each case, the Commissioner of Social Security (“Commissioner”) declined to assert a position on the reasonableness of the fees requested by the attorneys.2 None of the claimants objected to the requested fees. Nevertheless, the district court in each case awarded significantly lower fees than the attorneys sought.3

[1145] A. Crawford (Real-party-in-interest Shapiro)

On remand, the SSA awarded Crawford $123,891.20 in past-due benefits. Twenty-five percent of that amount is $30,972.80. Shapiro requested a fee of $21,000 (16.95% of the past-due benefits awarded). To support his motion, Shapiro presented evidence that he spent 19.5 hours of his own time and 4.5 hours of paralegal time on Crawford’s case. Because the Rohlfing firm operates only on a contingent-fee basis, Shapiro presented evidence (1) that small firms charged average hourly rates, after accounting for inflation, of $272.72 for partners, $186.54 for associates, and $93.82 for paralegals; (2) that the upperdecile hourly rates charged for each position in small firms were $366.54, $272.72, and $130.91, respectively; and (3) that the average gross income of small plaintiffs’ contingency firms was about 30-40% higher than the average gross income of all small law firms combined. He also presented evidence that a lawyer representing SSDI claimants in federal court could anticipate payment in only about 35% of cases because (1) district courts granted benefits in SSDI cases only about 6% of the time, and (2) in the 48% of cases in which the district court remanded an SSDI case to the agency, the SSA awarded benefits about 60% of the time. To aid the district court’s evaluation of his request, Shapiro noted that the fee he requested was equivalent to 3.55 times the lodestar calculation and reasonably accounted for the risk he assumed in representing his client on a contingent-fee basis.

The court found that there was no “fraud or overreaching” in the negotiation of the 25% contingent-fee agreement, that the requested fee was within the 25% boundary set by § 406(b), and that Shapiro caused no unnecessary delay resulting in an undue accumulation of back benefits. The court also found that the hours, comparative hourly rates, and inflation rates that Shapiro presented were reasonable and would result in a lodestar fee of $5,907.14. The court concluded, however, that Shapiro had not met his burden of convincing the court that a fee of $21,000, which the court found represented a 256% “enhancement” over the lodestar, was reasonable. The court noted that Shapiro did not present “data regarding his firm’s success rate that would enable the Court to assess the risk assumed by his firm in representing social security benefits claimants in the Central District of California” and determined that counsel’s expertise had already been taken into account in the comparative hourly rate. The court therefore found that the fee constituted a “windfall” and that a “substantial reduction [was] warranted.” The court concluded, without explaining its reasoning, that a 40% percent enhancement over the lodestar fee would be reasonable. The court awarded a fee of $8,270.00, or 6.68% of the past-due benefits.

B. Washington (.Real-party-in-interest Cho)

On remand, the SSA awarded Washington $76,041.00 in past-due benefits. Twenty-five percent of that amount is $19,010.25. Cho sought a fee of $11,500.00 (15.12% of the benefits awarded). Cho presented evidence that he spent 17.45 hours of his time and 4.7 hours of paralegal time on the case. Cho introduced the same comparative hourly rate data that Shapiro presented, as well as evidence that the costs of legal services had risen faster than the cost of living, justifying hourly rates in the ninth decile of $429.95 for partners, $319.90 for associates, and $153.55 for paralegals. Finally, Cho presented the same success-rate data for SSDI cases as did Shapiro. Cho noted that courts determining fees in class-action securities cases had found that multipliers [1146] of 3 to 4.5 over the lodestar were reasonable.

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Crawford v. Astrue, 586 F.3d 1142, 2009 U.S. App. LEXIS 24126, 2009 WL 3617989 (9th Cir. 2009).

586 F.3d 1142 (Crawford v. Astrue) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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