SSR 80-20c: SECTION 413(b) (30 U.S.C. 923(b)) BLACK LUNG BENEFITS -- REPRESENTATION OF CLAIMANT -- FIXING AMOUNT OF ATTORNEY'S FEES -- ADMINISTRATIVE AND COURT PROCEEDINGS

20 CFR 410.686a-410.686d

SSR 80-20c

WHITT v. CALIFANO, USDC, Fourth Circuit, Civil No. 77-2322 (7/12/79)

PER CURIAM:

This is an appeal by the Secretary of Health, Education and Welfare [HEW]

from the allowance by the district court of attorneys' fees to claimants'

attorneys in five black lung

cases. [1] Because the objections

of the Secretary to the allowance in all the cases are similar, the cases

were consolidated on appeal. We remand for further proceedings.

The Secretary urges that it is manifest the district judge in making the

awards in the cases improperly gave consideration to and granted

compensation, in part, for work done by claimants' counsel in

administrative proceedings and that, if the time spent in representing the

claimants in the administrative proceedings is disregarded, the amounts

allowed are grossly excessive on the basis of counsel's time spent in

representation of the claimants before the court. In support of these

objections, the Secretary points to several petitions filed by counsel for

the allowance of fees, in all of which counsel, in itemizing their

services, and in allocating time spent in such services, include their

services in the administrative proceedings. He, also, questions including

in the statement of services charges for the preparation of the petition

for a fee allowance and of the drafting of the order allowing a

fee. [2] He would analyze the

services of counsel largely in terms of time expended, as shown in the

itemized statement of services as filed with the court by counsel. On that

basis, he contends that, if the awards are restricted to services in the

court proceedings, they vary in hourly charges from approximately $150 to

about $520. He argues that this great disproportion in allowances, as

based on time spent, bespeaks excessiveness

sel largely in terms of time expended, as shown in the

itemized statement of services as filed with the court by counsel. On that

basis, he contends that, if the awards are restricted to services in the

court proceedings, they vary in hourly charges from approximately $150 to

about $520. He argues that this great disproportion in allowances, as

based on time spent, bespeaks excessiveness. He complains, further, that

the awards were all couched in the same language, except for title of case

and adjustment of figures to conform to the facts of the particular case,

and followed a standard "boiler-plate" form, in which the allowances

represented somewhere between roughly 20 and 22 percent of the past-due

benefits due in each case. It is apparently his position that this

circumstance suggests that the allowance followed a pattern under which

fees were awarded perfunctorily, close to the maximum allowable by

statute, without a careful review of the services rendered by counsel in

the particular case.

The legal objections raised by the Secretary were considered and decided

in McKittrick v. Gardner (4th Cir. 1967) 378 F.2d 872, which has

generally been regarded as the guiding authority governing the allowance

of fees under the Social Security Act. It is unnecessary to repeat all the

general considerations stated in that decision for governing the exercise

of the district judge's discretion in the allowance of attorney's fees in

cases such as these. We particularly emphasized in that case that, though,

the district judge, in making his award of fees, is properly clothed with

considerable discretion, he was neither to consider nor to make any

allowance for services rendered by counsel in the administrative

proceedings. That power to make allowances for those services rests solely

with the Secretary

ey's fees in

cases such as these. We particularly emphasized in that case that, though,

the district judge, in making his award of fees, is properly clothed with

considerable discretion, he was neither to consider nor to make any

allowance for services rendered by counsel in the administrative

proceedings. That power to make allowances for those services rests solely

with the Secretary. It follows that, lest the district court be misled

about the extent of counsel's services, counsel, in listing the services,

expressed in terms of hours expended for which he seeks allowance, should

not include any itemization of services rendered in the administrative

proceedings.

The Secretary argues vigorously that counsel for the claimants in these

cases improperly rested their petitions for a fee substantially on the

work performed in the administrative proceedings. He refers, as we have

said, to the itemization of services filed by counsel with the district

court. In one of the cases identified by the Secretary, where counsel

asked for a fee of $4,500 and the district judge allowed $4,200, the hours

expended on the administrative proceedings seem to have exceeded those

allocated to the court proceedings by approximately three to one. This

disparity in hours, he says, shows that a part of the substantial fee

requested must have been allocated to the administrative

proceedings. [3] These

circumstances would indicate, the Secretary urges, that the judge, in

making his allowances, looked to the total hours of work listed in their

itemization by counsel, without possibly noting the differentiation

between work done in the administrative proceedings and work in the court

proceedings. It does not, of course, necessarily follow that counsel were

seeking by their petitions and the district judge was making an award of

fees, in part, for services in the administrative proceedings

the total hours of work listed in their

itemization by counsel, without possibly noting the differentiation

between work done in the administrative proceedings and work in the court

proceedings. It does not, of course, necessarily follow that counsel were

seeking by their petitions and the district judge was making an award of

fees, in part, for services in the administrative proceedings. The facts

are such, however, as to make it appropriate for us to remand these

proceedings to the district court for clarification.

In remanding, however, we would emphasize again that the allowance of

fees in cases such as these is a matter that properly is committed to the

discretion of the district judge, whose familiarity with the proceedings

uniquely qualifies him to evaluate the services of counsel and to give

appropriate weight to the considerations outlined by us in McKittrick .

REMANDED

(For the reader's convenience, the decision in McKittrick v.

Gardner follows. Ed.)

HAYNESWORTH, Chief Judge:

In each of these cases, the Secretary objects to a routine allowance of

attorney fees to lawyers representing claimants to social security

benefits. In each instance the claimant prevailed in the District Court,

and the Secretary does not question the lawyers' entitlement to reasonable

fees. He complains only of the controlling significance given to

contingent fee contracts in fixing the fees.

h of these cases, the Secretary objects to a routine allowance of

attorney fees to lawyers representing claimants to social security

benefits. In each instance the claimant prevailed in the District Court,

and the Secretary does not question the lawyers' entitlement to reasonable

fees. He complains only of the controlling significance given to

contingent fee contracts in fixing the fees.

In the Crouch case, the District Court on November 18, 1966,

because of a contingent fee contract, approved a fee of $656.37, which was

twenty-five per cent of the accrued benefits. The District Judge wrote an

opinion in which he declared that fees would be routinely allowed in

accordance with contingent fee contracts if the contractual fee did not

exceed twenty-five per cent of the accrued benefits, the claimant approved

the payment and there was no affirmative indication of overreaching or

unfairness. Our opinions in Lambert v. Celebrezze , 4 Cir., 361 F.2d

677, and Redden v. Celebrezze , 4 Cir., 361 F.2d 815, were construed

as requiring an exercise of the Court's independent judgment only when the

contractual fee exceeds the statutory maximum of twenty-five per cent.

In the McKittrick case, the District Court routinely approved a

fee equal to twenty-five per cent of the claimant's accrued benefits.

Subsequently, on November 2, 1966, a supplemental fee was allowed equal to

twenty-five per cent of the accrued benefits due dependents, making the

total approved bee approximately $1,752.00. The District Judge had been

informed of the existence of a contingent fee contract, but the

supplemental order allowing the additional fee rests only upon findings

that there were accrued benefits payable to dependents and that neither

claimant nor his wife objected to the allowance of an additional fee equal

to twenty-five per cent of those benefits. There was no explicit

determination of the reasonableness of the fee.

med of the existence of a contingent fee contract, but the

supplemental order allowing the additional fee rests only upon findings

that there were accrued benefits payable to dependents and that neither

claimant nor his wife objected to the allowance of an additional fee equal

to twenty-five per cent of those benefits. There was no explicit

determination of the reasonableness of the fee.

[1] Subsequent to the allowance of the fees in these two cases, we filed

an opinion on rehearing of the Lambert and Redden cases. Redden v. Celebrezze , 4 Cir., 370 F.2d 373. There, we held that the

maximum fee base included accrued benefits due dependents, but we also

emphasized our reading of the

statute [4] as requiring the

court in every case to fix and determine a reasonable fee for services

rendered in the court. We specifically stated, "Routine approval of the

statutory maximum allowable fee should be avoided in all

cases," [5] and this is true

whether or not the fee claim has a contractual basis.

Our holding on rehearing in Redden requires a vacation of the fee

orders in these cases.

[2] As we attempted to point out in Redden , the statute requires

the court to fix and allow a reasonable fee for services rendered in the

judicial phase of the proceedings. It appears to contemplate no blind

deference to contractual fee arrangements, and the congressional scheme,

which places ultimate responsibility upon the court in every case, seems

appropriate for a number of reasons.

The rate of accrual of benefits varies without any relation to the merits

of the claim. It is fixed by such things as the claimant's prior earnings

and the number of his dependents. The issue in the usual case is

entitlement to benefits; their computation is rarely in question. Unlike

personal injury actions, therefore, the amount of the recovery bears no

relation to the lawyer's skill, effort or effectiveness.

enefits varies without any relation to the merits

of the claim. It is fixed by such things as the claimant's prior earnings

and the number of his dependents. The issue in the usual case is

entitlement to benefits; their computation is rarely in question. Unlike

personal injury actions, therefore, the amount of the recovery bears no

relation to the lawyer's skill, effort or effectiveness.

If, in these cases, a contingent fee contract governs the amount of the

fee, the dilatory lawyer is given a premium; the prompt, effective lawyer

who move expeditiously is penalized. The regrettable delays in the final

adjudication of these claims, in large measure, may be unavoidable, but

they should not be compounded by incentives for procrastination and

delaying tactics on the part of a claimant's attorney. The modest fees

claimed here may be contrasted with those claimed in Redden , where

the fee base exceeded $16,000. We attribute no responsibility to the

lawyer in Redden for the delay which permitted the accrued benefits

to reach that level, but it is obvious that in a similar case the size of

the fee base would depend, to a substantial extent, upon the effectiveness

of the lawyer's advancement of his client's cause with an inverse effect

upon his fee. While most lawyers are conscientious, statutes need not

encourage those who are not completely so to be less conscientious in the

expeditious prosecution of the claims of their clients.

obvious that in a similar case the size of

the fee base would depend, to a substantial extent, upon the effectiveness

of the lawyer's advancement of his client's cause with an inverse effect

upon his fee. While most lawyers are conscientious, statutes need not

encourage those who are not completely so to be less conscientious in the

expeditious prosecution of the claims of their clients.

More importantly, the worth of the lawyer's services varies profoundly

with his effort and its effectiveness. There are lawyers i this circuit,

handling such claims, who file complaints in such general and summary form

that a secretary could prepare them from office forms. The complaint is

followed by a motion for summary judgment in a form appropriate for every

case. Without the assistance of any brief or any exposition of the facts,

the lawyer casts upon the court the burden of sifting the record and,

unaided, of resolving any legal question which may be involved. Such

lawyers, expending little or no effort as advocates of their clients'

causes are atypical, but they do exist, and they do not deserve the same

fee allowance as their more deserving brothers who conscientiously assist

their clients and the courts.

It would be foolish to deny that the quantity and the quality of the

services rendered by lawyers in such cases as these varies throughout a

vast spectrum from very little to very great, and, after a favorable

outcome, the least of them may be the quickest to declare to the client,

"I won your case." Such a claimant is unlikely to object to an allowance

of a fee in accordance with his contingent fee arrangement, for, rightly

or wrongly, he will usually give the lawyer all of the credit for the

success in winning an award of benefits for him. The Bar, as a whole, is a

responsible, highly motivated group, but those whose performance depress

its averages are not entitled to compensation of the same basis with equal

reward as those whose performances elevate it.

with his contingent fee arrangement, for, rightly

or wrongly, he will usually give the lawyer all of the credit for the

success in winning an award of benefits for him. The Bar, as a whole, is a

responsible, highly motivated group, but those whose performance depress

its averages are not entitled to compensation of the same basis with equal

reward as those whose performances elevate it.

Our decision here is governed by the statute, but such considerations as

these lend support to the congressional purpose and our construction of

it. [6] No one, of course,

questions the appropriateness of congressional regulation of the fees

payable in connection with an award of benefits under a comprehensive,

statutory plan for the support of disabled persons.

The statute, as we construe it, imposes no great burden upon the courts.

In the ordinary case, no evidentiary hearing is required. The district

judge will know what assistance he received from the claimant's attorney.

If, with little or no assistance, he is required to read the entire

administrative record, discover the issues and do the basic research in

his library before he approaches performance of his ultimate

decision-making role, he will know it. He will know it if, in our

adversary system, the lawyers have performed superbly or adequately, their

function of eliminating irrelevancies, pointing up the issues to be

decided and supplying the court with the legislative and judicial

materials which he must have at hand when he reaches his ultimate

conclusion. He will know, too, the worth of their analyses of the relevant

materials, for he will have appraised them in depth in coming to his own

decision. If the lawyer's performance has been somewhere in between the

excellent and the wholly unacceptable, the judge will know it in all of

its gradients

ive and judicial

materials which he must have at hand when he reaches his ultimate

conclusion. He will know, too, the worth of their analyses of the relevant

materials, for he will have appraised them in depth in coming to his own

decision. If the lawyer's performance has been somewhere in between the

excellent and the wholly unacceptable, the judge will know it in all of

its gradients. The judge who has decided a case, need hold no evidentiary

hearing to determine the extent and quality of the assistance he received

from the lawyers in reaching his conclusion and in preparing an

opinion.

The judge may be assisted by a statement of the time spent by the lawyer,

though such statements must be subordinate to the judge's evaluation of

the lawyer's contribution to the decision. The evidence of a lawyer's

fidelity and commitment to his client's cause, which is reflected in his

performance in court, may be colored by reports or evidence of extra-legal

financial and consultative services rendered by the lawyer to a claimant

experiencing difficult, even insolvable, problems while awaiting receipt

of the benefits he seeks. In short, the judge may receive supplemental

reports and statements from the lawyer in aid of his fee claim, provided

copies have been furnished the Secretary, but the controlling criterion

will remain the quantity and quality of the lawyer's services as observed

by the judge in the judicial proceedings.

Under these circumstances, an evidentiary hearing as a prerequisite to an

order approving or allowing a fee should be rarely, if ever, necessary.

There may be extraordinary cases in which the lawyer's claim may depend in

part upon factual assertions which are questioned by the Secretary, but in

the vast majority of cases, the judge's own observation of the lawyer's

performance in the adjudicatory process will be a sufficient basis for his

allowance of a reasonable

fee. [7]

or allowing a fee should be rarely, if ever, necessary.

There may be extraordinary cases in which the lawyer's claim may depend in

part upon factual assertions which are questioned by the Secretary, but in

the vast majority of cases, the judge's own observation of the lawyer's

performance in the adjudicatory process will be a sufficient basis for his

allowance of a reasonable

fee. [7]

[3] While the judge must approve the reasonableness of the fee in every

case and may not unquestioningly endorse contingent fee contracts

providing for a fee of not more than twenty-five per cent of the accrued

benefits, there is no prohibition against his consideration of the

contingency of compensation. Availability of lawyers to such claimants is

of the highest importance, and if a lawyer is to receive no compensation

unless there is an award, his compensation is contingent whether or not he

has a contract that says so. Most of the disability claimants have no

other resources for the payment of fees. The contingency of compensation,

whether it stems from an employment contract or results from the

claimant's indigency, is highly relevant in the appraisal of the

reasonableness of any fee claim. The effective lawyer will not win all of

his cases, and any determination of the reasonableness of his fees in

those cases in which his client prevails must take account of the lawyer's

risk of receiving nothing for his services. Charges on the basis of a

minimal hourly rate are surely inappropriate for a lawyer who has

performed creditably when payment of any fee is so uncertain.

claim. The effective lawyer will not win all of

his cases, and any determination of the reasonableness of his fees in

those cases in which his client prevails must take account of the lawyer's

risk of receiving nothing for his services. Charges on the basis of a

minimal hourly rate are surely inappropriate for a lawyer who has

performed creditably when payment of any fee is so uncertain.

[4] In each case, therefore, the statute requires the court to fix and

determine a reasonable fee. It may approve a fee in accordance with a

contingent fee contract within the statutory maximum, if it finds, under

all of the circumstances, that the fee is reasonable, and in its

consideration of reasonableness it may consider all relevant facts and

materials, including he contingency of compensation. We suggest no

limitation upon the court's exercise of its discretion. We hold only that

its discretion must be exercised in each case, without automatic or

unquestioning acceptance of contractual arrangements.

It may be unfortunate that § 206(b) of the

Act [8] appears to limit the

court's allowance of a fee to the reasonable value of the lawyer's

services in the court without regard to any services he may have rendered

in the unsuccessful administrative

proceeding. [9] In the usual

case, when the District Judge has gone through the administrative record,

he will have become familiar with the extent and the nature of the

services rendered by the lawyer in the administrative phase of the case.

At an appropriate time, the Congress might consider whether or not it is

an unnecessary burden upon the lawyer to require him to prosecute two

separate fee allowance applications, if one in the District Court would

suffice

he administrative record,

he will have become familiar with the extent and the nature of the

services rendered by the lawyer in the administrative phase of the case.

At an appropriate time, the Congress might consider whether or not it is

an unnecessary burden upon the lawyer to require him to prosecute two

separate fee allowance applications, if one in the District Court would

suffice. Meanwhile, as Chief Judge Aldrich observed in Menendez ,

"[t]here is nothing singular in the fact that counsel who appears in two

forums should apply to each for the aliquot part of his total fee * *

*." [10] Counsel for the

Secretary assures us that the Secretary will allow a reasonable fee for

services in the administrative proceedings if, though the Secretary's

decision was adverse to the claimant, the claimant subsequently obtains an

award as a result of the judgment of a court.

In vacating the judgments of the District Court because of the

controlling significance attributed to the contingent fee contracts, and

remanding these cases for further proceedings not inconsistent with this

opinion, we intimate no opinion that the fees actually allowed in these

cases are unreasonable.

Vacated and remanded.

[1] § 206(b) Social Security

Act, 42 U.S.C. § 406(b), incorporated by reference, § 413(b), Federal Coal

Mine Health and Safety Act 1969, as amended, 30 U.S.C. § 923(b).

This section provides:

[2] These services, expressed in

time expended in the itemization of services, vary from 1-½ hours to 3

hours. Compensation for such services is not allowable under the

statute.

ted and remanded.

[1] § 206(b) Social Security

Act, 42 U.S.C. § 406(b), incorporated by reference, § 413(b), Federal Coal

Mine Health and Safety Act 1969, as amended, 30 U.S.C. § 923(b).

This section provides:

[2] These services, expressed in

time expended in the itemization of services, vary from 1-½ hours to 3

hours. Compensation for such services is not allowable under the

statute.

See, however, Gagne v. Maher (2d Cir. 1979) 594 F.2d 336 at

343-44, where the court held that such time is compensable. In so doing,

however, it cited with approval Prandini v. National Tea Co . (3d

Cir. 1978) 585 F.2d 47, 52-54. In that case the allowance was approved

because it was not a dilution of the amount to be received by plaintiff.

The implication was clear in the opinion that if an allowance would

operate to decrease the amount to be received by plaintiff an allowance

for such time should not be allowed. Gagne was the same kind of

case as Prandini . It would, therefore, seem that the instant cases

in which the allowance of attorney's fees would be at the expense of the

plaintiffs would not be covered by the rule as stated in either Gagne or in Prandini .

[3] Moreover, counsel candidly

stated in argument that applications for the allowances of fees in

connection with the administrative proceedings had not been filed because

counsel were satisfied with the awards by the court.

[4] 42 U.S.C.A. § 406(b). 378

F.2d-55½

[5] 370 F.2d at 376.

[6] As indicated earlier, other

considerations would be involved in an appraisal of the propriety and

usefulness of contingent fee arrangements in personal injury and other

tort actions. If such contracts should come under judicial scrutiny, the

problem will probably by posed in terms of the reasonableness of the

particular contract.

S.C.A. § 406(b). 378

F.2d-55½

[5] 370 F.2d at 376.

[6] As indicated earlier, other

considerations would be involved in an appraisal of the propriety and

usefulness of contingent fee arrangements in personal injury and other

tort actions. If such contracts should come under judicial scrutiny, the

problem will probably by posed in terms of the reasonableness of the

particular contract.

[7] The Secretary, of course,

should be afforded an opportunity to be heard. He will have seen the

pleadings and the briefs of the claimant's attorney and observed his

performance. His comparative appraisal, with the benefit of his very broad

experience, should be of assistance to the court.

[8] 42 U.S.C.A. § 406(b).

[9] Gardner v. Menendez, 1 Cir.,

373 F.2d 488; Robinson v. Gardner, 4 Cir., 374 F.2d 949.

[10] Menendez, 1 Cir., 373

F.2d 488, 490.