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Fee Shifting

Supreme Court Blocks Fees for Attorneys Representing the Poor

Prior debts to federal government must be paid first; ruling may complicate efforts to get legal help

For the three decades that Catherine Ratliff has practiced law in Hot Springs, S.D., she has spent most of her time helping low-income clients from the town’s Veterans Affairs hospital and the nearby Pine Ridge Indian Reservation with their Social Security disability claims.

“When I walk around town, I see so many people … who are my former clients,” she says. It’s been hard work. There’s a lot of red tape, and the people she represents suffer from a wide range of health problems. Often, she says, this includes undiagnosed mental conditions.

The amounts in dispute in these cases are small. To improve access to the courts and encourage lawyers like Ratliff to take on such work, Congress passed the Equal Access to Justice Act in 1980. The law requires the government to pay attorneys’ fees and other court costs for individuals who bring Social Security and veterans’ disputes to court and win their cases.

That’s what Ratliff was expecting when she represented Ruby Willow Kills Rhee, a member of the Oglala-Lakota (Sioux) tribe with diabetes, arthritis and other physical and mental health issues. Kills Rhee was receiving disability benefits, but Ratliff argued she should be getting more. A district court ruled that Kills Rhee was entitled to two months of additional payments. In addition, Ratliff asked for, and was awarded, attorneys’ fees of $2,112.60 for her work on the case.

But before that money reached Ratliff, the Treasury Department intervened. Instead, the funds were applied to an unrelated debt that Kills Rhee owed the government because she had received an overpayment in food stamps. Ratliff sued the Social Security commissioner to recover the money.

On June 14, the U.S. Supreme Court ruled against Ratliff. In a unanimous opinion written by Justice Clarence Thomas, the high court said the law requires that attorneys’ fees be paid to the client, not her lawyer, and the money can be diverted to pay a client’s debt to the federal government.

Concern for clients

Advocates for the poor and people with disabilities worry that the ruling in Astrue v. Ratliff could make it more difficult for people with outstanding government debt—and, potentially, even those without—to find lawyers to represent them in such cases.

Brian Wolfman, codirector of the Institute for Public Representation at the Georgetown University Law Center, says it remains to be seen exactly how much harder it will be. But, he argues, “Any impediment to a lawyer getting paid will make it somewhat more difficult for a client to get a lawyer to take a case.”

Barbara Jones, a lawyer with AARP, which filed a friend of the court brief in the case on Ratliff’s behalf, agrees. “It’s critical that people have access to attorneys when their benefits are denied,” she says. “Without the payment of these fees, many poor and disabled people will find it difficult to find representation.”

Attorneys’ fees on the docket

Ratliff’s case is one of three involving attorneys’ fees that the Supreme Court took up this term. In most legal disputes in the United States, each side pays its own lawyers for their work. But the cases before the Supreme Court all involve “fee shifting,” an approach designed to ensure lawyers are paid for work on certain kinds of cases, even if the dollar value of the disputes is relatively small. Under more than 100 federal laws, the attorney fees of a prevailing plaintiff in a lawsuit are paid by the opponent.

In Perdue v. Kenny A., a case brought by advocates for children in Atlanta’s troubled foster care system, the court made it more difficult for lawyers working on such public interest cases to receive bonus payments for exceptional performance—bonuses that even now are only paid occasionally.

But in Hardt v. Reliance Standard Life Insurance Co., the court sided with an individual seeking to recover attorneys’ fees. The case involved a disputed disability claim under Employee Retirement Income Security Act (ERISA), the federal law that governs the administration of most private health, pension and other employee benefit plans. The court ruled that Bridget Hardt, the plaintiff, was entitled to have her attorneys’ fees paid by the insurance company that ran her employer’s plan, even though the ultimate decision to award her benefits came not from a courtroom, but from the administrator of the disability plan.

Public-interest advocates worried that, taken together, decisions in the three cases could make it harder for people with a wide range of legal disputes—over everything from disability coverage, veterans’ benefits and consumer issues to civil rights and employee benefit plans—to find attorneys willing to represent them.

But Wolfman, who worked with Hardt’s lawyers on her case and with Ratliff’s legal team, said the mixed results—and the quirky nature of Ratliff’s case—don’t signal an overall shift in the court’s posture toward fee shifting.

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