The U.S. Supreme Court will soon decide whether contingency fee agreements result in a "reasonable" fee under certain federal statutes.

In Gisbrecht v. Barnhart, Docket No. 01-131, attorneys succeeded in reversing Social Security Administration denials of disability benefits. The Social Security Act provides that the court shall determine a reasonable attorney's fee to be paid by the client, not to exceed 25% of the award of back benefits. The attorneys and clients in these cases entered into contingency fee contracts for 25% of any award of back benefits.

The Ninth Circuit held that a "reasonable" fee must be determined by the "lodestar" method: the prevailing hourly rate multiplied by the hours reasonably expended by the attorneys.

In its brief to the Supreme Court, AAJ argues that the agreed contingent fee should be presumed reasonable. Contingent fee agreements have provided a key to the courthouse as far back as colonial times in a wide variety of situations. In fact, it is the dominant means of providing representation for monetary claims. Charging by the hour was not common until the 1960's and has been the subject of scandal and fraud ever since.

The lodestar method serves as a proxy for the marketplace in civil rights cases and other circumstances where the fee is paid by the losing opponent and there is no independent market for such representation. But in social security and many other types of litigation, the contingent fee is the choice of the marketplace. The Court should not resort to a poor substitute instead.

Read AAJ's amicus curiae brief in Gisbrecht v. Barnhart