OPINION AND ORDER GRANTING IN PART COUNSEL’S MOTION FOR ATTORNEY FEES PURSUANT TO 42 U.S.C. SECTION 406(b)
EICK, United States Magistrate Judge.
PROCEEDINGS
On June 16, 2006, counsel for Plaintiff filed “Counsel’s Notice of Motion and Motion for Attorney Fees Pursuant to 42 USC § 406(b), etc.” (“the Motion”), seeking $18,500. On July 12, 2006, Defendant filed a response that purportedly takes no position as to whether the requested fee is reasonable, but notes certain factors for the Court’s consideration. Counsel for Plaintiff filed a reply on July 17, 2006. The Court has taken the Motion under submission without oral argument.
See
Local Rule 7-15; June 16, 2006 Minute Order.
BACKGROUND
Plaintiff filed a complaint on September 26, 2003, seeking review of the Commissioner’s denial of disability benefits.
Fol
lowing Defendant’s answer, Plaintiff filed a motion for summary judgment. The motion for summary judgment asserted that the Commissioner’s denial should be reversed, and benefits should be awarded, because: (1) the Administrative Law Judge (“ALJ”) allegedly failed to offer any reason to reject the treating physician’s opinion that Plaintiff is disabled; and (2) the ALJ allegedly failed to offer clear and convincing reasons to reject Plaintiffs subjective complaints of pain.
See
“Notice of Motion and Motion for Summary Judgment, etc.,” filed March 30, 2004.
On May 7, 2004, the parties stipulated to remand the matter to the Social Security Administration for further proceedings pursuant to sentence four of 42 U.S.C. section 405(g). The Court entered an order and a judgment accordingly.
See
“Stipulation to Voluntarily Remand Pursuant to Sentence Four of 42 U.S.C. § 405(g) and to Entry of Judgment; Order Thereon” and “Judgment of Remand,” filed May 7, 2004.
Following remand, the Administration conducted proceedings that resulted in a favorable decision for Plaintiff and an award of past-due benefits from December 1998, totaling approximately $68,097.
See
Exhibits 2 and 3 filed with the Motion.
Of this award, the Commission withheld $17,024.25 (ie., 25 percent) for attorney fees.
See
“Defendant’s Response to Plaintiffs Motion for Attorneys’ Fees Pursuant to 42 U.S.C. § 406(b),” p. 5, n. 4.
Counsel for Plaintiff now moves for $18,500 in fees, which counsel asserts is $8.25 less than 25 percent of the approximated award.
Counsel acknowledges that any award made under section 406(b) must be offset by the $2,600 in attorney fees counsel previously recovered under the Equal Access to Justice Act (“EAJA”).
See
Motion, p. 3; “Stipulation for the Award and Payment of Attorney Fees Under the EAJA, etc.,” filed July 12, 2004; 28 U.S.C. § 2412. In support of the Motion, counsel for Plaintiff submitted a copy of the fee agreement between Plaintiff and counsel, which provides for a contingent fee of 25 percent of any past-due benefits awarded on the reversal of any unfavorable ALJ decision.
See
Motion, Exhibit 1 at ¶¶ 3-4.
APPLICABLE LAW
Under 42 U.S.C. section 406(b), the Court may allow attorney fees in a “reasonable” amount, not to exceed 25 percent of the total past-due benefits awarded to the claimant. The Court has an independent duty to ensure that a section 406(b) contingency fee is reasonable.
See id.; Gisbrecht v. Barnhart,
535 U.S. 789, 122
S.Ct. 1817, 152 L.Ed.2d 996 (2002)
(“Gisbrecht
”).
The United States Supreme Court has explained that section 406(b):
... does not displace contingent-fee agreements as the primary means by which fees are set for successfully representing Social Security benefits claimants in court. 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 this 25 percent boundary ... the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered.
Gisbrecht,
at 807, 122 S.Ct. 1817 (citations
omitted).
When a contingency fee falls within the 25 percent boundary, as here,
Gisbrecht
instructs that the Court appropriately may reduce counsel’s recovery:
...
based on the character of the representation and the results the representative achieved.
If the attorney is responsible for delay, for example, a reduction is in order so that the attorney will not profit from the accumulation of benefits during the pendency of the case in court.
If the benefits are large in comparison to the amount of time counsel spent on the case [thereby resulting in a windfall], a downward adjustment is similarly in order.
Id.
at 808, 122 S.Ct. 1817 (citations omitted) (emphasis added);
see also Straw v. Bowen,
866 F.2d 1167, 1169-70 (9th Cir.1989) (in traditional, non-contingency fee analysis, the court multiplies reasonable hours expended by the prevailing market rate to arrive at a “lodestar figure”; the court may adjust the lodestar figure by considering the factors identified in
Kerr v. Screen Extras Guild, Inc.,
526 F.2d 67, 70 (9th Cir.1975),
cert. denied,
425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976), to the extent the lodestar figure does not already subsume such factors).
Gisbrecht
does not instruct precisely how a district court should quantify the “downward adjustment” when the court concludes such an adjustment is “in order.”
Justice Scalia dissented in
Gisbrecht,
expressing concern that the majority opinion “does nothing whatever to subject [section 406(b) ] fees to anything approximating a uniform rule of law.”
Gisbrecht,
535 U.S. at 809, 122 S.Ct. 1817. Justice Scalia’s concern may have been well-founded. To date, there have been 43 reported decisions applying
Gisbrecht
to section 406(b) fee requests. A survey of these cases reveals considerable divergence and scant evidence of any “uniform rule of law.”
A.
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OPINION AND ORDER GRANTING IN PART COUNSEL’S MOTION FOR ATTORNEY FEES PURSUANT TO 42 U.S.C. SECTION 406(b)
EICK, United States Magistrate Judge.
PROCEEDINGS
On June 16, 2006, counsel for Plaintiff filed “Counsel’s Notice of Motion and Motion for Attorney Fees Pursuant to 42 USC § 406(b), etc.” (“the Motion”), seeking $18,500. On July 12, 2006, Defendant filed a response that purportedly takes no position as to whether the requested fee is reasonable, but notes certain factors for the Court’s consideration. Counsel for Plaintiff filed a reply on July 17, 2006. The Court has taken the Motion under submission without oral argument.
See
Local Rule 7-15; June 16, 2006 Minute Order.
BACKGROUND
Plaintiff filed a complaint on September 26, 2003, seeking review of the Commissioner’s denial of disability benefits.
Fol
lowing Defendant’s answer, Plaintiff filed a motion for summary judgment. The motion for summary judgment asserted that the Commissioner’s denial should be reversed, and benefits should be awarded, because: (1) the Administrative Law Judge (“ALJ”) allegedly failed to offer any reason to reject the treating physician’s opinion that Plaintiff is disabled; and (2) the ALJ allegedly failed to offer clear and convincing reasons to reject Plaintiffs subjective complaints of pain.
See
“Notice of Motion and Motion for Summary Judgment, etc.,” filed March 30, 2004.
On May 7, 2004, the parties stipulated to remand the matter to the Social Security Administration for further proceedings pursuant to sentence four of 42 U.S.C. section 405(g). The Court entered an order and a judgment accordingly.
See
“Stipulation to Voluntarily Remand Pursuant to Sentence Four of 42 U.S.C. § 405(g) and to Entry of Judgment; Order Thereon” and “Judgment of Remand,” filed May 7, 2004.
Following remand, the Administration conducted proceedings that resulted in a favorable decision for Plaintiff and an award of past-due benefits from December 1998, totaling approximately $68,097.
See
Exhibits 2 and 3 filed with the Motion.
Of this award, the Commission withheld $17,024.25 (ie., 25 percent) for attorney fees.
See
“Defendant’s Response to Plaintiffs Motion for Attorneys’ Fees Pursuant to 42 U.S.C. § 406(b),” p. 5, n. 4.
Counsel for Plaintiff now moves for $18,500 in fees, which counsel asserts is $8.25 less than 25 percent of the approximated award.
Counsel acknowledges that any award made under section 406(b) must be offset by the $2,600 in attorney fees counsel previously recovered under the Equal Access to Justice Act (“EAJA”).
See
Motion, p. 3; “Stipulation for the Award and Payment of Attorney Fees Under the EAJA, etc.,” filed July 12, 2004; 28 U.S.C. § 2412. In support of the Motion, counsel for Plaintiff submitted a copy of the fee agreement between Plaintiff and counsel, which provides for a contingent fee of 25 percent of any past-due benefits awarded on the reversal of any unfavorable ALJ decision.
See
Motion, Exhibit 1 at ¶¶ 3-4.
APPLICABLE LAW
Under 42 U.S.C. section 406(b), the Court may allow attorney fees in a “reasonable” amount, not to exceed 25 percent of the total past-due benefits awarded to the claimant. The Court has an independent duty to ensure that a section 406(b) contingency fee is reasonable.
See id.; Gisbrecht v. Barnhart,
535 U.S. 789, 122
S.Ct. 1817, 152 L.Ed.2d 996 (2002)
(“Gisbrecht
”).
The United States Supreme Court has explained that section 406(b):
... does not displace contingent-fee agreements as the primary means by which fees are set for successfully representing Social Security benefits claimants in court. 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 this 25 percent boundary ... the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered.
Gisbrecht,
at 807, 122 S.Ct. 1817 (citations
omitted).
When a contingency fee falls within the 25 percent boundary, as here,
Gisbrecht
instructs that the Court appropriately may reduce counsel’s recovery:
...
based on the character of the representation and the results the representative achieved.
If the attorney is responsible for delay, for example, a reduction is in order so that the attorney will not profit from the accumulation of benefits during the pendency of the case in court.
If the benefits are large in comparison to the amount of time counsel spent on the case [thereby resulting in a windfall], a downward adjustment is similarly in order.
Id.
at 808, 122 S.Ct. 1817 (citations omitted) (emphasis added);
see also Straw v. Bowen,
866 F.2d 1167, 1169-70 (9th Cir.1989) (in traditional, non-contingency fee analysis, the court multiplies reasonable hours expended by the prevailing market rate to arrive at a “lodestar figure”; the court may adjust the lodestar figure by considering the factors identified in
Kerr v. Screen Extras Guild, Inc.,
526 F.2d 67, 70 (9th Cir.1975),
cert. denied,
425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976), to the extent the lodestar figure does not already subsume such factors).
Gisbrecht
does not instruct precisely how a district court should quantify the “downward adjustment” when the court concludes such an adjustment is “in order.”
Justice Scalia dissented in
Gisbrecht,
expressing concern that the majority opinion “does nothing whatever to subject [section 406(b) ] fees to anything approximating a uniform rule of law.”
Gisbrecht,
535 U.S. at 809, 122 S.Ct. 1817. Justice Scalia’s concern may have been well-founded. To date, there have been 43 reported decisions applying
Gisbrecht
to section 406(b) fee requests. A survey of these cases reveals considerable divergence and scant evidence of any “uniform rule of law.”
A.
Post-Gisbrecht Decisions Awarding the Full 25 Percent of Past-Due Benefits
Slightly more than half, or 23, of the reported decisions applying
Gisbrecht
to section 406(b) requests have awarded at
torney fees in the amount of the requested 25 percent of past-due benefits. The stated justifications for these awards vary widely. For example, five of the decisions generally defer to the fee agreement, apparently without considering whether the benefits obtained were large in comparison to the time counsel spent representing the claimant.
Four decisions mention the size of the recovery in comparison to the time spent, but nonetheless deem the contingency fee “reasonable” because of the supposed difficulties in representing the claimants and/or the exceptional results obtained.
Each of the remaining 14 decisions awarding 25 percent of past-due benefits approves the fee request based at least in part on a finding that the
de faeto
hourly rate for counsel’s time was “reasonable.” Eleven of these 14 decisions calculate the
de facto
hourly rate based only on the time counsel spent before the court.
Three of
these decisions calculate the
de facto
hourly rate based on the time counsel spent before the court combined with the time counsel spent before the agency.
B.
Post-Gisbrecht Decisions Awarding Full Amount Requested, But Less than 25 Percent of Past-Due Benefits
Eight of the reported decisions applying
Gisbrecht
have awarded the full amount requested, when the amount happened to be less than 25 percent of the claimant’s past-due benefits. In seven of these decisions, the court appears to have considered the amount of time spent in relation to the benefits obtained.
In the remaining case, the court emphasized the fact that the fee was not disputed.
C.
Post-Gisbrecht Decisions Reducing Fees
The remaining 12 reported decisions applying
Gisbrecht
have awarded fees in amounts greater than the amounts that would have been recovered under counsel’s standard hourly rates, but less than the requested 25 percent of past-due benefits. These decisions vary significantly in the manner in which the decisions reduce the fees:
• Two decisions reduce the fees to a
de facto
hourly rate 2.5 times counsel’s normal hourly rate.
• Three decisions reduce the fees based on amounts the judge previously had adjudicated to be reasonable in other cases or had experienced in practice and on the bench.
• Five decisions reduce the fees markedly, but without any precise explanation regarding how the court calculated the reduction.
• One decision excludes fees attributable to paralegal time.
• One decision excludes fees for past-due benefits recovered for the claimant’s minor children.
D.
Lack of Uniformity; Lack of Guidance
In sum, therefore, the reported decisions suggest that district courts applying
Gis-brecht
have not been uniform in their approach.
It does appear, however, that most (but not all) of these courts have drawn on a traditional lodestar analysis in evaluating whether a full contingent percentage recovery would amount to a “windfall,” within the meaning of
Gis-brecht.
As yet, there is virtually no circuit court guidance in this area. Only the Fourth Circuit has published a decision interpreting or implementing
Gisbrecht.
In
Mudd v. Barnhart,
418 F.3d 424, 428-29 (4th Cir.2005), the Fourth Circuit affirmed a 25 percent fee, holding that the district court appropriately considered the time counsel spent before the agency as relevant in determining the complexity of the case, the lawyering skills required, and therefore the reasonableness of higher fees. Ultimately, however, the Circuit merely deferred to the district court’s determination that the fee was reasonable in that particular case.
Id.
DISCUSSION
Having reviewed the papers on file in this case in light of
Gisbrecht
and its progeny, the Court concludes that counsel has not met her burden of showing the reasonableness of the fees requested.
See
42 U.S.C. § 406(b);
Gisbrecht,
535 U.S. at 807, 122 S.Ct. 1817. Counsel’s office achieved a favorable result for Plaintiff and should be compensated above the office’s normal hourly fees to recognize the risks of contingent litigation.
See, e.g., Hearn v. Barnhart,
262 F.Supp.2d at 1037 (quoting
Dodson v. Commissioner of Social Security,
2002 WL 31927589; “Congress has indicated the permissibility, within limits, of rewarding attorneys for assuming the risk of going uncompensated for representing Social Security claimants.”). However, the $68,097 in past-due benefits Plaintiff recovered is large in comparison to the amount of time spent on the case by counsel’s office. In counsel’s June 2004 declaration submitted with her request for EAJA fees, counsel states:
My normal billing rate for matters taken on an hourly basis is $220.00 per hour, and $95.45 for my paralegal.
See
“Petition for Attorney Fees and Expenses Under the Equal Access to Justice Act, etc.,” filed June 4, 2004, at p. 9, ¶ 3. Counsel spent 16.2 hours and her paralegal spent 4.7 hours.
See
Motion, Exhibit 4. If compensated according to the normal hourly rates, counsel would receive:
$220.00 x 16.2 hours = $3,564.00
$ 95.45 x 4.7 hours = 448.62
Total Fees $4,012.62
If counsel receives the full 25 percent under the fee agreement, however, counsel will receive a fee equivalent to roughly 4.24 times her normal hourly rates
(i.e.,
$933.39 per hour for counsel’s time and $404.96 per hour for her paralegal’s time).
Additionally, at least one court adjudicating section
406(b) fee requests has denied recovery for non-attorney time that can be compensated under the EAJA.
See Roark v. Barnhart, 221
F.Supp.2d at 1021;
but see Hussa-Nelson v. Barnhart,
2002 WL 31664488 (not differentiating between 48.8 hours spent by attorney and 5.1 hours spent by law clerk in considering reasonableness of fee for work before the court).
While the contingent risk in the present case should be compensated reasonably, it should not be compensated as richly as counsel suggests. Under the circumstances of this case, to do as counsel suggests would not be faithful to
Gisbrecht. See Gisbrecht,
at 808, 122 S.Ct. 1817 (“If the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is ... in order”). Counsel spent very little time on the case in comparison to the amount of benefits now owing, and the issues briefed in the summary judgment motion were neither novel nor complex.
The Court finds that a downward adjustment from a full contingency fee award is required in this case to arrive at a fee that is “reasonable for the services rendered.” After surveying the case law, and after considering the nature of the contingent risk, the Court finds that a fee of $10,031.56, representing 2.5 times the normal hourly rates of counsel and her paralegal (or a
de facto
rate of $550 for counsel and $238.63 for her paralegal) is a reasonable fee for the representation of Plaintiff before this Court.
See Brannen v. Barnhart,
2004 WL 1737443 (awarding fee that was roughly 1.01 times counsel’s normal hourly rate);
Wallace v. Barnhart,
2004 WL 883447 (awarding fee that was 1.25 counsel’s normal hourly rate);
Hearn v. Barnhart,
262 F.Supp.2d at 1035 (awarding fee that was roughly 1.5 times counsel’s normal hourly rate);
Mitchell v. Barnhart,
376 F.Supp.2d at 923 (awarding fee that was 1.64 times counsel’s normal hourly rate);
Coppett v. Barnhart,
242 F.Supp.2d at 1381 (awarding fee that was roughly twice counsel’s normal hourly rate);
Roark v. Barnhart, 221
F.Supp.2d at 1021 (same);
Ogle v. Barnhart,
2003 WL 22956419 (awarding fee that was 2.5 times counsel’s normal hourly rate);
Van Nostrand v. Barnhart,
2005 WL 1168428 (same);
cf. Yarnevic v. Apfel,
359 F.Supp.2d at 1365-66 (awarding fee that was roughly 2.85 times counsel’s standard hourly rate);
Droke v. Barnhart,
2005 WL 2174397 (awarding fee that was roughly 5.54 times counsel’s normal hourly rate where counsel achieved “exceptional” results);
Claypool v. Barnhart,
294 F.Supp.2d at 830 (awarding fee that was roughly 5.73 times counsel’s normal hourly rate where past-due benefits totaled almost $200,000); and
Whitehead v. Barnhart,
2006 WL 681168 (awarding fee that was roughly 6.55 times counsel’s normal hourly rate where counsel argued novel, case-specific and risky position).
The Court acknowledges the regrettable imprecision of its analysis.
After
Gis-brecht,
counsel and their clients cannot predict with any degree of certainty what courts will award as “reasonable” fees under section 406(b), particularly where the benefits are large in comparison to the
amount of time spent by counsel. And, absent further guidance from Congress or from the appellate courts, district courts cannot have any degree of confidence that their section 406(b) awards will be consistent with what the law intends.
CONCLUSION
The Motion is granted in part. Section 406(b) fees are allowed in the gross amount of $10,031.56, to be paid out of the sums withheld by the Commissioner from Plaintiffs benefits. Counsel shall reimburse Plaintiff in the amount of $2,600, previously paid by the Government under the EAJA.
IT IS SO ORDERED.