In an 8-1 decision on May 28, the U.S. Supreme Court held that attorneys successfully representing Social Security disability claimants in court may be awarded fees based on contingent fee agreements with their clients.

The decision reverses a ruling by the Ninth Circuit that the Social Security statute, providing for awarding of "a reasonable fee," requires courts to use the "lodestar" method based on hourly rates. Justice Ginsburg, for the majority, noted that the lodestar method is a relatively recent development, frequently used in fee-shifting situations. However, there is no reason to believe that Congress intended to outlaw the use of contingency fees paid by clients.

The decision rejects the notion, advanced before the Supreme Court, that contingency fees are inherently unreasonable and that such agreements must be conformed, after the fact, to a judge's sense of what the legal services were worth in light of the result.

In its brief to the Supreme Court, AAJ argued 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.

Petitioner's attorney, Eric Schnaufer, indicated that AAJ's amicus brief "helped significantly" in obtaining this victory.

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