Several attorneys in Rhode Island have alleged that the Social Security Administration’s rules for distributing attorney fees are overly restrictive and a logistical headache for firms, something which has potential implications on access to justice for these cases. Another local firm successfully filed a suit against the agency, alleging that the rules were both “Byzantine and irrational,” and acted as barriers to the firm collecting the fees they were owed.
Attorney Robert P. Audette contributed some of his thoughts to the story, decrying the rules and expressing his support for the lawsuit. “To a large degree, we deal with the same types of things that this other law firm is complaining about. It’s a mess and for some reason, SSA doesn’t want to do anything about it.”
The SSA’s rules stated that attorney fees could only be paid to individual attorneys, not to law firms as a whole. For small private practices or partner attorneys, this isn’t a problem, but for associate attorneys who are salaried, the administration’s practices create logistical, accounting, and tax preparation nightmares. President-elect of the Rhode Island Association for Justice, Ralph R. Liguori, stated: “These arbitrary and nonsensical rules, if allowed to exist, will undoubtedly have a negative impact on the number of attorneys who do this work, and people who are disabled will have nowhere to turn.”
Andrew Horwitz, a Roger Williams University School of Law professor, added that the SSA’s billing rules were inhibiting the ability of a firm to take on this type of work, as opposed to a solo practitioner. When that’s the case, lawyers who get paid by succeeding in these cases, won’t have the confidence that they’ll be paid for their work, and when they don’t have this confidence, they won’t take the case.
In these instances, associate attorneys who have no right to the fees that the SSA pays them, are required to sign limited powers of attorney that acknowledge that the fees belong to the firm. Instead, the fees are deposited into a separate bank account that’s in the individual attorney’s name but controlled by the firm. The firm must then transfer the fees to their own operating or escrow accounts, which creates a massive headache when it comes to tax rules.
The other law firm filing the suit pointed out that the SSA’s rules recognize law firms themselves for tax purposes and for cases that reach federal court but don’t recognize or authorize payment to firms on agency-level cases. The firm characterized this division of fees as “arbitrary,” also raising issues with the fact that it equally distributes fees between all attorneys who have worked on a case, regardless of the actual amount of work done. This makes it particularly difficult for firms where multiple attorneys may work on a case, especially when some attorneys who worked on the case may no longer be with a firm or have an account with which to deposit funds.
Ultimately the judge in the suit ruled that the law firm’s arguments were premised and accepted, thus giving them the ability to bring their claim against the Social Security Administration to court. Rhode Island Social Security Disability attorneys are hoping that this case will allow all firms who work on a case to be able to be paid appropriately and without difficulty to ensure that those who seek justice through a Social Security claim can have the legal counsel they need.