Jeter v. Astrue

Case: 09-30452 Document: 00511249514 Page: 1 Date Filed: 09/30/2010

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
September 30, 2010

No. 09-30452 Lyle W. Cayce
Clerk

RITA JETER,

Plaintiff-Appellant,
v.

MICHAEL J. ASTRUE, COMMISSIONER OF SOCIAL SECURITY,

Defendant-Appellee.

Appeal from the United States District Court
for the Western District of Louisiana

Before GARZA and BENAVIDES, Circuit Judges, and LYNN * , District Judge.
FORTUNATO P. BENAVIDES, Circuit Judge:
We are presented with the question of whether district courts may employ
the lodestar method to determine whether an attorney fee constitutes a
“windfall” under Gisbrecht v. Barnhart, 535 U.S. 789 (2002). Because we read
Gisbrecht as merely forbidding exclusive reliance on the lodestar method to
determine the reasonableness of a 42 U.S.C. § 406(b) attorney fee, we do not
conclude that Gisbrecht precludes a court’s consideration of the lodestar method
altogether. And since the district court here did not rely exclusively on the
lodestar method to evaluate the reasonableness of a contingency fee, we conclude

*
District Judge of the Northern District of Texas, sitting by designation.
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the district court did not abuse its discretion in finding the contingency fee
unreasonable under § 406(b). Accordingly, we AFFIRM the decision of the
district court, and we write further only to clarify an area of the law that,
following the Supreme Court’s decision in Gisbrecht, has resulted in confusion
and conflicting outcomes in the decisions of our lower courts.
F ACTS AND P ROCEDURAL B ACKGROUND
The named appellant in this appeal, Gary W. Jeter (“Jeter”), is a Social
Security benefits claimant. He is represented by his attorney, John G. Ratcliff
(“Ratcliff’”), who is the real party in interest for purposes of this appeal’s
pertinent analysis.1 On appeal, Ratcliff challenges the district court’s denial of
the contingency fee he made with Jeter.2
On August 12, 2002, Jeter filed an application for Title II disability
insurance benefits and Title XVI supplemental security income, alleging an
inability to work due to physical impairments resulting from a myocardial
infarction. On April 22, 2005, an administrative law judge issued a decision
finding Jeter not disabled under the Act. Jeter requested review before the
Appeals Council, and on November 29, 2005, the Council denied his request. As

1
As the Supreme Court noted in Gisbrecht, although Jeter is named as the appellant,
the real party in interest is his attorney Ratcliff, who “seek[s] to obtain higher fee awards
under § 406(b).” Gisbrecht, 535 U.S. at 798 n.6. The Gisbrecht Court also noted “that the
Commissioner of Social Security here . . . has no direct financial stake in the answer to the §
406(b) question; instead, [h]e plays a part in the fee determination resembling that of a trustee
for the claiman[t].” Id.
2
Fees for representation of individuals claiming Social Security old-age, survivor, or
disability benefits, both at the administrative level and in court, are governed by prescriptions
Congress created in 1965. Social Security Amendments of 1965, 79 Stat. 403 (codified as
amended at 42 U.S.C. § 406). The statute deals with the administrative and judicial review
stages discretely: § 406(a) governs fees for representation in administrative proceedings; §
406(b) controls fees for representation in federal court. See also 20 CFR § 404.1728(a).

2
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a result, Jeter had exhausted his administrative remedies and could then file an
appeal of the Administration’s denial of his claim to the United States District
Court, for the Western District of Louisiana.
Jeter sought out the services of Ratcliff. Ratcliff agreed to represent Jeter
in his appeal of the Administration’s denial of his claim for benefits, and on
January 12, 2006, the two entered into an agreement (what is commonly known
as a “contingency fee”) stipulating that Ratcliff would provide Jeter with
representation to appeal the denial of his claim in federal court, in exchange for
twenty-five percent of Jeter’s unpaid past benefits– in the event that Ratcliff’s
representation proved to be successful. On that very same day, Ratcliff filed
Jeter’s appeal in the district court.
The case proceeded and six months later, on July 31, 2006, Ratcliff filed
a brief arguing that the Administration’s failure to find Jeter disabled violated
the Act. On October 4, 2006, the Administration filed a motion requesting
remand. The matter was referred to a magistrate judge, and the magistrate
judge recommended remand. Soon thereafter, the district court adopted the
magistrate judge’s report and recommendation in its entirety, and entered
judgment remanding the case. After further proceedings before the
Administration, including a hearing and a supplemental hearing, a second
administrative law judge determined that Jeter had been disabled since March
20, 2002. In a notice of award dated May 4, 2008, the Administration stated that
Jeter’s “past due benefits are $89,289.00 for September 2002 through March
2008.”3 As highlighted above, Jeter and Ratcliff’s contingency fee agreement set

3
For purposes of § 406(b), a successful decision on remand is considered a favorable
decision before the district court. No party disputes that Ratcliff is entitled to some fee for his
success in representing Jeter. The question is merely how much, and whether the district

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Ratcliff’s fee at twenty-five percent. Twenty-five percent of $89,289.00 is
$22,322.25.
Ratcliff then collected $5,300.00, the maximum fee permitted for his work
at the administrative level, leaving a balance of $17,022.25 available for
attorney’s fees under § 406(b). Ratcliff returned to the federal district court and,
pursuant to § 406(b), requested the $17,022.25 in fees for the work he performed
in the district court. At the same time, Ratcliff noted that he intended to refund
Jeter the $2,827.50 in fees he had previously received under the Equal Access
to Justice Act (EAJA) , recognizing that “[f]ee awards may be made under both
[EAJA and § 406(b)], but the claimant’s attorney must refund to the claimant the
amount of the smaller fee.” Gisbrecht, 535 U.S. at 796.4 As a result, Ratcliff’s
request that the contingency fee be formally recognized resulted in a request for
$14,734.74 in attorney’s fees. On July 1, 2008, the Administration filed its
opposition to Ratcliff’s § 406(b) motion, arguing that Ratcliff’s requested fee was
not reasonable because it would result in a “windfall.”
The case was once again referred to a magistrate judge, and the
magistrate judge issued a report and recommendation on December 29, 2008.
The magistrate judge recommended granting Ratcliff’s request for payment
pursuant to his and Jeter’s contingency fee but reducing the total amount

court erred when it failed to award the actual contingency fee award.
4
“Congress harmonized fees payable by the Government under EAJA with fees
payable under § 406(b) out of the claimant’s past-due Social Security benefits in this manner:
Fee awards may be made under both prescriptions, but the claimant’s attorney must refun[d]
to the claimant the amount of the smaller fee.” Gisbrecht, 535 U.S. at 796 (internal quotation
marks omitted).

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Ratcliff would be awarded to $3,993.75.5 In her report and recommendation, the
magistrate judge began by noting that “courts have struggled significantly in
applying Gisbrecht.” Specifically, she noted that the “question for this court to
answer is whether the Administration is correct that the fee represents a
windfall.”
Thus, in undertaking a § 406(b) “reasonableness” analysis, the court
considered several factors including: (1) Ratcliff’s degree of expertise in Social
Security cases; (2) the adequacy of Ratcliff’s representation of Jeter; (3) the
amount Jeter ultimately recovered; (4) the fact that Ratcliff sought twenty-five
percent of Jeter’s recovered amount; and (5) Ratcliff’s risk of loss. The court also
considered the hourly rate Ratcliff would receive as a result of the contingency
fee–by dividing the fee by the number of hours Ratcliff worked–and found that
if the court deemed the whole fee to be reasonable, Ratcliff would be paid at a
rate of $846.88 per hour for his services. In considering all of the
aforementioned factors combined, the magistrate judge recommended that the
district court find that Ratcliff’s requested fee would result in an unreasonable
windfall under Gisbrecht.
Since she found the contingency fee unreasonable, the magistrate judge
recommended that instead of the requested $14,734.74, the district court award
$3,993.75, reasoning that “[t]his will result in . . . an amount the court considers
reasonable and appropriate under the circumstances before it.” On April 3,
2009, the district court fully adopted the magistrate judge’s report and

5
The magistrate judge calculated the award to be $6,281.25, but after refunding Jeter
the $2,287.50 previously awarded to Ratcliff as his EAJA fee, Ratcliff would be awarded only
$3,993.75 for his services performed on Jeter’s behalf in the district court.

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No. 09-30452

recommendation, finding the requested contingency fee unreasonable and
awarding only $3,993.75.
This appeal timely followed. On appeal, Ratcliff asserts that the district
court erred when it found his § 406(b) contingency fee would constitute a
windfall under Gisbrecht. In particular, Ratcliff argues that the district court’s
reliance on the lodestar method in making its fee determination violates the
Supreme Court’s decision in Gisbrecht. As we will explain in greater detail to
follow, we find that the district court did not rely exclusively on a lodestar
calculation to find Ratcliff’s requested fee unreasonable, and consequently, we
cannot conclude that the district court’s fee award violates Gisbrecht. We write
further, however, in order to provide our lower courts better guidance in
navigating the circuitous contours of Gisbrecht’s “windfall” jurisprudence.
S TANDARD OF R EVIEW
A district court’s assessment of whether a contingency fee is reasonable
under 42 U.S.C. § 406(b) “qualif[ies] for [this Court’s] highly respectful review.”
Gisbrecht, 535 U.S. at 808. That is, “[a]n award of attorney’s fees out of past-due
benefits is discretionary, and we will not reverse a district court’s denial of
attorney’s fees under § 406(b) absent an abuse of discretion.” Pierce v. Barnhart,
440 F.3d 657, 663 (5th Cir. 2006).
“A district court abuses its discretion when it bases its decision on an
erroneous legal conclusion or on a clearly erroneous finding of fact.” James v.
Cain, 56 F.3d 662, 665 (5th Cir. 1995); see also Squires-Allman v. Callahan, 117
F.3d 918, 920 (5th Cir. 1997) (“Underlying findings of fact are reviewed for clear
error. Underlying conclusions of law, however, are reviewed de novo.”) (internal
citations omitted). Accordingly, “‘it is not inconsistent with the discretion

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standard for an appellate court to decline to honor a purported exercise of
discretion which was infected by an error of law.’” Rice v. Astrue, 609 F.3d 831,
836 n.22 (5th Cir. 2010) (quoting Abrams v. Interco, Inc., 719 F.2d 23, 28 (2d Cir.
1983)) (internal citations omitted).
A NALYSIS
As the magistrate judge aptly noted in her report and recommendation,
our “courts have struggled significantly in applying Gisbrecht.” This is because
the Gisbrecht Court began by explicitly rejecting the application of the “lodestar
method to calculate fees under § 406(b),”6 Gisbrecht, 535 U.S. at 798, and then
concluded by stating that “[i]f the benefits [resulting from the contingency fee]
are large in comparison to the amount of time counsel spent on the case, a
downward adjustment is similarly in order [to] . . . disallow windfalls for
lawyers.” Id. at 808 (internal citations and quotation marks omitted) (emphasis
added). We are not surprised that many of our lower courts have interpreted
this as a contradictory mandate: lower courts must not employ the lodestar
method to determine whether the hourly rate is excessively high and the fee
thus unreasonable, but if the hourly rate is excessively high, then lower courts
may declare the fee to be a windfall and, ultimately, unreasonable.7
We find, however, that it is possible to construe Gisbrecht such that its
prohibition against lone reliance on the lodestar method still permits a court to

6
See also, Gisbrecht, 535 U.S. at 793 (proscribing lower courts’ reliance on “lodestar
calculations . . . [since they] rejec[t] the primacy of lawful attorney-client fee agreements.”).
7
See id. at 809 (Scalia, J., dissenting) (“I do not know what the judges of our district
courts and courts of appeals are to make of today’s opinion . . . . While today’s opinion gets
this case out of our ‘in’ box, it does nothing whatever to subject these fees to anything
approximating a uniform rule of law.”).

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include a lodestar calculation in its consideration of the fee– specifically, in
instances where the court simultaneously relies on additional factors to support
its determination that the contingency fee constitutes an unearned advantage
to the attorney–such that the fee award may be considered a windfall.
A brief examination of the rationale behind the Supreme Court’s decision
in Gisbrecht provides support for our understanding and interpretation of
Gisbrecht’s holding–and ultimately, demonstrates why the district court did not
abuse its discretion in this particular instance.
I. T HE S UPREME C OURT’S D ECISION IN G ISBRECHT
First, it is important to note that the Supreme Court’s decision in
Gisbrecht came about in response to a circuit split. See Gisbrecht, 535 U.S. at
799 (“We granted certiorari in view of the division among the Circuits on the
appropriate method of calculating fees under § 406(b).”) (internal citation
omitted). Prior to Gisbrecht, the Second, Sixth, and Seventh Circuits did not
begin a § 406(b) reasonableness determination with a lodestar calculation, but
instead all gave primacy “effect to attorney-client contingent-fee agreement[s.]”
See id. (citing Wells v. Sullivan, 907 F.2d 367 (2d Cir. 1990); Rodriquez v. Bowen,
865 F.2d 739 (6th Cir. 1989) (en banc); and McGuire v. Sullivan, 873 F.2d 974
(7th Cir. 1989)). The Third, Fourth, Fifth, Eighth, Ninth, Tenth, and Eleventh
Circuits, however, did not. As the Supreme Court noted, in order to determine
whether a § 406(b) contingency fee was reasonable, these Circuit Courts looked
first to the lodestar method to determine whether the resulting hourly fee would
be higher than the attorney’s normal hourly rate. See id. (citing Coup v. Heckler,
834 F.2d 313 (3d. Cir. 1987); Craig v. Secretary, Dept. of Health and Human
Servs., 864 F.2d 324 (4th Cir. 1989); Brown v. Sullivan, 917 F.2d 189 (5th Cir.

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1990); Cotter v. Bowen, 879 F.2d 359 (8th Cir. 1989); Gisbrecht v. Apfel, 238 F.3d
1196 (9th Cir. 2000); Hubbard v. Shalala, 12 F.3d 946 (10th Cir. 1993); Kay v.
Apfel, 176 F.3d 1322 (11th Cir. 1999)).
In rejecting these courts’ cardinal reliance on the lodestar method to
determine a “reasonable” fee under § 406(b), we find it important to note in
particular that the Gisbrecht Court abrogated this Court’s decision in Brown v.
Sullivan, 917 F.2d 189 (5th Cir. 1990). In Brown, this Court had held that
although “due consideration [must] be given to the contingency fee agreement
. . . [t]he starting point . . . is the number of attorney hours reasonably expended
on litigation multiplied by a reasonable hourly rate.” Id. at 192 (internal
quotation marks omitted). That is, this Court recognized a lodestar calculation
as the method lower courts should “us[e] as a first approximation of the
reasonable hourly rate” when determining a reasonable fee under § 406(b). Id.
In Gisbrecht, the Supreme Court explicitly rejected Brown’s primary
reliance on the lodestar method as the “starting point” in determining a fee’s
reasonableness pursuant to § 406(b). Although the Supreme Court noted that
“the ‘lodestar’ figure has, as its name suggests, become the guiding light of our
fee-shifting jurisprudence[,]” Gisbrecht, 535 U.S. at 801 (internal quotation
marks and brackets omitted), the Gisbrecht Court distinguished § 406(b) fee
awards on the basis that 42 U.S.C. § 406(b) is not a fee-shifting statute. As a
result, the Gisbrecht Court reasoned that the lodestar method does not serve the
same purpose as when applied to the fee-shifting statutes from which it actually
originated. Id. at 802. That is, “the lodestar method today holds sway in
federal-court adjudication of disputes over the amount of fees properly shifted
to the loser in the litigation.” Id. Section 406(b), however, does not shift fees to

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the loser (in this case, the Administration), but rather, § 406(b) shifts fees to the
winner, the claimant (in this case Jeter). Id. (“Fees shifted to the losing party,
however, are not at issue here.”).8
Furthermore, in contrast to the fee-shifting statutes that created the
lodestar method, § 406(b) constitutes “the exclusive regime for obtaining fees for
successful representation of Social Security benefits claimants.” Id. at 795-96.
This distinction is significant because plaintiffs whose actions are covered by fee-
shifting statutes can offer to pay their attorneys money above and beyond what
they might recover under the applicable fee-shifting statute, if and when they
are successful. See id. at 801-02. This gives the fee-shifting plaintiffs the ability
to expend their own resources–if they wish to–in order to obtain better counsel.
A Social Security claimant, however, cannot pay his counsel more than twenty-
five percent of the unpaid benefits he receives if his attorney is successful. In
fact, if an attorney accepts or attempts to collect anything beyond twenty-five
percent of the claimant’s unpaid past benefits, the attorney subjects himself to
criminal prosecution. Id. at 796 (“Collecting or even demanding from the client
anything more than the authorized allocation of past-due benefits is a criminal
offense.”) (citing 42 U.S.C. §§ 406(a)(5), (b)(2); 20 CFR §§ 404.1740-1799). As a
result, “[t]he lodestar method under-compensates attorneys for the risk they
assume in representing SSDI claimants and ordinarily produces remarkably
smaller fees than would be produced by starting with the contingent-fee
agreement.” Crawford v. Astrue, 586 F.3d 1142, 1149 (9th Cir. 2009) (en banc).

8
See also, Crawford v. Astrue, 586 F.3d 1142, 1148 (9th Cir. 2009) (en banc) (“The
Court explained that the lodestar method was developed to implement fee-shifting statutes,
which assess fees against the losing party and which do not prevent the attorney from seeking
additional fees from the client.”) (citing Gisbrecht, 535 U.S. at 802, 806).

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With this in mind, Congress wrote § 406(b)(1)(A) in 1965 to read as follows:
Whenever a court renders a judgment favorable to a claimant under
this subchapter who was represented before the court by an
attorney, the court may determine and allow as part of its judgment
a reasonable fee for such representation, not in excess of 25 percent
of the total of the past-due benefits to which the claimant is entitled
by reason of such judgment. . . .

Consequently, the Gisbrecht Court reasoned that by limiting contingency
fees to no more than twenty-five percent, “Congress thus sought to protect
claimants against ‘inordinately large fees’ and also to ensure that attorneys
representing successful claimants would not risk ‘nonpayment of [appropriate]
fees.’” Gisbrecht, 535 U.S. at 805 (quoting SSA Report 66). Given the
aforementioned distinctions between fee-shifting statutes and § 406(b), the
Gisbrecht Court reasoned that it was “unlikely that Congress, legislating in
1965, and providing for a contingent fee tied to a 25 percent of past-due benefits
boundary, intended to install a lodestar method courts did not develop until
some years later.” Id. at 806.
Thus, the aforementioned discussion reveals that the Gisbrecht Court
proscribes exclusive, primary reliance on the lodestar method to determine the
reasonableness of a § 406(b) fee award. It is clear that the Gisbrecht Court first
instructed our lower courts to give the contingency fee agreement
“primacy”–recognizing that this would in some instances result in an excessively
high fee award to an individual attorney–and justifying this potential for
excessively high fees on the basis that § 406(b) is not a fee-shifting statute.
Although in some instances a twenty-five percent contingency fee may result in
a seemingly large fee, a particular claimant’s attorney often is not compensated

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at all for Social Security work in federal court.9 Thus, the Gisbrecht Court
recognized that Congress wrote § 406(b) to “ensure that attorneys representing
successful claimants would not risk ‘nonpayment of [appropriate] fees.’”
Gisbrecht, 535 U.S. at 805 (quoting SSA Report 66). Therefore, the best reading
of Gisbrecht highlights the most significant distinction between the lodestar
method’s role in fee-shifting statutes and its inapposite role in § 406(b): because
§ 406(b) is not a fee-shifting statute, the § 406(b) fee award constitutes the sole
means by which claimants can compensate–and thereby secure their access
to–competent counsel.
With this understanding of Gisbrecht in mind, the closing paragraph of
Gisbrecht may seem a mystery. Although the Gisbrecht Court went to great
lengths to explain its denouncement of the lodestar method for § 406(b)
reasonableness determinations, the Court concluded by instructing lower courts
that, “[i]f the benefits are large in comparison to the amount of time counsel
spent on the case, a downward adjustment is . . . in order [to] . . . disallow
windfalls for lawyers.” Id. at 808 (internal citations and quotation marks
omitted) (emphasis added). And so the question post-Gisbrecht is really the
following: if lower courts are not to resort first to the lodestar method when
determining whether a fee is reasonable under § 406(b), may a lower court give
the lodestar method any consideration in its determination of whether a
contingency fee constitutes a “windfall”?

9
“Counsel always are accepting some risk in taking social security cases under
contingency fee contracts because, statistically, roughly fifty percent will lose at the district
court level.” Mentzell v. Astrue, 623 F. Supp. 2d 1337, 1341-42 (M.D. Fla. 2008). We note that
before this Court, the success rate is significantly lower than the rate of success before district
courts.

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II. W HETHER R ATCLIFF’S F EE C ONSTITUTES A W INDFALL
On appeal, Ratcliff asserts that because the district court determined the
reasonableness of his § 406(b) fee by considering the resulting hourly rate he
would receive for his services, the district court abused its discretion and
violated Gisbrecht’s edict against relying on the lodestar method. Thus, the crux
of Ratcliff’s argument is that Gisbrecht forbids any consideration of the lodestar
method in § 406(b) fee determinations. Our reading of Gisbrecht, however, does
not abide that position.
Ratcliff’s proffered interpretation of Gisbrecht would render the concluding
paragraph of Gisbrecht meaningless (where the Court held that “a downward
adjustment [may be] . . . in order [to] . . . disallow for windfalls” id. at 808), just
as permitting courts to rely exclusively on the lodestar method to declare a fee
unreasonable would render the entirety of Gisbrecht’s decision meaningless.
Instead, we conclude that Gisbrecht’s concluding reference to downward
adjustments for windfalls must be read in accordance with Gisbrecht’s
instruction that courts are not to rely exclusively on the lodestar method.
Adopting Ratcliff’s interpretation would require our judges to blind themselves
to a factor the Supreme Court has clearly deemed worthy of consideration, while
allowing exclusive reliance on the lodestar method to find fees unreasonable
would have the effect of converting every contingency fee that results in an
amount higher than the lodestar into a windfall. Thus, neither of these two
interpretations can be squared with the entirety of the Supreme Court’s decision.
Although the Supreme Court did not set out a clear list of circumstances
in which a court may find that a contingency fee results in an unreasonable
windfall, we conclude that courts may consider the lodestar in their analyses so

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long as the court can articulate additional factors demonstrating that the
excessively high fee would result in an unearned advantage. In other words, the
Gisbrecht Court’s reference to windfall leaves room for consideration of an
effective hourly fee rate, but only so long as this mathematical calculation is
accompanied by consideration of whether an attorney’s success is attributable
to his own work or instead to some unearned advantage for which it would not
be reasonable to compensate him.
Any other reading would give attorneys a perverse incentive to delay
proceedings or expend unnecessary hours in an effort to prolong successful
litigation–all to ensure that their § 406(b) fee would not be reduced based on its
appearing excessively high in comparison to the number of hours they
expended.10 Likewise, we do not read Gisbrecht’s “windfall” as support for the
proposition that experienced, competent counsel should be punished for
accomplishing an arduous task in a shorter span of time than less-experienced,
less-aggressive counsel. Accordingly, we interpret Gisbrecht’s prohibition on the
lodestar method as an affirmation that if a claimant’s success on appeal can be
attributed to his attorney’s endeavors before the district court, then that
attorney should reap the benefit of his work–even if he managed to accomplish
a great deal in a small window of time. In this way, Gisbrecht’s “windfall” does

10
Apart from considering whether a fee would result in a windfall, the Gisbrecht Court
also recognized that where a district court finds that an attorney unnecessarily delayed the
proceedings in order to receive a large fee award, that is reason alone to reduce the fee award.
Gisbrecht, 535 U.S. at 808 (“If the attorney is responsible for delay, for example, a reduction
is in order so that the attorney will not profit from the accumulation of benefits during the
pendency of the case in court.”). This sort of reduction, however, is limited to instances where
the attorney himself unnecessarily delayed the proceedings. Nothing in Gisbrecht supports
reducing the attorney’s fee merely because the Administration or the court acted to delay or
extend the timeline of the proceedings.

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not preclude attorneys from recovering what may mathematically seem like a
high fee award if the attorney’s success on appeal is of his own making.
Thus, our district courts may consider the lodestar method in determining
the reasonableness of a § 406(b) fee, but the lodestar calculation alone cannot
constitute the basis for an “unreasonable” finding. Looking to the present case,
we find that the district court did not rely exclusively on the lodestar method to
find Ratcliff’s requested fee unreasonable. Instead, the district court considered
the resulting hourly fee rate in combination with a list of additional factors the
district court found combined to demonstrate that the fee constituted an
unearned windfall under Gisbrecht, and consequently we cannot say that the
district court abused its discretion in declaring the fee unreasonable pursuant
to § 406(b).11 Again, in finding that the district court did not abuse its discretion,
we read Gisbrecht as commanding that in order for district courts to rely on the
lodestar method to find a particular fee constitutes a windfall, the district court
must also articulate the factors that demonstrate to the court that the fee is
unearned. Specifically, the district court must discuss the factors that
demonstrate that the success on appeal is not of the attorney’s making, but

11
Ratcliff also argues that the district court erred when it reduced his fee in accordance
with the court’s determination that his hourly rate was $125 per hour. Given that this Court
reviews “[u]nderlying findings of fact . . . for clear error,” we do not find that the district court
abused its discretion and committed clear error in adopting this specific factual conclusion.
Squires-Allman, 117 F.3d at 920. First, Ratcliff states in his brief that “[w]hen he last charged
by the hour in cases unrelated to Social Security disability benefits, he charged $180.00 per
hour.” Although the magistrate judge used $125.00 as the “hourly rate”–the magistrate judge
multiplied that rate by 2.5 to get to $312.50 (which she then multiplied by the number of hours
she reasoned Ratcliff reasonably worked). Since the actual number the magistrate judge used
($312.50) is considerably higher than the hourly rate Ratcliff listed as his own ($180.00), we
would be hard pressed to conclude that the district court actually committed clear error in its
factual findings that Ratcliff’s hourly rate was $125.00.

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No. 09-30452

rather, is attributable to some other source for which it would be unreasonable
to compensate the attorney. See Gisbrecht, 535 U.S. at 808 (the reasonableness
§ 406(b) inquiry requires courts to assess whether the contingency fee reflects
“the character of the representation and the results the representative
achieved.”).
We hesitate, however, in this particular instance to prescribe an
exhaustive list of the precise factors our lower courts must consider in order to
determine whether a particular fee is unearned such that it may be considered
a windfall. Because district courts are in a better position to determine what
factors are relevant in considering whether the success of a claimant’s claim
before their court can be attributed to the attorney’s work–or whether the
success is unearned on the part of the attorney–we will refrain at this time
forcing our lower courts into applying an arbitrary, formulaic set of factors of our
own making.12 We do note, however, that in the absence of more specific
guidance from above, lower courts have considered a myriad of factors that may
demonstrate to the court whether the fee is an unearned windfall. For instance,
in Brannen v. Barnhart, one of our lower courts explained that:
[t]o guard against windfalls, some courts consider additional factors
not explicitly proffered in Gisbrecht. These include risk of loss in the
representation, experience of the attorney, percentage of the
past-due benefits the fee constitutes, value of the case to a claimant,
degree of difficulty, and whether the client consents to the requested
fee. See, e.g., Hearn v. Barnhart, 262 F.Supp.2d 1033, 1036-38

12
If, later on down the line, it becomes clear to this Court that a list of factors would
be instructive to our lower courts and lead to greater uniformity, we will certainly revisit the
possibility of making such a list. At this time, however, there is no reason to assume that our
lower courts need this Court to tell them all of the factors they can and cannot consider in
order to decide whether an attorney’s success on a particular case was unearned.

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No. 09-30452

(N.D.Cal., Apr. 30, 2003) (considering risk of loss, experience of
counsel, percentage of funds the fee consumes, value of the case to
the plaintiff, and client’s consent to fee requested); Coppett v.
Barnhart, 242 F.Supp.2d 1380, 1393-85) (S.D. Ga., Sep. 11 2002)
(considering risk of loss, difficulty of the case, and skill and
experience of attorney.).13
Civ. A. No. 99-325, 2004 WL 1737443, at *5 (E.D. Tex., July 22, 2004).
While we are not limiting courts’ consideration of what constitutes a
windfall to some exhaustive list, we are instructing our courts that Gisbrecht’s
windfall is not a simple reiteration of the lodestar method. Likewise, the
Supreme Court’s decision in Gisbrecht does not altogether preclude a district
court’s consideration of the lodestar method in a § 406(b) fee determination.
Instead, Gisbrecht commands that where lower courts look to the lodestar
method to evaluate the ratio of fee earned to number of hours expended, they
cannot find that a particular fee award would result in a windfall unless the
court can articulate additional, specific factors to demonstrate that the resulting
high fee was unearned by the attorney–and thus not attributable to the
attorney’s representation of the client before the court.
The Gisbrecht Court certainly did not expect our district judges to turn a
blind eye to hourly fee rates that are excessively high for the services provided

13
If a district court considers whether the degree of risk undertaken by an attorney
supports a fee reduction (i.e., whether the risk of loss was so low that the claimant’s success
was not particular to the attorney’s efforts), common sense dictates that the court’s analysis
begin with the risk involved at the time the claimant and the attorney entered into the
contingency fee agreement. Cf. Gisbrecht, 535 U.S. at 810 (Scalia, J., dissenting) (“I think it
obvious that the reasonableness of a contingent-fee arrangement has to be determined by
viewing the matter ex ante, before the outcome of the lawsuit and the hours of work expended
on the outcome are definitively known.”). Although initial risk is an important factor, it will
not always conclude the court’s analysis. A case that appears risky at first may become
straightforward through no effort of the claimant’s attorney. A district court would be able
to consider such extrinsic events in determining whether a fee is an unearned windfall.

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No. 09-30452

in their courts. Rather, the Gisbrecht Court made it clear that as a result of the
legislative history behind § 406(b)–as well as the difficult nature of Social
Security appeals and their low rates of success in general–an excessively high
hourly rate alone does not render an otherwise reasonable fee unreasonable.
Gisbrecht commands no more and no less.
C ONCLUSION
For the aforementioned reasons, we AFFIRM the judgment of the district
court.

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