Gary Jeter v. Social Security Administration

Filing

PUBLISHED OPINION FILED. [09-30452 Affirmed ] Judge: EMG , Judge: FPB , Judge: BML Mandate pull date is 11/22/2010 [09-30452]

Gary Jeter v. Social Security Administration

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
September 30, 2010 N o . 09-30452 Lyle W. Cayce Clerk

R I T A JETER, P la in t if f -A p p e lla n t , v. M I C H A E L J. ASTRUE, COMMISSIONER OF SOCIAL SECURITY, Defendant-Appellee.

A p p e a l from the United States District Court fo r the Western District of Louisiana

B e fo r e GARZA and BENAVIDES, Circuit Judges, and LYNN * , District Judge. F O R T U N A T O P. BENAVIDES, Circuit Judge: W e are presented with the question of whether district courts may employ t h e lodestar method to determine whether an attorney fee constitutes a " w in d fa ll" under Gisbrecht v. Barnhart, 535 U.S. 789 (2002). Because we read G is b r e c h t as merely forbidding exclusive reliance on the lodestar method to d e t e r m in e the reasonableness of a 42 U.S.C. § 406(b) attorney fee, we do not c o n c lu d e that Gisbrecht precludes a court's consideration of the lodestar method a lt o g e t h e r . And since the district court here did not rely exclusively on the lo d e s t a r method to evaluate the reasonableness of a contingency fee, we conclude

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District Judge of the Northern District of Texas, sitting by designation.

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No. 09-30452 t h e district court did not abuse its discretion in finding the contingency fee u n r e a s o n a b le under § 406(b). Accordingly, we AFFIRM the decision of the d is t r ic t court, and we write further only to clarify an area of the law that, fo llo w in g the Supreme Court's decision in Gisbrecht, has resulted in confusion a n d conflicting outcomes in the decisions of our lower courts. F ACTS AND PROCEDURAL BACKGROUND T h e named appellant in this appeal, Gary W. Jeter ("Jeter"), is a Social S e c u r it y benefits claimant. He is represented by his attorney, John G. Ratcliff (" R a tc liff'" ), who is the real party in interest for purposes of this appeal's p e r t in e n t analysis.1 On appeal, Ratcliff challenges the district court's denial of t h e contingency fee he made with Jeter.2 O n August 12, 2002, Jeter filed an application for Title II disability in s u r a n c e benefits and Title XVI supplemental security income, alleging an in a b ilit y to work due to physical impairments resulting from a myocardial in fa r c tio n . On April 22, 2005, an administrative law judge issued a decision fin d in g Jeter not disabled under the Act. Jeter requested review before the A p p e a ls Council, and on November 29, 2005, the Council denied his request. As

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. 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).
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No. 09-30452 a result, Jeter had exhausted his administrative remedies and could then file an a p p e a l of the Administration's denial of his claim to the United States District C o u r t , 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 J a n u a r y 12, 2006, the two entered into an agreement (what is commonly known a s a "contingency fee") stipulating that Ratcliff would provide Jeter with r e p r e s e n t a t io n to appeal the denial of his claim in federal court, in exchange for t w e n t y -fiv e percent of Jeter's unpaid past benefits­ in the event that Ratcliff's r e p r e s e n t a t io n proved to be successful. On that very same day, Ratcliff filed J e te r '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 t h e Act. On October 4, 2006, the Administration filed a motion requesting r e m a n d . The matter was referred to a magistrate judge, and the magistrate j u d g e recommended remand. Soon thereafter, the district court adopted the m a g is tr a t e judge's report and recommendation in its entirety, and entered ju d g m e n t remanding the case. After further proceedings before the

A d m in is tr a t io n , including a hearing and a supplemental hearing, a second a d m in is t r a t iv e law judge determined that Jeter had been disabled since March 2 0 , 2002. In a notice of award dated May 4, 2008, the Administration stated that J e te r 's "past due benefits are $89,289.00 for September 2002 through March 2 0 0 8 ."3 As highlighted above, Jeter and Ratcliff's contingency fee agreement set
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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No. 09-30452 R a t c liff's fee at twenty-five percent. $ 2 2 ,3 2 2 .2 5 . R a t c liff then collected $5,300.00, the maximum fee permitted for his work a t the administrative level, leaving a balance of $17,022.25 available for a t t o r n e y 's fees under § 406(b). Ratcliff returned to the federal district court and, p u r s u a n t 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 J e te r the $2,827.50 in fees he had previously received under the Equal Access t o Justice Act (EAJA) , recognizing that "[f]ee awards may be made under both [E A J A and § 406(b)], but the claimant's attorney must refund to the claimant the a m o u n t of the smaller fee." Gisbrecht, 535 U.S. at 796.4 As a result, Ratcliff's r e q u e s t that the contingency fee be formally recognized resulted in a request for $ 1 4 ,7 3 4 .7 4 in attorney's fees. On July 1, 2008, the Administration filed its o p p o s it io n to Ratcliff's § 406(b) motion, arguing that Ratcliff's requested fee was n o t reasonable because it would result in a "windfall." T h e case was once again referred to a magistrate judge, and the m a g is tr a t e judge issued a report and recommendation on December 29, 2008. The magistrate judge recommended granting Ratcliff's request for payment p u r s u a n t to his and Jeter's contingency fee but reducing the total amount Twenty-five percent of $89,289.00 is

court erred when it failed to award the actual contingency fee award. "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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No. 09-30452 R a t c liff would be awarded to $3,993.75.5 In her report and recommendation, the m a g is tr a t e judge began by noting that "courts have struggled significantly in a p p ly in g Gisbrecht." Specifically, she noted that the "question for this court to a n s w e r is whether the Administration is correct that the fee represents a w in d fa ll." Thus, in undertaking a § 406(b) "reasonableness" analysis, the court c o n s id e r e d several factors including: (1) Ratcliff's degree of expertise in Social S e c u r it y cases; (2) the adequacy of Ratcliff's representation of Jeter; (3) the a m o u n t Jeter ultimately recovered; (4) the fact that Ratcliff sought twenty-five p e r c e n t of Jeter's recovered amount; and (5) Ratcliff's risk of loss. The court also c o n s id e r e d the hourly rate Ratcliff would receive as a result of the contingency fe e ­ b y dividing the fee by the number of hours Ratcliff worked­and found that if the court deemed the whole fee to be reasonable, Ratcliff would be paid at a r a t e of $846.88 per hour for his services. In considering all of the

a fo r e m e n t io n e d factors combined, the magistrate judge recommended that the d is t r ic t court find that Ratcliff's requested fee would result in an unreasonable w in d fa ll under Gisbrecht. Since she found the contingency fee unreasonable, the magistrate judge r e c o m m e n d e d that instead of the requested $14,734.74, the district court award $ 3 ,9 9 3 .7 5 , reasoning that "[t]his will result in . . . an amount the court considers r e a s o n a b l e and appropriate under the circumstances before it." On April 3, 2 0 0 9 , the district court fully adopted the magistrate judge's report and

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 r e c o m m e n d a t io n , finding the requested contingency fee unreasonable and a w a r d in g only $3,993.75. T h is appeal timely followed. On appeal, Ratcliff asserts that the district c o u r t erred when it found his § 406(b) contingency fee would constitute a w in d fa ll under Gisbrecht. In particular, Ratcliff argues that the district court's r e lia n c e on the lodestar method in making its fee determination violates the S u p r e m e Court's decision in Gisbrecht. As we will explain in greater detail to fo llo w , we find that the district court did not rely exclusively on a lodestar c a lc u la t io n to find Ratcliff's requested fee unreasonable, and consequently, we c a n n o t conclude that the district court's fee award violates Gisbrecht. We write fu r t h e r , however, in order to provide our lower courts better guidance in n a v ig a t in g the circuitous contours of Gisbrecht's "windfall" jurisprudence. S TANDARD OF REVIEW A district court's assessment of whether a contingency fee is reasonable u n d e r 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 b e n e fits is discretionary, and we will not reverse a district court's denial of a t t o r n e y 's fees under § 406(b) absent an abuse of discretion." Pierce v. Barnhart, 4 4 0 F.3d 657, 663 (5th Cir. 2006). "A district court abuses its discretion when it bases its decision on an e r r o n e o u s legal conclusion or on a clearly erroneous finding of fact." James v. C a in , 56 F.3d 662, 665 (5th Cir. 1995); see also Squires-Allman v. Callahan, 117 F .3 d 918, 920 (5th Cir. 1997) ("Underlying findings of fact are reviewed for clear e r r o r . Underlying conclusions of law, however, are reviewed de novo.") (internal c it a t io n s omitted). Accordingly, "`it is not inconsistent with the discretion

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No. 09-30452 s t a n d a r d for an appellate court to decline to honor a purported exercise of d is c r e t io n which was infected by an error of law.'" Rice v. Astrue, 609 F.3d 831, 8 3 6 n.22 (5th Cir. 2010) (quoting Abrams v. Interco, Inc., 719 F.2d 23, 28 (2d Cir. 1 9 8 3 )) (internal citations omitted). A N A L Y S IS A s the magistrate judge aptly noted in her report and recommendation, o u r "courts have struggled significantly in applying Gisbrecht." This is because t h e Gisbrecht Court began by explicitly rejecting the application of the "lodestar m e t h o d to calculate fees under § 406(b),"6 Gisbrecht, 535 U.S. at 798, and then c o n c lu d e d by stating that "[i]f the benefits [resulting from the contingency fee] a r e large in comparison to the amount of time counsel spent on the case, a d o w n w a r d adjustment is similarly in order [to] . . . disallow windfalls for la w y e r s ." Id. at 808 (internal citations and quotation marks omitted) (emphasis a d d e d ). We are not surprised that many of our lower courts have interpreted t h is as a contradictory mandate: lower courts must not employ the lodestar m e t h o d to determine whether the hourly rate is excessively high and the fee t h u s unreasonable, but if the hourly rate is excessively high, then lower courts m a y declare the fee to be a windfall and, ultimately, unreasonable.7 W e find, however, that it is possible to construe Gisbrecht such that its p r o h ib it io n against lone reliance on the lodestar method still permits a court to

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."). 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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No. 09-30452 in c lu d e a lodestar calculation in its consideration of the fee­ specifically, in in s t a n c e s where the court simultaneously relies on additional factors to support it s determination that the contingency fee constitutes an unearned advantage t o the attorney­such 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 G is b r e c h t's holding­and ultimately, demonstrates why the district court did not a b u s e its discretion in this particular instance. I. T HE SUPREME COURT'S DECISION IN GISBRECHT

F ir s t , it is important to note that the Supreme Court's decision in G is b r e c h t came about in response to a circuit split. See Gisbrecht, 535 U.S. at 7 9 9 ("We granted certiorari in view of the division among the Circuits on the a p p r o p r ia te method of calculating fees under § 406(b).") (internal citation o m it t e d ). Prior to Gisbrecht, the Second, Sixth, and Seventh Circuits did not b e g in a § 406(b) reasonableness determination with a lodestar calculation, but in s t e a d 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, 8 6 5 F.2d 739 (6th Cir. 1989) (en banc); and McGuire v. Sullivan, 873 F.2d 974 (7 t h Cir. 1989)). The Third, Fourth, Fifth, Eighth, Ninth, Tenth, and Eleventh C ir c u it s , however, did not. As the Supreme Court noted, in order to determine w h e t h e r a § 406(b) contingency fee was reasonable, these Circuit Courts looked fir s t to the lodestar method to determine whether the resulting hourly fee would b e higher than the attorney's normal hourly rate. See id. (citing Coup v. Heckler, 8 3 4 F.2d 313 (3d. Cir. 1987); Craig v. Secretary, Dept. of Health and Human S e r v s ., 864 F.2d 324 (4th Cir. 1989); Brown v. Sullivan, 917 F.2d 189 (5th Cir.

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No. 09-30452 1 9 9 0 ); Cotter v. Bowen, 879 F.2d 359 (8th Cir. 1989); Gisbrecht v. Apfel, 238 F.3d 1 1 9 6 (9th Cir. 2000); Hubbard v. Shalala, 12 F.3d 946 (10th Cir. 1993); Kay v. A p fe l, 176 F.3d 1322 (11th Cir. 1999)). I n rejecting these courts' cardinal reliance on the lodestar method to d e t e r m in e a "reasonable" fee under § 406(b), we find it important to note in p a r tic u la r that the Gisbrecht Court abrogated this Court's decision in Brown v. S u ll i v a n , 917 F.2d 189 (5th Cir. 1990). In Brown, this Court had held that a lt h o u g h "due consideration [must] be given to the contingency fee agreement . . . [t]he starting point . . . is the number of attorney hours reasonably expended o n litigation multiplied by a reasonable hourly rate." Id. at 192 (internal

q u o t a t io n marks omitted). That is, this Court recognized a lodestar calculation a s the method lower courts should "us[e] as a first approximation of the r e a s o n a b le hourly rate" when determining a reasonable fee under § 406(b). Id. In Gisbrecht, the Supreme Court explicitly rejected Brown's primary r e lia n c e on the lodestar method as the "starting point" in determining a fee's r e a s o n a b le n e s s pursuant to § 406(b). Although the Supreme Court noted that " t h e `lodestar' figure has, as its name suggests, become the guiding light of our fe e - s h ift in g jurisprudence[,]" Gisbrecht, 535 U.S. at 801 (internal quotation m a r k s and brackets omitted), the Gisbrecht Court distinguished § 406(b) fee

a w a r d s on the basis that 42 U.S.C. § 406(b) is not a fee-shifting statute. As a r e s u lt , the Gisbrecht Court reasoned that the lodestar method does not serve the s a m e purpose as when applied to the fee-shifting statutes from which it actually o r ig in a t e d . Id. at 802. That is, "the lodestar method today holds sway in fe d e r a l-c o u r t adjudication of disputes over the amount of fees properly shifted t o the loser in the litigation." Id. Section 406(b), however, does not shift fees to

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No. 09-30452 t h e loser (in this case, the Administration), but rather, § 406(b) shifts fees to the w in n e r , the claimant (in this case Jeter). Id. ("Fees shifted to the losing party, h o w e v e r , are not at issue here.").8 F u r t h e r m o r e , in contrast to the fee-shifting statutes that created the lo d e s t a r method, § 406(b) constitutes "the exclusive regime for obtaining fees for s u c c e s s fu l representation of Social Security benefits claimants." Id. at 795-96. This distinction is significant because plaintiffs whose actions are covered by fees h ift in g statutes can offer to pay their attorneys money above and beyond what t h e y might recover under the applicable fee-shifting statute, if and when they a r e successful. See id. at 801-02. This gives the fee-shifting plaintiffs the ability t o expend their own resources­if they wish to­in order to obtain better counsel. A Social Security claimant, however, cannot pay his counsel more than twentyfiv e percent of the unpaid benefits he receives if his attorney is successful. In fa c t , if an attorney accepts or attempts to collect anything beyond twenty-five p e r c e n t of the claimant's unpaid past benefits, the attorney subjects himself to c r im in a l prosecution. Id. at 796 ("Collecting or even demanding from the client a n y t h in g more than the authorized allocation of past-due benefits is a criminal o ffe n s e ." ) (citing 42 U.S.C. §§ 406(a)(5), (b)(2); 20 CFR §§ 404.1740-1799). As a r e s u lt , "[t]he lodestar method under-compensates attorneys for the risk they a s s u m e in representing SSDI claimants and ordinarily produces remarkably s m a lle r fees than would be produced by starting with the contingent-fee a g r e e m e n t." Crawford v. Astrue, 586 F.3d 1142, 1149 (9th Cir. 2009) (en banc).

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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No. 09-30452 W it h this in mind, Congress wrote § 406(b)(1)(A) in 1965 to read as follows: W h e n e v e r a court renders a judgment favorable to a claimant under t h is subchapter who was represented before the court by an a t t o r n e y , the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent o f the total of the past-due benefits to which the claimant is entitled b y reason of such judgment. . . . C o n s e q u e n t ly , the Gisbrecht Court reasoned that by limiting contingency fe e s to no more than twenty-five percent, "Congress thus sought to protect c la im a n t s against `inordinately large fees' and also to ensure that attorneys r e p r e s e n t in g successful claimants would not risk `nonpayment of [appropriate] f e e s . '" Gisbrecht, 535 U.S. at 805 (quoting SSA Report 66). Given the

a fo r e m e n t io n e d distinctions between fee-shifting statutes and § 406(b), the G is b r e c h t Court reasoned that it was "unlikely that Congress, legislating in 1 9 6 5 , and providing for a contingent fee tied to a 25 percent of past-due benefits b o u n d a r y , intended to install a lodestar method courts did not develop until s o m e years later." Id. at 806. Thus, the aforementioned discussion reveals that the Gisbrecht Court p r o s c r ib e s exclusive, primary reliance on the lodestar method to determine the r e a s o n a b le n e s s of a § 406(b) fee award. It is clear that the Gisbrecht Court first in s tr u c te d our lower courts to give the contingency fee agreement

" p r im a c y " ­ r e c o g n iz in g that this would in some instances result in an excessively h ig h fee award to an individual attorney­and justifying this potential for e x c e s s iv e ly 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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No. 09-30452 a t all for Social Security work in federal court.9 Thus, the Gisbrecht Court r e c o g n iz e d that Congress wrote § 406(b) to "ensure that attorneys representing s u c c e s s fu l claimants would not risk `nonpayment of [appropriate] fees.'" Gisbrecht, 535 U.S. at 805 (quoting SSA Report 66). Therefore, the best reading o f Gisbrecht highlights the most significant distinction between the lodestar m e t h o d '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 m e a n s by which claimants can compensate­and thereby secure their access t o ­ c o m p e t e n t counsel. With this understanding of Gisbrecht in mind, the closing paragraph of G is b r e c h t may seem a mystery. Although the Gisbrecht Court went to great le n g t h s to explain its denouncement of the lodestar method for § 406(b) r e a s o n a b le n e s s determinations, the Court concluded by instructing lower courts t h a t , "[i]f the benefits are large in comparison to the amount of time counsel s p e n t on the case, a downward adjustment is . . . in order [to] . . . disallow w in d fa lls for lawyers." Id. at 808 (internal citations and quotation marks

o m it t e d ) (emphasis added). And so the question post-Gisbrecht is really the f o l l o w i n g : if lower courts are not to resort first to the lodestar method when d e t e r m in in g whether a fee is reasonable under § 406(b), may a lower court give t h e lodestar method any consideration in its determination of whether a c o n t in g e n c y fee constitutes a "windfall"?

"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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No. 09-30452 II. W HETHER RATCLIFF'S FEE CONSTITUTES A WINDFALL

O n appeal, Ratcliff asserts that because the district court determined the r e a s o n a b le n e s s of his § 406(b) fee by considering the resulting hourly rate he w o u ld receive for his services, the district court abused its discretion and v io la t e d Gisbrecht's edict against relying on the lodestar method. Thus, the crux o f Ratcliff's argument is that Gisbrecht forbids any consideration of the lodestar m e t h o d in § 406(b) fee determinations. Our reading of Gisbrecht, however, does n o t abide that position. Ratcliff's proffered interpretation of Gisbrecht would render the concluding p a r a g r a p h of Gisbrecht meaningless (where the Court held that "a downward a d ju s tm e n t [may be] . . . in order [to] . . . disallow for windfalls" id. at 808), just a s permitting courts to rely exclusively on the lodestar method to declare a fee u n r e a s o n a b le would render the entirety of Gisbrecht's decision meaningless. Instead, we conclude that Gisbrecht's concluding reference to downward a d ju s tm e n t s for windfalls must be read in accordance with Gisbrecht's in s t r u c t io n that courts are not to rely exclusively on the lodestar method. Adopting Ratcliff's interpretation would require our judges to blind themselves t o a factor the Supreme Court has clearly deemed worthy of consideration, while a llo w in g exclusive reliance on the lodestar method to find fees unreasonable w o u ld have the effect of converting every contingency fee that results in an a m o u n t higher than the lodestar into a windfall. Thus, neither of these two in t e r p r e t a t io n s can be squared with the entirety of the Supreme Court's decision. A lt h o u g h the Supreme Court did not set out a clear list of circumstances i n which a court may find that a contingency fee results in an unreasonable w in d fa ll, we conclude that courts may consider the lodestar in their analyses so

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No. 09-30452 lo n g as the court can articulate additional factors demonstrating that the e x c e s s iv e ly high fee would result in an unearned advantage. In other words, the G is b r e c h t Court's reference to windfall leaves room for consideration of an e ffe c t iv e hourly fee rate, but only so long as this mathematical calculation is a c c o m p a n ie d by consideration of whether an attorney's success is attributable t o his own work or instead to some unearned advantage for which it would not b e reasonable to compensate him. Any other reading would give attorneys a perverse incentive to delay p r o c e e d in g s or expend unnecessary hours in an effort to prolong successful lit ig a t io n ­ a ll to ensure that their § 406(b) fee would not be reduced based on its a p p e a r i n g excessively high in comparison to the number of hours they e x p e n d e d .1 0 Likewise, we do not read Gisbrecht's "windfall" as support for the p r o p o s it io n that experienced, competent counsel should be punished for a c c o m p lis h in g an arduous task in a shorter span of time than less-experienced, le s s -a g g r e s s iv e counsel. Accordingly, we interpret Gisbrecht's prohibition on the lo d e s t a r method as an affirmation that if a claimant's success on appeal can be a t t r ib u t e d to his attorney's endeavors before the district court, then that a t t o r n e y should reap the benefit of his work­even if he managed to accomplish a great deal in a small window of time. In this way, Gisbrecht's "windfall" does

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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No. 09-30452 n o t preclude attorneys from recovering what may mathematically seem like a h ig h fee award if the attorney's success on appeal is of his own making. T h u s , our district courts may consider the lodestar method in determining t h e reasonableness of a § 406(b) fee, but the lodestar calculation alone cannot c o n s t it u t e the basis for an "unreasonable" finding. Looking to the present case, w e find that the district court did not rely exclusively on the lodestar method to fin d Ratcliff's requested fee unreasonable. Instead, the district court considered t h e resulting hourly fee rate in combination with a list of additional factors the d is t r ic t court found combined to demonstrate that the fee constituted an u n e a r n e d windfall under Gisbrecht, and consequently we cannot say that the d is t r ic t court abused its discretion in declaring the fee unreasonable pursuant t o § 406(b).1 1 Again, in finding that the district court did not abuse its discretion, w e read Gisbrecht as commanding that in order for district courts to rely on the lo d e s t a r method to find a particular fee constitutes a windfall, the district court m u s t also articulate the factors that demonstrate to the court that the fee is u nearn ed. Specifically, the district court must discuss the factors that

d e m o n s t r a t e that the success on appeal is not of the attorney's making, but

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 r a t h e r , is attributable to some other source for which it would be unreasonable t o compensate the attorney. See Gisbrecht, 535 U.S. at 808 (the reasonableness § 406(b) inquiry requires courts to assess whether the contingency fee reflects " t h e character of the representation and the results the representative a c h ie v e d ." ). We hesitate, however, in this particular instance to prescribe an e x h a u s t iv e list of the precise factors our lower courts must consider in order to d e t e r m in e 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 fa c t o r s are relevant in considering whether the success of a claimant's claim b e fo r e their court can be attributed to the attorney's work­or whether the s u c c e s s is unearned on the part of the attorney­we will refrain at this time fo r c in g our lower courts into applying an arbitrary, formulaic set of factors of our o w n making.1 2 We do note, however, that in the absence of more specific

g u id a n c e from above, lower courts have considered a myriad of factors that may d e m o n s t r a t e 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 n o t explicitly proffered in Gisbrecht. These include risk of loss in the r e p r e s e n t a t io n , experience of the attorney, percentage of the p a s t -d u e benefits the fee constitutes, value of the case to a claimant, d e g r e e of difficulty, and whether the client consents to the requested fe e . See, e.g., Hearn v. Barnhart, 262 F.Supp.2d 1033, 1036-38

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 .C a l., Apr. 30, 2003) (considering risk of loss, experience of c o u n s e l, percentage of funds the fee consumes, value of the case to t h e plaintiff, and client's consent to fee requested); Coppett v. B a r n h a r t, 242 F.Supp.2d 1380, 1393-85) (S.D. Ga., Sep. 11 2002) (c o n s id e r in g risk of loss, difficulty of the case, and skill and e x p e r ie n c e of attorney.).1 3 C iv . 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 w in d fa ll to some exhaustive list, we are instructing our courts that Gisbrecht's w in d fa ll is not a simple reiteration of the lodestar method. Likewise, the

S u p r e m e Court's decision in Gisbrecht does not altogether preclude a district c o u r t's consideration of the lodestar method in a § 406(b) fee determination. Instead, Gisbrecht commands that where lower courts look to the lodestar m e t h o d to evaluate the ratio of fee earned to number of hours expended, they c a n n o t find that a particular fee award would result in a windfall unless the c o u r t can articulate additional, specific factors to demonstrate that the resulting h ig h fee was unearned by the attorney­and thus not attributable to the a t t o r n e y 's representation of the client before the court. The Gisbrecht Court certainly did not expect our district judges to turn a b lin d eye to hourly fee rates that are excessively high for the services provided

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 le g is la t iv e history behind § 406(b)­as well as the difficult nature of Social S e c u r it y appeals and their low rates of success in general­an excessively high h o u r ly rate alone does not render an otherwise reasonable fee unreasonable. G is b r e c h t commands no more and no less. CONCLUSION F o r the aforementioned reasons, we AFFIRM the judgment of the district c o u r t.

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