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 and nonlawyer representatives will be paid a fee only if they win the case (this is called a contingency fee). Here's how it works.
When you first hire a disability attorney or nonlawyer advocate, whether you are filing for SSDI or SSI, you typically sign a fee agreement that allows the Social Security Administration (SSA) to pay your representative 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 representative 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).
When you sign a fee agreement with a Social Security disability lawyer or nonlawyer advocate, the fee is limited to 25% of the past-due benefits you are awarded, up to a maximum of $6,000. (Some fee agreements, however, allow a separate fee to be charged if you appeal to federal district court, but most cases end at the Social Security hearing stage.)
The representative will be paid only out of your past-due benefits, or "backpay." If no back-dated benefits are awarded, the representative will not receive a fee. However, in this situation and a few others, the representative is allowed to submit a fee petition to Social Security to request a higher fee.
It doesn't usually cost you anything to hire a representative; the fee will be paid out of the disability award you eventually receive. Some representatives, 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 representative's fee? Usually, you don't. The SSA takes the entire representative's fee (up to $6,000) from your award of backpay, before the agency sends it to you.
We recently surveyed readers of this site who had won their case and asked them about how much backpay their disability representatives took. For the majority, it was significantly less than the $6,000 cap. For the details, see our survey statistics with the average fees paid to Social Security disability lawyers, both when a lawyer represented a disability applicant at a hearing and when the applicant won benefits at the initial application stage.
Once you are approved for benefits, Social Security 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.)
Again, the maximum the disability attorney or nonattorney advocate 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 representative will be paid $2,500 and you will receive $7,500. However, an experienced representative 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.
During the course of representation, a disability attorney or nonlawyer advocate 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 a representative will ask for money in advance to pay for these items. This is permitted so long as the representative 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 or nonlawyer advocate, you should ask whether you will be charged for out-of-pocket expenses in addition to the lawyer's fee or advocate's fee, and what types of expenses might be included.