Major 9th Circuit Decision On Attorney Fees

The Ninth Circuit Court of Appeals has issued an important opinion in Crawford v. Astrue, holding that:

We read Gisbrecht not to prohibit a district court from making lodestar-type calculations, but only from relying exclusively on such calculations and refusing to consider the contingent-fee agreement. Here, the district court noted that Gisbrecht controls, and considered the contingent-fee agreements. The district court, however, concluded that substantial reductions in the fees under those agreements were necessary for the fees to meet the statutory standard of reasonableness. Those rulings complied with the requirements of Gisbrecht.

Unlike the dissent, we do not read the Supreme Court’s Gisbrecht opinion as mandating any particular procedure or format that the district courts must follow in determining a reasonable attorney fee in social security cases. The Court did not, as the dissent apparently concludes, prescribe that in every case the district court mechanically must begin its analysis with the twenty-five percent contingent fee and then make any reduction in that amount that appears appropriate in the particular case.

As we have noted above, what Gisbrecht held was that “§ 406(b) does not displace contingent-fee agreements within the statutory ceiling; instead, § 406(b) instructs courts to review for reasonableness fees yielded by those agreements.” 535 U.S. at 808. The methodology by which a district makes such reasonableness determinations is for that court to select in the exercise of its sound discretion. In making these determinations, it would be preferable for a district court to begin with the contingency-fee agreement and decrease from there, rather than increase from a lodestar calculation. It does not seem to be an abuse of discretion, however, to use the latter approach as long as the court takes the necessary factors into consideration.

I am not going to the trouble of explaining this. If you do not understand it, you probably would not care anyway.