Unlike many attorneys, disability lawyers do not charge up-front fees or require a retainer to work on a Social Security disability case. Most disability attorneys will be paid a fee only if they win the case (this is called a contingency fee.) Here's how it works.
Contingency Fee Agreement
When you first hire a disability attorney, whether you are filing for SSDI or SSI, you must sign a fee agreement that allows the SSA to pay your attorney if your claim is approved. The SSA will review the agreement to make sure it meets the fee agreement guidelines. This is to ensure that your attorney receives only what he or she is entitled to.
Fee agreements must be on a contingency basis (meaning the attorney will only be paid if you win your disability claim).
How Much Is the Attorney's Fee?
For Social Security disability lawyers, the fee is limited to 25% of the past-due benefits you are awarded, up to a maximum of $6,000. Note that the attorney will be paid only out of your past-due benefits, or "backpay." If no back-dated benefits are awarded, the attorney will not receive a fee; nor is he or she permitted to ask you for one.
It doesn't usually cost you anything to hire a disability attorney; the fee will be paid out of the disability award you eventually receive. Some attorneys, however, will ask you to pay a nominal amount for costs (see below) at the beginning of your case.
When do you have to pay the attorney's fee? Usually, you don't. The SSA takes the entire lawyer's fee (up to $6,000) from your first disability check (your award of backpay), before the agency sends it to you.
Once you are approved for benefits, the SSA will calculate the amount of backpay you are owed. For SSDI, your backpay will include retroactive benefits you are owed from the date you were approved back to the date the SSA determined your disability began (for a maximum of 12 months back from the date of your application).
For SSI, your benefits are calculated from the date you are approved for benefits back to the month after you applied for benefits. (For more information, see our article on disability backpay.)
The maximum the disability attorney can charge is 25% of your backpay for his or her services, up to a maximum of $6,000. For example, if your back-dated benefits are calculated to be $10,000, your attorney will be paid $2,500 and you will receive $7,500. However, an attorney is likely to be able to get you more in backpay by negotiating your disability onset date with the SSA -- something you can't do without a hearing (in an "on-the-record" ALJ decision) if you're not represented by an attorney.
During the course of representation, a disability attorney usually has to request a claimant’s medical, school, work records, and occasionally medical or psychological examinations; these can be expensive. The client must pay these costs separately from the attorney's fee (of 25% of their backpay). Other costs may include charges for copying and postage. It would be unusual in most instances for these costs to exceed two hundred dollars per case (and, usually, the out-of-pocket costs are lower).
Sometimes an attorney will ask for money in advance to pay for these items. This is permitted so long as the attorney holds the money in trust until it is needed. However, attorneys usually front these costs for their clients. Then, once the case has closed, regardless of whether you win or lose, the attorney will send the client a bill requesting reimbursement for any funds fronted on behalf of the client.
Before hiring a disability lawyer, you should ask whether you will be charged for out-of-pocket expenses in addition to the lawyer's fee, and what types of expenses might be included.