Fields v. Kijakazi
24 F.4th 845
| 2d Cir. | 2022Background
- Mr. Fields retained Binder & Binder in 2011 and the firm represented him through multiple agency hearings, two district-court suits, and several remands.
- After a final favorable agency decision, the SSA calculated past‑due benefits of $160,680 and withheld 25% ($40,170) for attorney’s fees.
- Binder & Binder sought the full $40,170 under the contingency retainer; the firm had spent 25.8 hours on the federal-court work (de facto hourly rate ≈ $1,556.98).
- The district court found the requested fee a windfall based solely on the high de facto hourly rate and reduced the award to $19,350.
- The Second Circuit reversed, holding that a § 406(b) reduction based only on a high de facto hourly rate is improper unless it is truly clear the fee is unearned; it directed the SSA to release the withheld fee and ordered counsel to remit EAJA fees to the client.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the § 406(b) contingency fee is unreasonable as a "windfall" because of a high de facto hourly rate | The agreed 25% fee is reasonable given counsels’ expertise, years of agency work, contingency risk, and successful result | The de facto hourly rate (~$1,556.98) is at the high end and risks producing an impermissible windfall | Fee is not a windfall; district court abused its discretion by reducing fee solely on de facto rate and must award $40,170 |
| Whether courts may rely on lodestar/de facto hourly comparisons as sole basis for reducing a § 406(b) fee | Contingency agreements are primary; fee reasonableness must look to context, not just lodestar comparisons | High de facto rates justify reduction as unearned windfalls in some cases | Courts cannot reduce fees solely by comparing to lodestar; must show fee is truly unearned and consider other factors |
| What factors inform whether a high contingency fee is an unearned windfall | Efficiency, attorneys’ specialized expertise, substantial agency‑level work, contingency risk, claimants’ satisfaction | Comparable rates in other cases indicate the requested rate is unusually high | Court should evaluate counsel skill/efficiency, agency work, risk of nonpayment, client’s position, and whether counsel caused delay; here factors support allowing the fee |
| Remedy and disposition | Award the full agreed § 406(b) fee and require counsel to remit prior EAJA award to client | Support reduction to prevent excessive fee | Reversed district court; remanded with instruction to release withheld fee and require counsel to remit EAJA fees to claimant |
Key Cases Cited
- Gisbrecht v. Barnhart, 535 U.S. 789 (2002) (courts should start with contingent-fee agreement and independently test for reasonableness)
- Wells v. Sullivan, 907 F.2d 367 (2d Cir. 1990) (Wells II) (contingency agreement is starting point; reduce only if unreasonable, consider windfall)
- Wells v. Bowen, 855 F.2d 37 (2d Cir. 1988) (Wells I) (§ 406(b) caps and courts’ role in fee approval)
- Jeter v. Astrue, 622 F.3d 371 (5th Cir. 2010) (lodestar alone cannot justify finding of unreasonableness; district court must show fee unearned)
- Mudd v. Barnhart, 418 F.3d 424 (4th Cir. 2005) (agency-level work can inform overall reasonableness under § 406(b))
- Crawford v. Astrue, 586 F.3d 1142 (9th Cir. 2009) (recognizing counsel’s long wait for payment and costs borne while awaiting § 406(b) recovery)
- Sinkler v. Berryhill, 932 F.3d 83 (2d Cir. 2019) (standard of review: abuse of discretion for § 406(b) determinations)