Joseph J. ROYZER, Plaintiff-Appellant, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant-Appellee

900 F.2d 981, 1990 U.S. App. LEXIS 5635, 1990 WL 42252

• Court: Court of Appeals for the Sixth Circuit
• Decided: April 16, 1990
• Docket: 89-1631
• Status: Published

Opinions

RALPH B. GUY, Jr., Circuit Judge.

Claimant’s counsel, Gerald Benjamin, appeals from a reduction in the attorney’s fee he claimed after successfully representing claimant in a social security disability benefits claim. The district judge found the hourly rate to be “higher than is justified” and the hours expended to be “more than reasonably necessary.” In the district court, the Secretary did not oppose this fee request, but on appeal has filed a brief in support of the district court reduction.¹

Upon review, we conclude that the district court reduction was inconsistent with our holding in Rodriquez v. Bowen, 865 F.2d 739 (6th Cir.1989) (en banc), requiring us to reverse and remand.

Benjamin had a twenty-five percent contingent fee contract with the claimant.² He represented claimant at the administrative hearing, the Appeals Council level, and then succeeded at the district court level in getting the Secretary’s denial of benefits reversed. Benjamin’s time records show that he spent 34.75 hours on this case.³ The fee claimed — the full twenty-five percent — was $5,265.12.

Although Benjamin did not bill on an hourly basis, the district court computed his hourly rate by dividing the hours worked into the amount of the requested fee. The result was an hourly rate of $151.51. We tend to agree with the trial judge that, viewed as an hourly rate billing, this is on the high side; however, this is not an hourly rate billing. It is not at all unusual for contingent fees to translate into large hourly rates if the rate is computed as the trial judge has computed it here. In assessing the reasonableness of a contingent fee award, we cannot ignore the fact that the attorney will not prevail every time. The hourly rate in the next contingent fee case will be zero, unless benefits are awarded. Contingent fees generally overcompensate in some eases and under-compensate in others. It is the nature of the beast.

We want to emphasize that we are not saying that it is per se improper for a district judge to reduce a contingent fee to an hourly rate and view the computed hourly rate as part of the calculus in arriving at an appropriate fee. Contingent fees in social security cases are different than in other areas of the law because Congress has put the responsibility on the federal judiciary to make sure that fees charged are reasonable and do not unduly erode the claimant’s benefits.

In Rodriquez, we stated that the twenty-five percent fee agreement “should be given the weight ordinarily accorded a rebut-table presumption.” 865 F.2d at 746. We also indicated that:

Deductions generally should fall into two categories: 1) those occasioned by improper conduct or ineffectiveness of counsel; and 2) situations in which counsel would otherwise enjoy a windfall because of either an inordinately large benefit award or from minimal effort expended.

Id.

There is no claim here of any improper conduct or ineffectiveness, and we do not view this as a case involving an “inordinately large benefit award” or one in which “minimal effort” was expended. Unlike many social security cases, the attorney here represented claimant at the administrative hearing as well as before the Appeals Council. Our decision in Rodriquez represented a trade-off. We were aware that many experienced district judges felt they instinctively knew when a fee was too high, even though they might have difficulty articulating the rationale for their conclusion. However, this led to a plethora of ad hoc decisions which generated a considerable number of appeals. Rodriquez was an attempt to make fee decisions more uniform and predictable. It was not an attempt to eliminate the discretion which Congress has placed in the first instance in the district court.

It would be unfortunate if Rodriquez or our reversal of the district court in cases such as this one resulted in automatic approvals of contingent fees. That is certainly not our intent. This is particularly important in light of the fact that attorneys usually have contingent fee arrangements in social security cases. Thus, when we discuss contingent fees in social security cases, for all practical purposes, we are discussing the entire universe of fee requests in this type of case. If the fees requested are to be reduced, however, the reduction must be in accordance with the standards set forth in Rodriquez.

Although Rodriquez, like all cases, will mean different things to different persons, it appears safe to say that it was intended to eliminate the intuitive approach to the resolution of fee requests.

REVERSED and REMANDED for further proceedings consistent with this opinion.

1 .If the Secretary is going to object, the objection ought to be made at the district court level where factual disputes, if any, can be resolved. When the objection comes for the first time on appeal, as in the case here, we are faced with a number of nit-picking factual disputes which we do not have the capability, short of remand, to resolve.

2 . The fee contract actually provided for a fee not to exceed twenty-five percent, consistent with the authority of the court to order a fee less than twenty-five percent.

3 . The district court, as is usual, never saw Benjamin’s actual time records. A recapitulation of the records was attached to the petition for fee approval.