You asked whether an attorney may put an attorney's lien on the social security benefits
of a successful claimant. The answer is no. The Social Security Act, under 42 U.S.C.
§ 406, establishes the exclusive regime for obtaining fees for successful representation
of Social Security benefits claimants. Disability benefits are not subject to attachment
or lien by creditors and no exception was carved out in the statute for an attorney's
Debra B~ filed a claim for social security disability insurance benefits ("DIB") and
Supplemental Security Income ("SSI"). Ms. B~ signed a "Appointment of Representative"
and fee agreement with Alex B~. Apparently, Ms. B~ subsequently discharged Mr. B~
and named Bruce J~ to represent her. Ms. B~ signed an "Appointment of Representative"
and a second fee agreement, this time with Mr. J~. Ms. B~ was successful in her applications
and was awarded benefits. Mr. B~ subsequently wrote a letter to Mr. J~ claiming an
attorney's lien on Ms. B~'s disability benefits.
Anti-attachment Provision - 42 U.S.C. § 407
Section 207 of the Social Security Act, 42 U.S.C. § 407, provides that:
The right of any person to any future payment under this subchapter shall not be transferable
or assignable, at law or in equity, and none of the moneys paid or payable or rights
existing under this subchapter shall be subject to execution, levy, attachment, garnishment,
or other legal process, or to the operation of any bankruptcy or insolvency law.
No other provision of law, enacted before, on, or after April 20, 1983, may be construed
to limit, supersede, or otherwise modify the provisions of this section except to
the extent that it does so by express reference to this section.
Like anti-attachment provisions generally, see Philpott v. Essex County Welfare Board, 409 U.S. 413 (1973); Wissner v. Wissner, 338 U.S. 655 (1950), the statutory language is broadly phrased and announces a legislative
objective of assuring that Social Security disability benefits actually reach the
beneficiary. Accordingly, the Supreme Court of the United States held, "[s]ection
407(a) unambiguously rules out any attempt to attach Social Security benefits." Bennett v. Arkansas, 485 U.S. 395, 397 (1988). The House Conference Report on the Supplemental Security
Income legislation stressed, ". . . . if the benefits which would be provided under
this program are to meet the most basic needs of the poor, the benefits must be protected
from seizure in legal processes against the beneficiary. Therefore, any amounts paid
or payable under this program would not be subject to levy, garnishment, or other
legal process, except the collection of delinquent Federal taxes. Also, entitlement
to these benefits would not be transferable or assignable." 1972 U.S. Code Cong. &
Admn. News 5142.
However, Congress foresaw that the pursuit of entitlement to benefits might require
legal assistance and, in 42 U.S.C. §§ 406(a)(2) and 1383(d)(2) of the Social Security
Act, authorized the Commissioner to prescribe regulations for the recognition and
payment of claimants' representatives. The implementing regulations appear at 20 C.F.R.
§§ 404.1700 et seq. and 416.1500 et seq. This section allows the Commissioner to certify
for payment to the claimant's attorney a certain percentage of past due benefits.
If the Commissioner does not certify payment to the attorney, the attorney is precluded
by 42 U.S.C. § 407 from claiming a lien on the claimant's benefits.
Attorney Representation - 42 U.S.C. § 406
The Social Security Act and regulations provide two methods by which fees can be set
for attorneys who represent claimants in cases before the Social Security Administration.
See 42 U.S.C. § 406. Fees may be obtained by filing a "fee petition" under 42 U.S.C.
§ 406(a)(1) or through the fee agreement provision of 42 U.S.C. § 406(a)(2)-(3). The
Social Security Administration certifies the fee for payment out of the past-due benefits
owed to the claimant. See 42 U.S.C. § 406(a)(4); 20 C.F.R. § 404.1730(b). Thus, "[t]he prescriptions set out
in §§ 406(a) and (b) establish the exclusive regime for obtaining fees for successful
representation of Social Security benefits claimant." See Gisbrecht, 122 S.Ct. at 1822. In either case, once the fee is approved, the Social Security
Administration may certify for payment out of past-due benefits so much of the fee
that does not exceed 25% of such past-due benefits. See 42 U.S.C. § 406(a)(4).
As noted above, fee may be obtained by filing a "fee petition" under 42 U.S.C. § 406(a)(1).
Section 406(a) provides that the Social Security Administration should set a "reasonable
fee" for representation services before the Agency in every case in which a favorable
benefit determination is made. To implement this provision, the Social Security Administration,
in 1980, issued regulations establishing a "fee petition" under which representatives
must request and receive authorization to charge their clients a fee. See 20 C.F.R. § 404.1725. After the claimant has been awarded benefits, a representative
must file a written request, itemizing the services provided, the time expended, and
the amount the attorney wishes to charge. 20 C.F.R. § 404.1725(a). SSA then sets the
amount of the fee based on both the purpose of the Act, which is to provide a measure
of economic security to beneficiaries, and seven enumerated factors, including the
extent of services performed and the level of skill and competence required. 20 C.F.R.
§ 404.1725(b)(1). Claimants or representatives who disagree with the fee determination
may request administrative review. 20 C.F.R. § 404.1720(d). The fee determination
is reviewed by an authorized official who did not take part in setting the fee, and
the decision is not subject to further review. 20 C.F.R. § 404.1720(d)(1).
In 1990, Congress created as an alternative to fee petitions: fee agreements. See Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, tit. V, § 5106(a),
104 Stat. 1388, 1388-266 (1990). The "fee agreement" provisions established a second
means for authorizing fees for attorneys representing Social Security claimants. 42
U.S.C. § 406(a)(2)-(3). A fee agreement must satisfy three prerequisites: (i) it must
be submitted to the Commissioner in writing prior to the time the Commissioner makes
a determination on the claim; (ii) it must specify a fee that does not exceed the
lesser of 25% of the past-due benefits awarded or $5,300; and (iii) the Commissioner
must make a determination favorable to the claimant. 42 U.S.C. § 406(a)(2)(A). If
the Social Security Administration issues a favorable determination and if these requirements
are satisfied, "then the Commissioner of Social Security shall approve that agreement
at the time of the favorable determination, and ... the fee specified in the agreement
shall be the maximum fee." 42 U.S.C. § 406(a)(2)(A). An approved agreement sets the
maximum fee, and SSA then notifies the claimant and the representative of the amount
of the past-due benefits, the maximum fee set by the agreement, and the method of
obtaining administrative review of the fee amount. 42 U.S.C. § 406(a)(2)(D).
Where Two or More Attorneys Represent a Claim
In providing for both fee petitions and fee agreements, Congress made an important
distinction: fee petitions have no maximum, whereas fee agreements do. If fee agreements
did not provide for a maximum fee, the potential for abuse would be very great. While
42 U.S.C. § 406(a)(2) is silent as to what the Commissioner should do if presented
with more than one fee agreement, the three statutory prerequisites, as well as the
"shall approve" clause, are all written in the singular suggesting that Congress did
not intend to address situations in which multiple attorneys presented agreements.
See Powers v. Barnhart, -- F.3d --, 2002 WL 1275561, No. 01-5182 at *3 (D.C. Cir. June 11, 2002). If there
were a mandatory duty to approve any agreement that met the three prerequisites of
42 U.S.C. § 406(a)(2)(A), then approval of more than one fee agreement could conflict
with the important purposes of § 42 U.S.C. § 406(a): to cap the amount that a claimant
may agree to pay in attorneys' fees at the lesser of 25% of his recovery or $5,300
and to ensure that disability benefits actually reach the beneficiary.
Fee petitions are different; since the attorney provides documentation of services
provided and time spent, the potential for abuse is much less, even without a statutory
maximum. For this reason, where more than one attorney represented a Social Security
claimant, each is permitted to file a separate fee petition. The potential for abuse is minimized, because SSA will review the petitions to make
sure that they are reasonable.
The Hearings, Appeals, and Litigation Law Manual ("HALLEX") I-5-109 clarifies the
matter of what to do when two or more unrelated attorneys submit fee agreements.
Question #24 states:
If a claimant had two representatives but the first representative waived his or her
fee, does exception a. in IV.A.2. of HALLEX TI 5-109 still apply?
No. Because the first representative waived his or her fee, this exception does not
Neither does exception c. of the same section.
The purpose of these two exceptions is to avoid a situation in which a decision
maker might inadvertently approve the fee agreement of both representatives and
authorize each representative to collect the maximum amount allowed by the statute.
Once one of the representatives waives his or her fee, the situation mentioned above
is no longer at issue.
HALLEX I-5-109, question #24 (emphasis added). The POMS also states that a fee request
must be made by fee petition where two ore more attorney's represent a claimant. See POMS GN
03940.025(C)(4). Thus, where a claimant had two representatives, and one representative did
not waive his or her fee, neither representative is eligible for fees under the fee
agreement process. This is consistent with the intent of Congress.
The Agency recently defended this policy in the Power's case. Like the case at hand, Powers dealt with a situation in which the Agency was presented with two attorneys who had
represented the claimant over the course of his claim. See Powers, 2002 WL 1275561 at * 1-2. In that matter, "the Deputy Chief ALJ explained that '[s]ince
the claimant appointed more than one representative, and did not sign a single, common
fee agreement or waive charging and collecting a fee, the Social Security Administration
cannot process your fee under the fee agreement process.'" See Powers, 2002 WL 1275561 at *2 (citing letter from Deputy Chief ALJ dated July 6, 1999). The
Deputy Chief ALJ advised Power that he would have to "file a fee petition." (Id.).
Here, Alex B~ has not submitted a fee petition, nor has he sought a fee waiver from
Bruce J~. Instead, Mr. B~ has claimed a lien on the disability benefits of the claimant.
This is inappropriate. To obtain fees, Mr. B~ must file a fee petition. If appropriate,
the Agency may certify for payment some or all of any approved fees out of the claimant's
The Social Security Act ensures that social security disability benefits actually
reach the beneficiary. Therefore, an attorney may not place a lien on the benefits
of a beneficiary under the 42 U.S.C. § 407.
Furthermore, where the record contains more than one fee agreement, the Social Security
Administration will not process any fee under the fee agreement process. Rather, the
attorneys must file separate fee petitions in order to receive any fees from the claimant's
past due benefits for their services rendered.
Thomas W. C~
Chief Counsel, Region V
Alfred C. S~
Assistant Regional Counsel