NCPA - National Center for Policy Analysis

Lawyers See Big Profits from Disability Claims

December 8, 2014

Social Security's financial woes due to an aging American population are hardly news.  However, the elderly are not the only group covered by Social Security.  Since 1956, disability has been included as a part of Social Security, providing income to those who are physically unable to work.  Along with the American with Disabilities Act of 1990 (ADA), these two programs have provided a booming industry for attorneys, according to a report from the Manhattan Institute's Center for Legal Policy.

Social Security Disability Insurance (SSDI) is no small program, costing taxpayers more than the combined cost of federal welfare payments, housing subsidies, food stamps and school lunches. Attorneys receive taxpayer-funded fees each time they successfully place a client in the program, which incentivizes them to encourage clients to file disability claims. The fees are capped at 25 percent of the successful client's SSDI award, or $6,000, whichever is less. Attorneys took in $1.2 billion in such fees in 2013, up from just $425 billion in 2011.  

In 2010, the report notes that nine of the top 10 highest-earning SSDI lawyers made more than $2 million just in fees that year.  Claimants' representatives need not be attorneys to receive the fees, a rule that changed in 2004 when Congress voted to allow non-lawyers to represent disability claimants. What resulted, however, was an explosion in profits to SSDI-focused law firms such as Binder and Binder, which hired large teams of people to work on disability claims and sent their profits soaring, reaching $88 million in 2010.

Source: "Trial Lawyers Inc.: Wheels of Fortune: Update No. 12," Center for Legal Policy at the Manhattan Institute, November 2014.

 

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