Shapiro v. Astrue ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CLARA CRAWFORD, 
Plaintiff,
v.
MICHAEL J. ASTRUE, Commissioner No. 06-55822
of the Social Security
Administration,  D.C. No.
Defendant-Appellee, CV-00-11884-AN
v.
BRIAN C. SHAPIRO,
Real-party-in-interest-Appellant.

RUBY WASHINGTON, 
Plaintiff,
v.
MICHAEL J. ASTRUE, Commissioner No. 06-55954
of the Social Security
Administration,  D.C. No.
Defendant-Appellee, CV-03-06884-AN
v.
YOUNG CHO,
Real-party-in-interest-Appellant.

14861
14862 CRAWFORD v. ASTRUE
DAPHNE M. TREJO, 
Plaintiff,
v.
MICHAEL J. ASTRUE, Commissioner No. 06-56284
of the Social Security
Administration,  D.C. No.
CV-98-05662-RNB
Defendant-Appellee, OPINION
v.
DENISE BOURGEOIS HALEY,
Real-party-in-interest-Appellant.

Appeal from the United States District Court
for the Central District of California
Arthur Nakazato and Robert N. Block, Magistrate Judges,
Presiding
Argued and Submitted
June 22, 2009—Seattle, Washington
Filed November 4, 2009
Before: Alex Kozinski, Chief Judge, Mary M. Schroeder,
Betty B. Fletcher, Harry Pregerson, Stephen Reinhardt,
Andrew J. Kleinfeld, Marsha S. Berzon,
Johnnie B. Rawlinson, Richard R. Clifton, Carlos T. Bea,
and N. Randy Smith, Circuit Judges.
Opinion by Judge B. Fletcher;
Partial Concurrence and Partial Dissent by Judge Clifton;
Dissent by Judge Bea.
14866 CRAWFORD v. ASTRUE
COUNSEL
Lawrence D. Rohlfing, Santa Fe Springs, California, for the
real parties in interest-appellants.
Michael E. Robinson, Department of Justice, Washington,
D.C., for the defendant-appellee.
OPINION
B. FLETCHER, Circuit Judge:
We review three consolidated appeals that present one
overarching issue: Did the district court follow the mandate of
Gisbrecht v. Barnhart, 535 U.S. 789 (2002), in determining
the amount of attorneys’ fees awarded to lawyers who suc-
cessfully represented Social Security disability insurance
(“SSDI”) claimants in federal court under contingent-fee con-
tracts?1 We hold in each case that it did not. We vacate the
district courts’ orders and grant the attorneys the contingency-
based fees they requested.
I.
In each of the three cases presented for review, the Social
Security Administration (“SSA”) denied a claim for benefits.
Each claimant retained an attorney to challenge the adminis-
trative action in federal court. Each of the three claimants was
represented by a different attorney: Brian C. Shapiro repre-
sented Clara Crawford; Young Cho represented Ruby Wash-
ington; and Denise Bourgeois Haley represented Daphne M.
1
The three orders are appealed from the Central District of California.
Two of them, Crawford v. Barnhart, No. 00-cv-11884, and Washington v.
Barnhart, No. 03-cv-06884, were decided by Magistrate Judge Nakazato.
The third, Trejo v. Barnhart, No. 98-cv-05662, was decided by Magistrate
Judge Block.
CRAWFORD v. ASTRUE 14867
Trejo. All three attorneys were affiliated with the Lawrence
D. Rohlfing (“Rohlfing”) law firm, which specializes in
Social Security matters. In each case, the claimant signed a
written contingent-fee agreement under which the attorney
would be paid 25% of any past-due benefits awarded to the
claimant. The district court remanded each case back to the
SSA, which eventually awarded substantial past-due benefits
to each claimant. The attorneys subsequently filed motions in
the district court pursuant to 42 U.S.C. § 406(b) requesting
fees of less than the 25% of past-due benefits for which their
attorney-client fee agreements provided. In each case, the
Commissioner of Social Security (“Commissioner”) declined
to assert a position on the reasonableness of the fees requested
by the attorneys.2 None of the claimants objected to the
requested fees. Nevertheless, the district court in each case
awarded significantly lower fees than the attorneys sought.3
A. Crawford (Real-party-in-interest Shapiro)
On remand, the SSA awarded Crawford $123,891.20 in
past-due benefits. Twenty-five percent of that amount is
$30,972.80. Shapiro requested a fee of $21,000 (16.95% of
the past-due benefits awarded). To support his motion, Sha-
piro presented evidence that he spent 19.5 hours of his own
time and 4.5 hours of paralegal time on Crawford’s case.
Because the Rohlfing firm operates only on a contingent-fee
basis, Shapiro presented evidence (1) that small firms charged
average hourly rates, after accounting for inflation, of $272.72
for partners, $186.54 for associates, and $93.82 for paralegals;
(2) that the upper-decile hourly rates charged for each posi-
2
The Commissioner “plays a part in the fee determination resembling
that of a trustee for the claimants.” Gisbrecht, 535 U.S. at 798 n. 6.
3
In each case, the district court properly reduced the fee award by the
amount of attorneys’ fees already paid by the government under the Equal
Access to Justice Act (“EAJA”). See 28 U.S.C. § 2412. A district court
may award fees under both the EAJA and 42 U.S.C. § 406(b), “but the
claimant’s attorney must refund to the claimant the amount of the smaller
fee.” Gisbrecht, 535 U.S. at 796 (quotation and alteration omitted).
14868 CRAWFORD v. ASTRUE
tion in small firms were $366.54, $272.72, and $130.91,
respectively; and (3) that the average gross income of small
plaintiffs’ contingency firms was about 30-40% higher than
the average gross income of all small law firms combined. He
also presented evidence that a lawyer representing SSDI
claimants in federal court could anticipate payment in only
about 35% of cases because (1) district courts granted benefits
in SSDI cases only about 6% of the time, and (2) in the 48%
of cases in which the district court remanded an SSDI case to
the agency, the SSA awarded benefits about 60% of the time.
To aid the district court’s evaluation of his request, Shapiro
noted that the fee he requested was equivalent to 3.55 times
the lodestar calculation and reasonably accounted for the risk
he assumed in representing his client on a contingent-fee
basis.
The court found that there was no “fraud or overreaching”
in the negotiation of the 25% contingent-fee agreement, that
the requested fee was within the 25% boundary set by
§ 406(b), and that Shapiro caused no unnecessary delay
resulting in an undue accumulation of back benefits. The
court also found that the hours, comparative hourly rates, and
inflation rates that Shapiro presented were reasonable and
would result in a lodestar fee of $5,907.14. The court con-
cluded, however, that Shapiro had not met his burden of con-
vincing the court that a fee of $21,000, which the court found
represented a 256% “enhancement” over the lodestar, was
reasonable. The court noted that Shapiro did not present “data
regarding his firm’s success rate that would enable the Court
to assess the risk assumed by his firm in representing social
security benefits claimants in the Central District of Califor-
nia” and determined that counsel’s expertise had already been
taken into account in the comparative hourly rate. The court
therefore found that the fee constituted a “windfall” and that
a “substantial reduction [was] warranted.” The court con-
cluded, without explaining its reasoning, that a 40% percent
enhancement over the lodestar fee would be reasonable. The
CRAWFORD v. ASTRUE 14869
court awarded a fee of $8,270.00, or 6.68% of the past-due
benefits.
B. Washington (Real-party-in-interest Cho)
On remand, the SSA awarded Washington $76,041.00 in
past-due benefits. Twenty-five percent of that amount is
$19,010.25. Cho sought a fee of $11,500.00 (15.12% of the
benefits awarded). Cho presented evidence that he spent 17.45
hours of his time and 4.7 hours of paralegal time on the case.
Cho introduced the same comparative hourly rate data that
Shapiro presented, as well as evidence that the costs of legal
services had risen faster than the cost of living, justifying
hourly rates in the ninth decile of $429.95 for partners,
$319.90 for associates, and $153.55 for paralegals. Finally,
Cho presented the same success-rate data for SSDI cases as
did Shapiro. Cho noted that courts determining fees in class-
action securities cases had found that multipliers of 3 to 4.5
over the lodestar were reasonable.
The same magistrate judge who decided Crawford also
decided Washington. As in Crawford, the court found that
there was no “fraud or overreaching” in the making of the
contingent-fee agreement, that the fee Cho sought fell within
the 25% statutory boundary and was less than the fee Wash-
ington agreed to pay, and that there was no “excessive delay”
attributable to counsel. The court also found that the eco-
nomic data Cho presented were reasonable. Nevertheless, the
court found that the requested fee, which it found represented
an 82% “enhancement” over the $6,303.95 lodestar fee, was
unreasonable. As in Crawford, the court noted that Cho had
provided no data regarding his law firm’s success rate and
that Cho’s skills were already accounted for in determining
the reasonable hourly rate. The court also found that: (1)
“counsel did not have to do much work to persuade the Com-
missioner to stipulate to a remand,” and (2) a fee representing
a 3 to 4.5 multiplier over the lodestar would be unreasonable
because Social Security cases are not as complex or expensive
14870 CRAWFORD v. ASTRUE
as class-action securities litigation. Concluding that the
requested fee would represent a “windfall,” the court applied
a 40% enhancement to the lodestar fee, without explaining
why that percentage increase would result in a reasonable fee.
The court awarded a fee of $8,825.53, or 11.61% of the past-
due benefits.
C. Trejo (Real-party-in-interest Haley)
On remand, the SSA awarded Trejo $172,223.00 in past-
due benefits. Twenty-five percent of that amount is
$43,055.75. Haley sought a fee of $24,000 (13.94% of the
past-due benefits awarded.) She presented evidence that she
spent 26.9 hours of her time and 2.6 hours of paralegal time
on the case. She also presented the same comparative hourly
rate data and success rate data as did Shapiro and Cho.
The court acknowledged the contingent-fee agreement pro-
viding for 25% of the past-due benefits awarded and found
that there was no evidence of fraud or overreaching by coun-
sel in making the agreement. The court noted the “high qual-
ity of the representation provided . . . which ultimately
resulted in a fully favorable decision awarding over twelve
years of back benefits” and found that there was no excessive
delay attributable to Haley. The court also found that Haley’s
economic data were reasonable. Nevertheless, the court found
that the fee Haley sought was unreasonable. First, finding that
1.5 hours of claimed paralegal time and 1.4 hours of claimed
attorney time were improperly attributed to the federal court
action, the court reduced the hours worked to 25.5 hours of
attorney time and 1.1 hours of paralegal time. Second, as in
Crawford and Washington, the court noted that Haley had
provided no data regarding her law firm’s success rate and
that Haley’s skills were already accounted for in determining
the reasonable hourly rate. Third, the court found that there
was no evidence that the firm was precluded from other
employment by accepting Trejo’s case and that the case did
not involve any unduly short time limits. The court concluded
CRAWFORD v. ASTRUE 14871
that “plaintiff’s counsel has done a wholly inadequate job
convincing the Court that the 279% enhancement sought . . .
is reasonable under the circumstances presented,” and that a
reasonable enhancement over the $6,325.20 lodestar would be
100%. The court did not, however, explain why a 100%
enhancement would be reasonable. The court determined that
a reasonable fee would be $12,650.40, or about 7.35% of the
past-due benefits.
II.
The three attorneys timely appealed the district courts’ fee
orders. We consolidated the cases for argument. We review a
district court’s award of attorneys’ fees pursuant to 42 U.S.C.
§ 406(b) for abuse of discretion. Clark v. Astrue, 529 F.3d
1211, 1213 (9th Cir. 2008) (citing Allen v. Shalala, 48 F.3d
456, 457 (9th Cir. 1995), abrogated on other grounds by Gis-
brecht, 535 U.S. at 799). “The district court abuses its discre-
tion if it does not apply the correct legal standard or rests its
decision on a clearly erroneous finding of fact.” Id. at 1214.
We review de novo the district court’s interpretation of a stat-
ute. Id.; see also Mudd v. Barnhart, 418 F.3d 424, 427 (4th
Cir. 2005) (reviewing de novo the district court’s interpreta-
tion of 42 U.S.C. § 406(b)).
A.
[1] Under 42 U.S.C. § 406(b), a court entering judgment in
favor of an SSDI claimant who was represented by an attor-
ney “may determine and allow as part of its judgment a rea-
sonable fee for such representation, not in excess of 25
percent of the total of the past-due benefits to which the
claimant is entitled by reason of such judgment.”4 In contrast
4
Section 406(b)(1)(A) provides,
Whenever a court renders a judgment favorable to a claimant
under this subchapter who was represented before the court by an
14872 CRAWFORD v. ASTRUE
to fees awarded under fee-shifting provisions such as 42
U.S.C. § 1988, the fee is paid by the claimant out of the past-
due benefits awarded; the losing party is not responsible for
payment.5 Gisbrecht, 535 U.S. at 802. Also in contrast to fees
awarded under fee-shifting statutes, under which “nothing
prevents the attorney for the prevailing party from gaining
additional fees, pursuant to contract, from his own client,” id.
at 806, the court-awarded fee is the only way a successful
SSDI attorney may recover fees for work performed before
the district court. In fact, it is a criminal offense for an attor-
ney to collect fees in excess of those allowed by the court. 42
U.S.C. § 406(b)(2); see also Gisbrecht, 535 U.S. at 806-07.6
SSDI attorneys routinely enter into contingent-fee agree-
ments specifying that the fee will be 25% of any past-due
benefits recovered, thus providing the attorney the statutory
maximum of fees if the representation is successful. See Gis-
attorney, the court may determine and allow as part of its judg-
ment a reasonable fee for such representation, not in excess of 25
percent of the total of the past-due benefits to which the claimant
is entitled by reason of such judgment, and the Commissioner of
Social Security may . . . certify the amount of such fee for pay-
ment to such attorney out of, and not in addition to, the amount
of such past-due benefits.
5
Section 406(b) fees are based only on the amount of past-due benefits
recovered, even where the claimant is entitled to continuing benefits. See
Gisbrecht, 535 U.S. at 795. Thus, the claimant may actually pay the attor-
ney far less than 25% of the total benefits recovered.
6
An attorney may also petition for fees for representing a claimant at the
administrative level. 42 U.S.C. § 406(a). Section 406(a) fees may not
exceed the lesser of 25% of past-due benefits or $5,300. 42 U.S.C.
§ 406(a)(2)(A)(ii), (iii); Gisbrecht, 535 U.S. at 795 (noting that the statu-
tory $4,000 limit was increased to $5,300 by regulation in 2002); 67 Fed.
Red. 2477. The 25% cap on attorneys’ fees in § 406(b) limits only the
amount of attorneys’ fees awarded for representation before the district
court. It does not limit the combined fees awarded under § 406(a) for rep-
resentation before the SSA and under § 406(b) for representation before
the district court. Clark, 529 F.3d at 1218.
CRAWFORD v. ASTRUE 14873
brecht, 535 U.S. at 803. Contingent-fee agreements were
already prevalent at the time § 406(b) was enacted, see id. at
805, and agreements providing for fees of 25% of past-due
benefits have since become the “most common fee arrange-
ment between attorneys and Social Security claimants.” Id. at
800. The statute does not specify how courts should determine
whether a requested fee is reasonable. See id. (noting “the
statute’s inconclusive text”). Rather, the statute provides only
that the fee must not exceed 25% of the past-due benefits
awarded.
[2] Before Gisbrecht, the circuits were split regarding how
to address this ambiguity in the statute. We belonged to the
majority of circuits which used the lodestar method to deter-
mine a reasonable fee under § 406(b). See Gisbrecht v. Apfel,
238 F.3d 1196, 1197-98 (9th Cir. 2000); see also Allen, 48
F.3d at 458. Under the lodestar method, the district court
determines a reasonable fee by multiplying the reasonable
hourly rate by the number of hours reasonably expended on
the case. Gisbrecht, 238 F.3d at 1197-98. Although the dis-
trict court could consider the contingent nature of the fee
agreement in determining a reasonable fee, we held that fail-
ure to do so was not an abuse of discretion. See id. at 1199.
Three other circuits rejected the lodestar method, instead giv-
ing effect to the attorney-client contingent-fee agreement
unless the resulting fee was unreasonable. See Wells v. Sulli-
van, 907 F.2d 367, 370 (2d Cir. 1990); Rodriquez v. Bowen,
865 F.2d 739, 746 (6th Cir. 1989) (en banc); McGuire v. Sul-
livan, 873 F.2d 974, 980-81 (7th Cir. 1989); see also Gis-
brecht, 535 U.S. at 799 (listing cases).
[3] In Gisbrecht, the Supreme Court flatly rejected our
lodestar approach. The Court explained that we had “errone-
ously read § 406(b) to override customary attorney-client
contingent-fee agreements” when we approved the use of the
lodestar to determine a reasonable fee, Gisbrecht, 535 U.S. at
808-09. The Court held that a district court charged with
determining a reasonable fee award under § 406(b)(1)(A)
14874 CRAWFORD v. ASTRUE
must respect “the primacy of lawful attorney-client fee agree-
ments,” id. at 793, “looking first to the contingent-fee agree-
ment, then testing it for reasonableness,” id. at 808. The Court
noted that courts that had followed this model had “appropri-
ately reduced the attorney’s recovery based on the character
of the representation and the results the representative
achieved.” Id. A fee resulting from a contingent-fee agree-
ment is unreasonable, and thus subject to reduction by the
court, if the attorney provided substandard representation or
engaged in dilatory conduct in order to increase the accrued
amount of past-due benefits, or if the “benefits are large in
comparison to the amount of time counsel spent on the case.”
Id. “[A]s an aid to the court’s assessment of the reasonable-
ness of the fee yielded by the fee agreement,” but “not as a
basis for satellite litigation,” the court may require counsel to
provide a record of the hours worked and counsel’s regular
hourly billing charge for noncontingent cases. Id. The attor-
ney bears the burden of establishing that the fee sought is rea-
sonable. Id. at 807.
[4] The Supreme Court made clear in Gisbrecht why courts
must start with the contingent-fee agreement in SSDI cases.
The Court explained that the lodestar method was developed
to implement fee-shifting statutes, which assess fees against
the losing party and which do not prevent the attorney from
seeking additional fees from the client. See Gisbrecht, 535
U.S. at 802, 806. SSDI attorneys’ fees, in contrast, are not
shifted. They are paid from the award of past-due benefits and
the amount of the fee, up to 25% of past-due benefits, is based
on the agreement between the attorney and the client. See id.
at 803-04.7 Congress chose to embrace the use of contingent
7
As the Second Circuit explained, in a pre-Gisbrecht case, “since there
is no shifting of fees under § 406(b), courts need not be Solomon-like arbi-
ters of ‘reasonableness’ between the opposing interests of prevailing plain-
tiffs and losing defendants. Rather, because a successful social security
claimant evaluates and pays his own attorney, a court’s primary focus
should be on the reasonableness of the contingency agreement in the con-
text of the particular case.” Wells, 907 F.2d at 371 (internal citation omit-
ted).
CRAWFORD v. ASTRUE 14875
fees to compensate lawyers who represent SSDI claimants.
When Congress added § 406(b) to the Social Security Act in
1965, contingent fees paid from past-due benefits were
already the norm. See id. at 804 (discussing the 1965 amend-
ments’ legislative history). Rather than displace contingent-
fee agreements, the amendment was meant to address a partic-
ular problem in their implementation. Attorneys were entering
into agreements reserving what Congress regarded as “exorbi-
tant fees” of one-third to one-half of the past-due benefits,
often for easy cases in which the attorney would purposefully
cause delay in order to increase the accrued benefits and the
resulting fees. See id. At the same time, Congress was mind-
ful that fee awards should be sufficient to encourage adequate
representation of claimants. See id. at 806; see also Wells, 907
F.2d at 370 (contingent-fee agreements “effectuate
[C]ongress’s objective of securing adequate representation for
social security claimants”). Against this backdrop, Congress
enacted § 406(b), which says nothing to discourage
contingent-fee agreements, instead opting for a 25% cap on
fees. See Gisbrecht, 535 U.S. at 805.
[5] As this history demonstrates, Congress and the Supreme
Court have considered the negative policy implications of
allowing the lodestar methodology to drive SSDI fee awards.
Given the prevalence of lodestar calculations in the fee-
shifting context, district courts are familiar with the normal
lodestar rules. These include the “strong presumption” that
the lodestar is the reasonable fee, see City of Burlington v.
Dague, 505 U.S. 557, 562 (1992), and the rule forbidding
contingency enhancements to compensate for the risk of non-
payment in fee shifting cases. See id. at 566-67. These rules
should not apply where the fee is paid by the client under the
agreement negotiated between the parties. The lodestar
method under-compensates attorneys for the risk they assume
in representing SSDI claimants and ordinarily produces
remarkably smaller fees than would be produced by starting
with the contingent-fee agreement. A district court’s use of
the lodestar to determine a reasonable fee thus ultimately
14876 CRAWFORD v. ASTRUE
works to the disadvantage of SSDI claimants who need coun-
sel to recover any past-due benefits at all.
B.
[6] The Supreme Court in Gisbrecht has given the district
courts direction in how to evaluate a request for a contingent
fee under § 406(b). Courts must “approach [§ 406(b)] fee
determinations by looking first to the contingent-fee agree-
ment, then testing it for reasonableness.” Gisbrecht, 535 U.S.
at 808; see also Mudd, 418 F.3d at 428 (recognizing this same
methodology). Because the SSA has no direct interest in how
much of the award goes to counsel and how much to the dis-
abled person, the district court has an affirmative duty to
assure that the reasonableness of the fee is established. Perfor-
mance of that duty must begin, under Gisbrecht, with the fee
agreement, and the question is whether the amount need be
reduced, not whether the loadstar amount should be enhanced.
An examination of the fee awards in these cases makes it
starkly evident that the district courts did not follow this path.
Instead, in direct contrast to Gisbrecht’s mandate, the district
courts’ decisions “rest[ed] on lodestar calculations and rejec-
t[ed] the primacy of lawful attorney-client fee agreements.”
Gisbrecht, 535 U.S. at 793.
Here, in each case, the client signed a contract providing
that the attorney would receive 25% of any past-due benefits
awarded following appeal to the district court. In determining
a reasonable fee, the district courts proceeded contrary to the
requirements of Gisbrecht by beginning with a lodestar calcu-
lation. Each court compared the lodestar fee to the requested
fee award, and referred to the difference between the two as
“an enhancement.” In each order, the district court expressed
the “enhancement” as a percentage of the lodestar for exam-
ple, the Crawford court noted that the requested fee would
have represented a 256% enhancement over the lodestar—and
found that each enhancement would be a “windfall” to the
lawyers. Each court then added a percentage of the lodestar
CRAWFORD v. ASTRUE 14877
to enhance the lodestar fees, choosing 40% for the Crawford
and Washington cases and 100% for the Trejo case. Had the
district court awarded the full fees contracted by the parties,
the attorneys in these cases would have received fees ranging
from $19,010.25 to $43,055.75. Instead, they received
amounts ranging from $8,270.00 to $12,650.40. The fees
awarded ranged from 6.68% to 11.61% of the past-due bene-
fits awarded. Put another way, the district courts reduced the
contractual fees by between 53.57% and 73.30%.8
[7] By beginning with the lodestar calculation, the district
courts plainly failed to respect the “primacy of lawful
attorney-client fee agreements.” Gisbrecht, 535 U.S. at 793.
Lawful attorney-client contingent fee agreements do not result
in “enhancements” that modify a lodestar fee that might oth-
erwise be too low. Rather, they are the “primary means” by
which fees are determined. Id. at 807. The district courts’
methodology in these cases under-emphasizes the contingent-
fee agreements, contravening the Supreme Court’s instruction
that the agreements be the primary means for determining the
fee.
These cases vividly demonstrate the deleterious effect of a
district court’s failure to recognize the distinction between
fee-shifting cases and cases involving payment by the claim-
ant from his benefit award. All of the normal lodestar lan-
guage and methodology are accounted for in the district
court’s orders: reasonable fees, reasonable hours, and an “en-
hancement.” Lodestar fees will generally be much less than
contingent fees because the lodestar method tends to under-
compensate attorneys for the risk they undertook in represent-
ing their clients and does not account for the fact that the stat-
ute limits attorneys’ fees to a percentage of past-due benefits
8
The attorneys in these cases themselves suggested that the full 25% fee
provided for by their fee agreements would be unreasonable. They there-
fore sought fees ranging from 13.94% to 16.95% of the benefits awarded,
a substantial reduction from the amounts for which the contracts provided.
14878 CRAWFORD v. ASTRUE
and allows no recovery from future benefits, which may far
exceed the past-due benefits awarded. In Crawford, for exam-
ple, the district court awarded 6.68% of the past-due benefits.
From the lodestar point of view, this was a premium of 40%
over the lodestar. It seems reasonable. But from the
contingent-fee point of view, 6.68% of past-due benefits was
over 73% less than the contracted fee and over 60% less than
the discounted fee the attorney requested.9 Had the district
court started with the contingent-fee agreement, ending with
a 6.68% fee would be a striking reduction from the parties’
fee agreement. This difference underscores the practical
importance of starting with the contingent-fee agreement and
not just viewing it as an enhancement.
[8] The district court orders quote extensively from Gis-
brecht. They even cursorily discuss the character of the
representation—noting that it was skillful and not dilatory—
before concluding that the requested fee would represent a
windfall to the attorneys. But this parroting of language from
Gisbrecht does not mean that the district courts actually
applied its teachings. As the orders make clear, the district
courts in these cases started with the lodestar calculation and
then adjusted upward to account for the contingent nature of
the representation. This is contrary to the Supreme Court’s
clear directive that the district court must first look to the fee
agreement and then adjust downward if the attorney provided
substandard representation or delayed the case, or if the
requested fee would result in a windfall. See id. at 808; see
also Rodriquez, 865 F.2d at 746 (“In the event the court
chooses not to give effect to the terms of the agreement, it
should state for the record the deductions being made and the
reasons therefore.”).
9
The attorneys in Washington and Trejo were dealt a 23% and a 47%
reduction, respectively, from the fees requested.
CRAWFORD v. ASTRUE 14879
C.
[9] The fees requested here are reasonable under the test
mandated by Gisbrecht. Although Gisbrecht did not provide
a definitive list of factors that should be considered in deter-
mining whether a fee is reasonable or how those factors
should be weighed, the Court directed the lower courts to con-
sider “the character of the representation and the results the
representative achieved.” Gisbrecht, 535 U.S. at 808; see also
Mudd, 418 F.3d at 428 (“The Court did not provide a defini-
tive list of factors to be considered because it recognized that
the judges of our district courts are accustomed to making rea-
sonableness determinations in a wide variety of contexts.”
(quotation and alterations omitted)). The court may properly
reduce the fee for substandard performance, delay, or benefits
that are not in proportion to the time spent on the case. Gis-
brecht, 535 U.S. at 808. As evidence of the reasonableness of
the resulting fee, the court may require counsel to submit a
record of hours spent and a statement of normal hourly billing
charges. Id. The Supreme Court did acknowledge that the dis-
trict court could consider the lodestar calculation, but only as
an aid in assessing the reasonableness of the fee. See id.
[10] Applying Gisbrecht’s reasonableness test, we hold that
the attorneys in these cases met their burden to demonstrate
that the fees they requested were reasonable. First, no reduc-
tion in fees due to substandard performance was warranted.
Nothing in the district courts’ opinions suggests that counsels’
performance was anything other than excellent. In each case,
the attorneys demonstrated (and the district courts found) that
there was no evidence of fraud or overreaching in the making
of the 25% contingent-fee agreements and that they provided
high-quality representation which resulted in their clients
receiving substantial past-due benefits. Second, no reduction
in fees for dilatory conduct was warranted, as the attorneys in
these cases caused no excessive delay which resulted in an
undue accumulation of past-due benefits. Finally, the
requested fees, which were significantly lower than the fees
14880 CRAWFORD v. ASTRUE
bargained for in the contingent-fee agreements, were not
excessively large in relation to the benefits achieved. In each
case, counsel voluntarily evaluated the fees in comparison to
the amount of time spent on the case. In each case, counsel
voluntarily reduced those fees substantially from the allow-
able 25%. The attorneys will receive no percentage of the
substantial future benefits paid to the claimants following
their successful representation. The attorneys assumed signifi-
cant risk in accepting these cases, including the risk that no
benefits would be awarded or that there would be a long court
or administrative delay in resolving the cases.10
[11] Counsel have waited a long, long time for payment,
and have borne the costs of this appeal out of the fees to
which they are entitled. To force petitioners’ counsel to multi-
ply the diminution of those fees by going through three sepa-
rate and unnecessary district court proceedings would be
completely unjustified. The question before the district courts
was whether the fees sought by petitioners are reasonable. See
Gisbrecht, 535 U.S. at 809 (holding that 42 U.S.C. § 406(b)
“instructs courts to review for reasonableness fees yielded by
[attorney-client contingent-fee] agreements.”); see also Wells,
907 F.2d at 371 (“[B]ecause a successful social security
claimant evaluates and pays his own attorney, a court’s pri-
mary focus should be on the reasonableness of the contin-
gency agreement in the context of a particular case.”).
Because we have held that the fees are reasonable, nothing
remains for the district courts to do in these cases, except to
award those fees. The Supreme Court in Gisbrecht held that
“satellite litigation” over attorneys’ fees should not be encour-
aged. See Gisbrecht, 535 U.S. at 808. Accordingly, we hold
that petitioners are entitled to the fees which they requested
and remand with instructions to award the requested fees.
10
For example, it took over six years for the SSA to resolve Trejo’s case
after the district court remanded it to the agency.
CRAWFORD v. ASTRUE 14881
D.
[12] A separate and adequate ground for vacating the
orders in these cases is the district courts’ failure to explain
why the percentages by which they enhanced their lodestar
calculations produced a reasonable fee in each case. Although
the district court has discretion to determine a reasonable fee,
it must provide “a concise but clear explanation of its reasons
for the fee award.” Hensley v. Eckerhart, 461 U.S. 424, 437
(1983). Here, although each district court explained on a very
general level that the requested fee would result in a windfall
to the attorney, each court failed to relate its “enhancement”
of the lodestar to the circumstances of the individual case.
See, e.g., Moreno v. City of Sacramento, 534 F.3d 1106, 1112
(9th Cir. 2008) (noting that where the district court awards a
substantially reduced fee, it must “articulate[ ] its reasoning
with more specificity”); Gates v. Deukmejian, 987 F.2d 1392,
1400 (9th Cir. 1993) (as amended) (“the use of percentages”
does not “discharge[ ] the district court from its responsibility
to set forth a ‘concise but clear’ explanation of its reasons for
choosing a given percentage reduction”).
[13] In addition, the district courts’ orders in Trejo and
Crawford misconstrue the nature of the risk assessment by
focusing on the firm’s overall success rate instead of the spe-
cific facts that make a given case more or less risky for the
firm. For example, in Crawford, the district court faulted the
firm for failing to “provide[ ] any data regarding [the] firm’s
success rate that would enable the Court to assess the risk
assumed by [the] firm in representing social security benefits
claimants in the Central District of California.” This misstates
the attorney’s burden, which is to show that the fee is reason-
able based on the facts of the particular case. A district court
cannot reduce the amount of a fee simply because a firm is
generally successful. Rather, the district court should look at
the complexity and risk involved in the specific case at issue
to determine how much risk the firm assumed in taking the
case.
14882 CRAWFORD v. ASTRUE
III.
Because the district courts inverted the reasonableness
analysis prescribed by Gisbrecht, and because the attorneys
proved the reasonableness of their fees and none of the
grounds in the district court orders establish unreasonable-
ness, we direct the district court to grant the attorneys their
requested fees. We VACATE the district courts’ orders and
REMAND with instructions to order the SSA to pay the attor-
neys the fees they requested, less fees already paid under the
EAJA, and to release the balance of the withheld past-due
benefits to the claimants.
VACATED and REMANDED WITH INSTRUC-
TIONS.
CLIFTON, Circuit Judge, with whom Chief Judge
KOZINSKI joins, concurring in part and dissenting in part:
I agree with the majority that the district courts did not
apply the proper standard in determining the amounts of fees
awarded to the attorneys who represented the claimants in
these cases. I thus concur in sections I, II, III-A, and III-B of
the majority opinion.
I do not agree with the majority’s order that claimants’
attorneys be awarded the amounts they requested, however,
and from that order I respectfully dissent. The cases should
instead be remanded so that the respective district courts can
determine reasonable fees by applying the proper standard.
That is a task assigned to the district courts, not to us, and it
is the expertise of the district courts that the Supreme Court
referenced in Gisbrecht v. Barnhart, 535 U.S. 789, 808 (2002)
(“Judges of our district courts are accustomed to making rea-
sonableness determinations in a wide variety of contexts, and
CRAWFORD v. ASTRUE 14883
their assessments in such matters, in the event of an appeal,
ordinarily qualify for highly respectful review.”)
The majority opinion sets a poor example for district courts
to follow. It orders payments that translate into hourly rates,
for the time of both attorneys and paralegals, of $519 in
Washington, $875 in Crawford, and $902 in Trejo. But, as
described in more detail in Judge Bea’s dissenting opinion,
the majority opinion provides no serious explanation of why
these awards are reasonable or why they do not represent
“windfalls.” It instructs district courts to “look at the com-
plexity and risk involved in the specific case at issue to deter-
mine how much risk the firm assumed in taking the case,”
supra at 14881, but it does not comply with that requirement
itself, not even in the Washington case, where the district
court found that claimant’s counsel faced “very little risk.” It
acknowledges, supra at 14870, the finding by the district
court in the Trejo case that 1.4 hours of reported attorney time
and 1.5 hours of paralegal time did not properly relate to the
federal court action, but it still awards the claimant’s attorney
the full amount of fees requested, with no reduction for the
inappropriate time entries.
It is not obvious to me that there is no “windfall” in any of
the fee requests made by claimants’ attorneys. It would not
necessarily constitute an abuse of discretion for a district
court to decline to award the full amounts requested. Award-
ing the attorneys what they ask for brings an end to this matter
without requiring a remand, but it does not satisfy our obliga-
tion under the statute to protect the interests of the claimants
themselves, from whose past benefits the money is taken. In
future cases, the district courts should do as we say, not as we
do.
14884 CRAWFORD v. ASTRUE
BEA, Circuit Judge, with whom RAWLINSON and N.R.
SMITH, Circuit Judges, join, dissenting:
This is a case about how much an attorney should get paid
for successfully representing someone who claims the govern-
ment incorrectly withheld social security disability benefits
(“SSDI”). In each of these cases here on appeal, the plaintiffs
filed a claim with the government that they were disabled and
therefore eligible for SSDI. The social security agency dis-
agreed with each of them. After the government denied the
claims, each claimant hired an attorney to appeal the govern-
ment’s decision. The contract between the claimants and their
attorneys stated the claimants would pay the attorneys 25 per-
cent of the benefits they receive if their appeal succeeded. In
SSDI cases, successful plaintiffs are entitled to an award in an
amount equal to the sum of the monthly payments they would
have received had the government approved their disability
claim when plaintiffs initially filed them. Congress, however,
decided that contracts between SSDI claimants and their attor-
neys must be reviewed by a judge, and that the attorneys must
prove to the judge that the amount of fees they request are
“reasonable.” In each of these cases, the district courts
decided the requested fees were unreasonable and awarded
the attorneys a smaller share of the disabled claimants’ recov-
ered benefits than what the attorneys sought.
The majority decides the attorneys’ fee requests were rea-
sonable. Therefore, the disabled clients must pay their attor-
neys a larger share of their disability benefits than the district
courts decided was reasonable. The majority reaches this
decision regardless of the fact that the district courts were
more familiar than we are with the difficulty, if any, of these
cases and how much work the attorneys did on each case.
Essentially, we disagree with how the majority reads Gis-
brecht v. Barnhart, 535 U.S. 789 (2002), the most recent deci-
sion from the Supreme Court on the topic of attorneys fees in
SSDI cases. We think the majority faults the district courts for
doing something—namely considering the amount of time the
CRAWFORD v. ASTRUE 14885
attorneys worked on each case—that the Supreme Court
required them to do. Under Gisbrecht, we think the district
courts did not abuse their discretion by finding the requested
fee amounts were unreasonable, or in awarding the attorneys
a lower amount of fees based on the amount of time the attor-
neys spent on each case. Therefore, we would affirm the deci-
sions below.
The magistrate judges below did not abuse their discretion
by awarding attorneys’ fees of less than the amounts
requested. See Clark v. Astrue, 529 F.3d 1211, 1213 (9th Cir.
2008). A lower court abuses its discretion if it (1) applies an
incorrect legal standard or (2) makes factual findings that are
illogical, implausible, or bereft of support in the record. Id. at
1214. The magistrate judges here carefully applied the
method outlined in Gisbrecht v. Barnhart, 535 U.S. 789
(2002), and each opinion was fully supported by the record.
The majority chastises the magistrate judges for not following
Gisbrecht, but then fails to follow it themselves. Therefore,
we think the majority has itself abused its own discretion in
ignoring the standard of review, re-weighing the evidence,
and engaging in appellate fact finding. As the Supreme Court
emphasized, district court judges and magistrates, not appel-
late court judges, are “accustomed to making reasonableness
determinations in a wide variety of contexts, and their assess-
ments in such matters, in the event of an appeal, ordinarily
qualify for highly respectful review.” Id. at 808.
The statute governing this case states that the court may
allow “a reasonable fee for such representation, not in excess
of 25 percent of the total past-due benefits . . . .” 42 U.S.C.
§ 406(b). Gisbrecht requires that the trial judge perform an
independent “check” of contingent fee arrangements “to
assure that they yield reasonable results in particular cases.”
Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002). The sole
issue of this case is whether the trial judges’ rulings constitute
an abuse of discretion in their application of 42 U.S.C.
§ 406(b) as interpreted by the Court in Gisbrecht.
14886 CRAWFORD v. ASTRUE
In Gisbrecht, the Supreme Court held district courts must
not solely consider the lodestar method (reasonable hours
spent multiplied by a reasonable hourly rate) for calculating
reasonable attorneys’ fees in SSDI cases. The lodestar method
was designed to balance the interests of opposing parties
under fee-shifting statutes. Attorneys representing SSDI
claimants are paid fees from the recovery for the disabled cli-
ent, not from the opposing party. SSDI claimants typically
cannot afford an attorney’s hourly fee. Thus, virtually all
attorneys charge a contingency fee in these cases. Again, 42
U.S.C. § 406(b) sets the maximum percentage that may be
charged for representing a claimant in district court at 25 per-
cent of past benefits recovered.
To determine the amount of attorney’s fees to be awarded
when the claimant is successful, a court first looks at any
contingent-fee agreement for reasonableness “based on the
character of the representation and the results the representa-
tive achieved.” Gisbrecht, 535 U.S. at 808. The Supreme
Court gave two examples of when a district court should
reduce an attorney’s recovery under such a contingent fee
arrangement: (1) when the attorney is responsible for an
unreasonable delay in recovering benefits for the claimant
(because the attorney should not profit from the accumulation
of unpaid benefits during the delay); and (2) “when the bene-
fits are large in comparison to the amount of time counsel
spent on the case.” Id.
There is no claim here that any of the attorneys in the three
cases before us purposely delayed proceedings so as to pile up
unpaid benefits into a larger pot to divide with the client.
Instead, at issue here is whether the benefits to counsel are
large in comparison to the amount of time counsel spent on
the case. To make that determination, Gisbrecht permits the
trial court to require “the claimant’s attorney . . . submit . . .
as an aid to the court’s assessment of the reasonableness of
the fee yielded by the fee agreement, a record of the hours
spent representing the claimant and a statement of the law-
CRAWFORD v. ASTRUE 14887
yer’s normal hourly billing charge for noncontingent-fee
cases.” Id. The Supreme Court specifically left it to a district
court’s discretion to decide what a reasonable amount of time
to be spent on a case entailed.
The magistrate judges here each followed the process out-
lined in Gisbrecht. First they examined the contingency fee
agreements. Then each compared the amount of the requested
fee award to the amount of time the attorneys spent. To aid
the magistrate judges in making such a comparison, the attor-
neys submitted a record of their hours and, statistics on the
average hourly rate for comparable attorneys in lieu of their
own hourly billing charge because they take cases only on a
contingency basis.
After considering this information, the magistrate judges
found that to grant the attorneys the full amount of their
requested contingency fees would result in windfalls for the
attorneys. The magistrate judges consequently granted smaller
attorneys’ fee awards based on computations of the amount of
hours spent plus a substantial bonus percentage.
The majority’s reasoning as to why the magistrate judges
were wrong here is inadequate. First, the majority states the
magistrate judges erred because they failed to give “primacy”
to the contingent-fee agreements. See Slip Op. 14877. We do
not know what the majority might mean by this term. But it
cannot be the meaning of “primacy” as used in Gisbrecht.1
In Gisbrecht, the Supreme Court reversed us because we
“rejected the primacy of lawful attorney-client fee agree-
ments.” Id. at 793. This statement is easily understood in con-
text. Prior to the enactment of § 406(b), contingent-fee
agreements were the most prevalent method by which SSDI
1
Primacy is defined as “the state of being first (as in importance, order,
or rank).” Merriam-Webster’s Online Dictionary (2009). To date, no other
circuits have addressed the meaning of “primacy” in Gisbrecht.
14888 CRAWFORD v. ASTRUE
claimants paid their attorneys. Id. at 803. Our error was that
we had rejected this most frequently used method attorneys
and SSDI claimants used to negotiate fees. The Supreme
Court held it was unlikely Congress intended § 406(b) to ban
contingency fee agreements altogether and replace them
solely with courts’ application of the lodestar method, particu-
larly because the lodestar method was developed years after
Congress enacted § 406(b). Id. at 806.
When the majority attempts to clarify the meaning of “pri-
macy,” it ends up replacing “primacy” with “exclusivity.”
That interpretation is simply contrary to Gisbrecht, which
encourages district courts to assess the reasonableness of the
time the attorney spent on a case. The actual amount of time
spent on a case provides the trial judge with a reference
amount to use in determining whether the attorney would
receive a windfall. A windfall can be identified only by com-
paring the requested amount with a reference amount. Here,
the trial judges were given three amounts by the parties: the
contingent fee amount, the amount requested by the attorney,
and the reference—or “lodestar”—amount. The trial judges
found the requested amounts to be a “windfall”—another way
of saying the requested amounts were not reasonable—and
considered an upward adjustment from the reference amount.
Therefore, the judges here spent time explaining why the
court needed to increase the reference amount.
The majority, perhaps recognizing that “primacy” is a thin
reed from which to hang its opinion, dismisses the magistrate
judges’ discussion of the contingency fee agreements as mere
lip-service to, or parroting of, Gisbrecht. This is quite a cava-
lier assault on the sincerity of our magistrate judges, hardly
the “highly respectful review” the Supreme Court instructed
us to apply to those most “accustomed to making reasonable-
ness determinations.” Gisbrecht, 535 U.S. at 808.
The majority says it is skeptical whether the magistrate
judges adequately considered the contingency fee agreement
CRAWFORD v. ASTRUE 14889
because they each used the term “enhancement” when they
compared the requested amount of attorneys’ fees to the
amount of time spent and the reasonable hourly rate. But, the
choice of the term “enhancement” is supported by Gisbrecht
itself. In describing the approved method of determining rea-
sonableness, Gisbrecht relied on several other opinions,
including McGuire v. Sullivan, 873 F.2d 974, 979, 981 (7th
Cir. 1989), which refer to “enhancements” and “risk enhance-
ments” over a lodestar figure when discussing whether a
contingent-fee agreement is reasonable. Thus, the use of this
one word does not reflect an improper analysis.
The second reason the majority may doubt the magistrate
judges’ decisions is that the fees award were each signifi-
cantly lower than the requested amount. In other words, the
majority does not like the final result. That the judges in the
majority would have awarded higher fees, however, does not
mean the magistrate judges abused their discretion and erred
in applying Gisbrecht.
The magistrate judges found awarding the requested fees
would result in a windfall for the attorneys.2 The majority
does not discuss how the magistrate judges erred in their find-
ings that the requested fees would be a windfall for the attor-
neys; nor does the majority even discuss what properly
defines the discretionary range in which the magistrates could
find a windfall. It is the magistrate judges, however, and not
this court, who best know the cases, the pleadings, the effort
invested by each attorney, and all other relevant factors in
assessing whether the requested fee awards were reasonable.
This familiarity is decisive. If the magistrate judges found that
the attorneys did not assume a significant risk in accepting
representation, then awarding a significant fee based on the
risk of litigation would indeed be a “windfall.”
2
“Windfall” seems like a good term to apply to a fee award if “the bene-
fits are large in comparison to the amount of time the attorney spent on
the case.” Id. at 807.
14890 CRAWFORD v. ASTRUE
The majority devotes all of three sentences to discussing
what would be reasonable fees and why. It asserts (1) the fees
requested were reasonable because the attorneys requested
less than the full 25% allowed under the contingency fee
agreement; (2) the attorneys will not receive a percentage of
the SSDI claimants future benefits; and (3) the “attorneys
assumed significant risk in accepting these cases, including
the risk that no benefits would be awarded or that there would
be a long court or administrative delay in resolving the case.”
Op. at 14880. The attorneys’ choices to reduce their requested
fees tell us only that they too were somewhat loath to seek the
full amount of fees as written in the contracts. An attorney
must still show the requested amount is reasonable, not
merely that the requested amount is less than an admittedly
higher, unreasonable amount.3
The second reason is a red herring; future benefits are never
available under § 406(b) and cannot contribute to assessing
whether a particular fee request under § 406(b) is reasonable.
The third reason is directly contrary to the specific findings
of the magistrate judge in Washington. There, the magistrate
judge found the facts of the case weighed heavily in favor of
the SSDI claimant, which demonstrated the attorney took on
“very little risk” of losing the case. Yet, the majority says not
a word about why the magistrate judge abused his discretion
3
SSDI is not the only field of the law where attorney contingency fee
contracts are subject to court supervision based on reasonableness. Per-
sonal injury contingency fee contracts for representation of minors and all
sorts of probate court matters come to mind. In these cases, courts review
contingency fee agreements for reasonableness and use many of the fac-
tors found in lodestar analyses, such as the amount of time spent on the
case. See, e.g., Padilla v. McClellan, 93 Cal. App. 4th 1100, 1107 (2001)
(assessing the “type and difficulty of the matter, counsel’s skill vis-à-vis
the skill required to handle the case, counsel’s age and experience, the
time and attention counsel gave to the case, and the outcome”). See also
Revised Code of Washington § 4.24.005 (providing for judicial review of
attorneys’ fees based on factors such as “time and labor required,” in all
tort actions).
CRAWFORD v. ASTRUE 14891
in making this factual finding. So much for application of our
standard of review. In Crawford and Trejo, the magistrate
judges did not make explicit findings about the risk of losing
the case, but considered the difficulty of the case in assessing
the quality of the representation. Most importantly, every
SSDI case involves risk of loss. If that factor is sufficient to
show requested attorneys fees are reasonable, district courts
will be reduced to rubber stamping contingency fee requests.
Similarly, there is no support for the majority’s position
that reversing the magistrate judges’ orders is necessary to
assure SSDI claimants have a corps of attorneys from which
to choose, to be sure to receive adequate representation. This
musing by the majority lacks any support in this record. Fur-
ther, if a redistribution of money, awarded to palliate the
claimant’s disability, between the disabled claimant and his
attorney is needed to make available adequate plaintiffs’
counsel, that is a policy consideration to be addressed by Con-
gress, not the courts.
Perhaps the strongest contention in support of reversing the
decisions below is that the magistrate judges did not precisely
explain the computations that led to their fee awards. The
magistrate judges applied either a 40% or 100% risk-factor
upward enhancement to the lodestar amount computed in each
case. Admittedly, the magistrate judges appear to reach those
specific numbers, as opposed to say, 45% or 103%, by judi-
cial fiat; they do not explain how they reached these percent-
ages. Instead, in Crawford and Washington, the magistrate
judges explained that they increased the attorney fees by 40%
above the lodestar, because (a) there was no excessive delay
and (b) plaintiff’s counsel was able to persuade the Commis-
sioner to stipulate to a remand, ultimately leading to the
favorable decision. However, the judges refused to increase
the fee by 256% (that requested in Crawford) or 82% (that
requested in Washington) because (1) counsel in Crawford
did not meet his burden to show the risk of accepting the rep-
14892 CRAWFORD v. ASTRUE
resentation justified his requested amount4; (2) counsel did not
have to do much work to persuade the Commissioner to stipu-
late to a remand in Washington; and (3) counsel incurred little
risk in Washington, because it was so clear that the ALJ had
erred. In Trejo, the magistrate judge increased the fees by
100% because (1) the attorney provided high quality represen-
tation and (2) although there was excessive delay in reaching
the ultimate decision, it was not due to plaintiff’s counsel.
However, the judge refused to increase the fee by 279%,
because (1) counsel did not provide data on her firm’s success
rate; (2) there was no evidence the attorney was precluded
from other employment due to acceptance of the case; and (3)
the case did not require short time limitations.
In Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th
Cir. 2008), we held district courts must provide a specific
explanation for reductions of requested fee awards greater
than 10%. Moreno, however, involved a district court reduc-
ing an attorneys’ fee request based on the district court’s
determination the attorney did redundant work and should not
have been remunerated for specific hours the attorney claimed
to have spent on the case. See id. at 1112-14. When a district
court disregards and eliminates some of an attorneys’ billable
hours, the court can easily explain its reductions arithmeti-
cally. When a district court determines a contingent risk fac-
tor, however, arithmetic is insufficient.
For example, in Trejo the attorney requested $24,000,
which was 14% of the $172,223 award for unpaid benefits to
the SSDI claimant. The magistrate awarded $12,650.40, or
7.3% of the unpaid benefits, by taking the number of hours
4
The district court found, in part, counsel failed to meet his burden
because he failed to provide data on the success rate of his firm. The suc-
cess rate of plaintiff’s specific firm is not relevant; it is the success rate
of all attorneys who take on similar representations that matters for the
purpose of determining contingent risk. Otherwise, the courts would pun-
ish successful attorneys and reward incompetent attorneys.
CRAWFORD v. ASTRUE 14893
multiplied by the average hourly rate of comparable attorneys
($6,325.20) and then doubling that fee to take the attorney’s
risk of not getting paid into account. Would the majority
require the magistrate judge to explain exactly how he arrived
at 100%? The Supreme Court made it clear we should rely on
the lower courts’ expertise to make reasonableness determina-
tions.
Lastly, even though the Supreme Court overruled this Cir-
cuit in Gisbrecht, it remanded “for recalculation of counsel
fees payable from the claimant’s past-due benefits.” Id. at
793. The majority here criticizes and overrules the magistrate
judges for failing to follow Gisbrecht. Then, by judicial fiat,
it refuses to follow Gisbrecht’s direction. It states merely,
“[b]ecause we have held that the fees are reasonable, nothing
remains for the district courts to do in these cases, except to
award those fees” and then awards the fees requested by the
attorneys in each of these cases. See Slip Op. 14880. The
appellate court, at most, can determine what the trial court did
was error, but should remand to the district court to determine
whether, upon according “primacy” to the contingency agree-
ments, the district court determines the fees requested were
reasonable.
If we overrule the district court, we (like the Supreme
Court did in Gisbrecht) should remand these cases to those
courts to make the reasonableness determination in these
cases. Gisbrecht did not hold that contingent fee agreements,
if not in excess of 25 percent of past-due benefits, are pre-
sumptively reasonable. Gisbrecht, 535 U.S. at 792. Gisbrecht
instead gives the attorney for the plaintiff the burden of show-
ing that “the fee sought is reasonable for the services ren-
dered.” Id. at 807. For these reasons alone, even if the
magistrate courts in these decisions applied Gisbrecht incor-
rectly, we can only remand after giving them clarifying
instructions. The Supreme Court has shown that remand is the
correct procedure when district courts misapply the law in
determining attorneys fees in SSDI cases, because district
14894 CRAWFORD v. ASTRUE
judges and magistrate judges, not appellate court judges, are
“accustomed to making reasonableness determinations in a
wide variety of contexts.” Gisbrecht, 535 U.S. at 808.
For these reasons, we respectfully dissent.