Law Firm Forces Rewrite of Social Security Attorneys' Fee Rules – Bloomberg Law

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By Jacklyn Wille
The Social Security Administration must change its procedures for paying attorneys’ fees in disability benefit disputes to allow payments to law firms and payments for work done by lawyers who later join the government, the First Circuit held.
The administration’s requirement that attorneys’ fees be paid to individual attorneys and not to law firms is arbitrary and frustrates the statutory mandate to provide a reasonable legal fee for representing Social Security disability claimants, the U.S. Court of Appeals for the First Circuit said in a July 16 opinion.
The fact that only individual attorneys can serve as representatives in the disability claims process doesn’t justify a limitation on payments that ignores the “practical reality” that law firms “ordinarily are the ultimate recipients of fees paid to salaried associates,” the court said.
The court reached a similar conclusion with respect to the administration’s bar on paying attorneys’ fees for work completed by lawyers who later leave private practice to take a government job. The administration said this rule was necessary to comply with government-wide ethics requirements prohibiting officials from being paid to represent claimants before the administration.
The First Circuit disagreed, calling this logic “inscrutable” and “facially irrational.” The fee requests submitted by attorneys who later join the government include the specific dates on which work was performed, which allows the administration to verify that the attorneys’ representation ended before their government service began, the court said.
The decision is a victory for Rhode Island law firm Marasco & Nesselbush LLP, which says it’s owed about $70,000 in attorneys’ fees for work on behalf of individuals claiming Social Security disability benefits. The firm sued administration officials under the Administrative Procedure Act, arguing that certain of its “byzantine and irrational rules” governing the payment of attorneys’ fees are arbitrary and unenforceable.
Though the court sided with the firm on key issues, it declined to hold that the challenged rules violated agency notice-and-comment requirements or the federal constitution.
Judge Kermit V. Lipez wrote the decision. Chief Judge Jeffrey R. Howard and Judge O. Rogeriee Thompson joined.
Whelan Corrente & Flanders LLP represents the law firm.
The case is Marasco & Nesselbush LLP v. Collins, 1st Cir., No. 20-1397, 7/16/21.
To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com
To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com
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