Shaderock v. Astrue
220 F. Supp. 3d 47
D.D.C.2016Background
- Shaderock filed for DIB and SSI in 2004; claims were denied at all administrative levels before he filed suit in D.D.C. in 2012.
- He retained counsel in 2013 under a contingency agreement entitling counsel to 25% of any recovered past‑due benefits.
- The Court remanded the case to the agency; Shaderock later received a Fully Favorable Decision and past‑due benefits in 2016.
- Counsel spent 35.9 hours on the federal litigation and requested § 406(b) fees equal to 25% of past‑due benefits ($25,009.62); the Government did not oppose the amount but noted it equates to $696.65/hour and that EAJA recovery must be offset.
- Counsel previously received an EAJA award; after offsetting the $3,993.03 already paid, the Court awarded the difference under § 406(b) ($21,016.59).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a 25% contingency fee is reasonable under § 406(b) | 25% is the agreed statutory maximum; counsel’s work secured a substantial award and the agreement should be enforced | Government did not oppose but noted the effective hourly rate and EAJA offset requirement | Court found the 25% contingency reasonable and approved fee subject to EAJA offset |
| Whether counsel delayed the case to increase fees | Counsel filed promptly after Notice of Award; any refiling complied with local rules | Suggested the court note the effective hourly rate but raised no delay claim | No undue delay; timing of filings was proper and benefits did not accrue due to counsel’s delay |
| Whether counsel faced a substantial risk of loss justifying contingent fee | Counsel litigated despite multiple prior denials; contingency risked no payment | Government did not dispute risk-of-loss argument | Court found substantial risk of loss, supporting fee reasonableness |
| Whether the requested fee is an unjustified windfall given hours spent | Multiplier (~2.36x of counsel’s normal hourly rate) is justified by risk, results, experience, and case difficulty | Not opposed on reasonableness; noted resulting hourly rate | Court held the compensation was commensurate with time and not an unjustified windfall |
| Whether EAJA award must be refunded / offset against § 406(b) recovery | Counsel previously received EAJA; cannot recover more than 25% aggregate | Government noted EAJA must be refunded to the extent necessary | Court ordered that the previously paid EAJA amount be credited; awarded § 406(b) net of EAJA already received |
Key Cases Cited
- Gisbrecht v. Barnhart, 535 U.S. 789 (courts must independently review contingency agreements for reasonableness under § 406(b))
- Hensley v. Eckerhart, 461 U.S. 424 (contingent-fee counsel assumes risk of receiving no payment)
- Jeter v. Astrue, 622 F.3d 371 (considerations for § 406(b) reasonableness include risk, complexity, and delay)
- Lasley v. Comm’r of Social Security, 771 F.3d 308 (attorney delay can render a contingency fee unreasonable)
- Buljina v. Astrue, 828 F. Supp. 2d 109 (illustrative application of § 406(b) reasonableness factors)
- Crawford v. Astrue, 586 F.3d 1142 (favorable representation supports fee reasonableness)
- Outlaw v. Chater, 921 F. Supp. 13 (lodestar/hours may inform § 406(b) review)