Opinion #198. Attorneys handling of fees in Social Security Administration case where client was previously represented by a non-attorney advocate.
Issued by the Professional Ethics Commission
Date Issued: December 4, 2009
Attorney X has inquired for guidance in a case where a Social Security Claimant was previously represented by a non-attorney advocate. Attorney X stated that the advocate had withdrawn from the case but was waiting to get paid. Attorney X had received his fee and told the client that he would pay the advocate for her services but was concerned about a possible violation of Rule 5.4 of the Maine Rules of Professional Conduct, which prohibits fee splitting with non-lawyers, notwithstanding the attorney's proposed treatment of the disbursement as a "cost" and not a fee.
Does the arrangement proposed by Attorney X violate the requirements of the Maine Rules of Professional Conduct?
The proper route for Attorney X and the non-attorney advocate to take is to have the advocate file a Fee Petition with the Social Security Administration. The Administration requires that the Petition be filed within 60 days of the date of the Notice of Favorable Decision. Attorney X's Fee Agreement or Fee Petition will be adjusted by the Administration, if appropriate, for services rendered by the non-attorney advocate. If the 60-day deadline has passed, and/or, as in the instant case, Attorney X has already been paid his entire fee, Attorney X may refund a portion of his fee to the client to make a direct payment to the non-attorney advocate, if he believes that keeping his entire fee would render the client's total fees unreasonable. See Rule 1.5(a) of the Maine Rules of Professional Conduct. An attorney is always free to discount his/her fee to a client.
A lawyer may not share fees with a non-lawyer except under those circumstances set forth in Rule 5.4 of the Maine Rules of Professional Conduct, which are not present here. This Commission acknowledges that full disclosure and counsel to the client regarding his/her potential liability for fees to a prior non-attorney advocate is paramount, in Social Security and other similar administrative matters, to avoid exposing the client to litigation by the non-attorney advocate to collect his or her fees. The Commission suggests that lawyers handling these cases incorporate the following language into the standard contingent fee agreement, found at the end of Rule 1.5 of the Maine Rules of Professional Conduct:
(7) Attorney has inquired of Client as to any prior representation in this matter by a non-attorney advocate and has advised Client that he/she may be separately liable to that advocate for fees incurred for services rendered. Client states that a non-attorney advocate has/has not provided services to Client in this matter. (Insert name and address of non-attorney advocate).
(8) Attorney agrees to promptly provide the non-attorney advocate named above with a copy of any Notice of Favorable Decision rendered in this matter, so that the advocate may file a Fee Petition with the Social Security Administration, if appropriate, within 60 days of the date of the Notice. The Client understands that he/she has the right to agree or object to any Fee Petition filed with the Administration and that if he/she objects, he/she must do so in a timely fashion.