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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.

A strict reading of the law

In his opinion on Ratliff’s case, Justice Thomas pointed to the language of the 1980 law. The court has long held, he wrote, “that the term ‘prevailing party’ in attorney’s fees statutes is a ‘term of art’ that refers to the prevailing litigant.”

While the court’s opinion was unanimous, Justice Sonia Sotomayor also wrote a concurring opinion, which was joined by Justices John Paul Stevens and Ruth Bader Ginsburg. In it, she agreed that a “textual analysis” of the law requires payment to a client, and not her attorney. But she noted that EAJA was written well before the Treasury Department began diverting attorneys’ fees to offset clients’ debts in 2005, and questioned whether Congress intended to permit that kind of behavior by the government.

“In my view, it is likely both that Congress did not consider that question and that, had it done so, it would not have wanted EAJA fee awards to be subject to offset,” she wrote.

Most of the fees paid by the Social Security Administration to lawyers under the law are small (the average was less than $3,600 in 2006). The brief filed in the case by AARP and several other public-interest advocacy groups argued that in Social Security cases, EAJA fees “are the first—and sometimes the only—fees the attorney may receive.”

Sotomayor also indicated her concern that curtailing those payments could have real consequences. Using attorneys’ fees to offset a client’s debt “will unquestionably make it more difficult for persons of limited means to find attorneys to represent them,” she wrote.

Assessing the impact

In most circumstances in which clients are not in debt to the government, a simple agreement or contract between attorney and client will be enough to ensure that attorneys’ fees awarded by the court end up in a client’s bank account, according to several experts.

Gerald McIntyre, an attorney with the National Senior Citizens Law Center, which joined with AARP in the friend of the court brief in the case, says the impact of the ruling will be felt most by people who have outstanding debts to the government. “It means that they are going to have great difficulty in getting an attorney,” he says. And while the success rate in such cases is high if an attorney works on the case, “if they don’t have an attorney, it’s unlikely they will win.”

As a result of the decision in Ratliff’s case, McIntyre says he is also concerned that people who owe child support could have their attorneys’ fees diverted to pay those debts. A system that discourages attorneys from representing clients who are fighting for government benefits would only make it more difficult to pay the child support debt, he argues.

Jones, the AARP lawyer, says that the Ratliff ruling will likely prompt attorneys who take such cases to find out whether potential clients owe the federal government any money. But clients may not be truthful about their debts, or may be unaware of them, and the work required to verify whether they are in debt could discourage some attorneys from taking these kinds of benefits cases.

The experience with Kills Rhee marked the third time that fees intended for Ratliff were diverted to cover a client’s government debt. (Another was for an unpaid student loan.) “I don’t have time to look” into whether potential clients owe the government money, she says, though she is aware that, in light of the court’s ruling, the same thing could happen yet again in a future case.

Ratliff worries that the decision could push some of her legal colleagues away from this kind of important work. “I think there will be some attorneys who don’t do a lot of Social Security cases who just say, ‘I’m not going to do them any more. This is the last straw.’ ”

Not giving up

But Ratliff, now semi-retired, isn’t discouraged. Her father, grandfather and great-grandfather were Methodist ministers, and she says she learned that “you’re supposed to serve people in need.”

The Supreme Court’s ruling is a disappointment, she says. But, she adds, “I’m not going to let it change my mind.”

Holly Yeager is a New York-based freelance journalist.

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