If you cannot work because of an illness or injury, the cost of a disability lawyer in New York depends on who is paying the benefit. A Social Security claim is subject to a federal fee cap and no fee is owed unless you win. A long-term disability (LTD) claim against an employer-sponsored insurer governed by ERISA can be handled hourly or on contingency, and a federal court in Manhattan or Brooklyn can order the insurer to pay your fees. A claim on an individual policy or a government employee plan is usually handled on contingency at 30% to 40% of the recovery. A New York short-term disability (DBL) claim rarely justifies a lawyer at all. This guide walks through each type, with the statutes and Second Circuit decisions that control fees in New York.
New York Disability Fees at a Glance
| Type of claim | How the lawyer is paid | Limit or fee-shifting rule |
|---|---|---|
| Social Security Disability Insurance (SSDI) | Contingency only; no upfront fee except actual costs | Lesser of 25% of past-due benefits or $9,200 (cap in effect since November 30, 2024), unless the SSA approves a fee petition for more. 42 U.S.C. § 406(a). |
| Supplemental Security Income (SSI) | Same contingency rules as SSDI | Same cap, applied through 42 U.S.C. § 1383(d)(2). Large SSI back-pay awards may be paid in installments, which delays the fee. |
| Federal court appeal of an SSA denial (SDNY, EDNY, NDNY, WDNY) | Contingency for court work, typically 25% of past-due benefits | Court may award up to 25% under 42 U.S.C. § 406(b); government may be ordered to pay an hourly fee under the Equal Access to Justice Act, 28 U.S.C. § 2412(d). The lawyer refunds the smaller of the two to you. |
| ERISA-governed LTD insurer | Hourly or contingency (30% to 40% plus costs) | Court may order the insurer to pay your attorney's fees under 29 U.S.C. § 1132(g)(1) once you achieve some success on the merits. |
| Individual policy or government employee plan (not ERISA) | Usually contingency (30% to 40%); hourly is possible | American rule: each side pays its own lawyer. Government plan denials are reviewed in an Article 78 proceeding. |
| New York State DBL or Paid Family Leave | Rarely needed; any fee requires Workers' Compensation Board approval | Workers' Compensation Law Article 9 and § 24. |
Social Security Disability Claims (SSDI and SSI)
A representative in a Social Security claim cannot charge you an upfront fee. The only money you may be asked for in advance is reimbursement of actual costs, such as copies of medical records, a treating doctor's narrative report, or postage.
The fee itself comes out of your past-due benefits under a fee agreement approved by the SSA. 42 U.S.C. § 406(a)(2). The fee is the lesser of 25% of past-due benefits or the SSA's dollar cap, which rose to $9,200 for favorable decisions issued on or after November 30, 2024. If the SSA awards $40,000 in back pay, 25% is $10,000, but the lawyer receives $9,200. If the SSA awards $20,000, the lawyer receives $5,000. The SSA withholds the fee from your back pay and pays the representative directly. 20 C.F.R. § 404.1730.
Two details matter in New York, where back-pay awards tend to be large because hearing waits are long:
- The assessment: The SSA deducts a user fee from every directly paid attorney fee, currently 6.3% of the fee up to a yearly dollar cap. 42 U.S.C. § 406(d). The representative may not pass that charge on to you.
- Fees above the cap: If the representative wants more than $9,200, for example after a remand from the Appeals Council that required a second hearing, or where two representatives worked on the file, the representative must file a fee petition itemizing the hours spent. 20 C.F.R. § 404.1725. The SSA decides what is reasonable, and you receive a copy and may object.
SSI claims follow the same rules, but with one timing wrinkle. If SSI back pay exceeds three times the federal benefit rate, the SSA pays it in up to three installments six months apart. 20 C.F.R. § 416.545. The fee is still calculated on the full past-due amount.
New York hearing offices and why the wait affects your fee
Hearings for New York City and suburban claimants are held by the SSA's Office of Hearings Operations in Manhattan, Brooklyn, the Bronx, Queens, Long Island, and White Plains, with upstate offices in Albany, Buffalo, Rochester, and Syracuse. The time from hearing request to decision varies by office and year; the SSA publishes current averages. The longer the wait, the more past-due benefits accrue, and the more likely the 25% figure exceeds $9,200. In practice, most New York claimants who win at the hearing level pay the capped amount, not a true 25%.
Appealing an SSA Denial to Federal Court in New York
If the Appeals Council denies review, you have 60 days to file a civil action under 42 U.S.C. § 405(g). Claimants in Manhattan, the Bronx, and the northern suburbs file in the Southern District of New York. Claimants in Brooklyn, Queens, Staten Island, Nassau, and Suffolk file in the Eastern District. Fees for court work are governed by two separate statutes.
- EAJA fees: If the court remands or reverses and the government's position was not substantially justified, the court can order the United States to pay a fee based on hours worked at a statutory rate of $125 per hour adjusted for cost of living. 28 U.S.C. § 2412(d). Recent SDNY and EDNY decisions have approved adjusted rates above $200 per hour. The application is due within 30 days of final judgment. The award is paid to you, not the lawyer, and the government may offset any federal debt you owe. Astrue v. Ratliff, 560 U.S. 586 (2010).
- Section 406(b) fees: Separately, the court may approve a fee for court representation of up to 25% of past-due benefits, paid out of those benefits. 42 U.S.C. § 406(b). Courts test the contingency agreement for reasonableness rather than applying a lodestar. Gisbrecht v. Barnhart, 535 U.S. 789 (2002). The Second Circuit gives the agreement primacy and asks only whether the fee exceeds 25%, whether the agreement was the product of fraud or overreaching, and whether the fee would be a windfall. Wells v. Sullivan, 907 F.2d 367 (2d Cir. 1990). A high effective hourly rate alone is not a windfall. Fields v. Kijakazi, 24 F.4th 845 (2d Cir. 2022). The § 406(b) motion is due 14 days after the lawyer receives the notice of award. Sinkler v. Berryhill, 932 F.3d 83 (2d Cir. 2019).
When a lawyer collects both, the lawyer must refund the smaller fee to you. The 25% cap in § 406(b) applies only to the court fee and is not aggregated with the administrative fee under § 406(a). Culbertson v. Berryhill, 586 U.S. 53 (2019). As a practical matter the SSA withholds only 25% of past-due benefits for direct payment, so anything above that must be collected from the claimant.
A worked example of a § 406(b) fee petition
The figures below are hypothetical and are used only to show the mechanics.
- An ALJ in Brooklyn denies the claim. The Appeals Council denies review. The claimant files in the Eastern District.
- The court remands for a new hearing. Counsel applies for EAJA fees for 40 hours at an adjusted rate of $240 per hour, and the government pays $9,600.
- On remand the ALJ finds the claimant disabled. The notice of award shows $60,000 in past-due benefits and the SSA withholds $15,000.
- Within 14 days, counsel moves under § 406(b) for $15,000, which is 25% of past-due benefits and matches the signed court-representation agreement. The court reviews for windfall under Wells and Fields and approves the fee.
- Counsel receives $15,000 from the withheld funds and refunds the $9,600 EAJA fee to the claimant. The claimant's net cost for the court appeal is $5,400.
- Any fee for the administrative work on remand is a separate request under § 406(a), subject to the $9,200 cap or a fee petition.
ERISA Long-Term Disability Claims
Most LTD coverage obtained through a private employer is governed by ERISA. The claim must first go through the insurer's internal appeal, and only then can you sue in federal court under 29 U.S.C. § 1132(a)(1)(B). For this work, a lawyer in New York may charge hourly or on contingency. Contingency rates run 30% to 40% of the benefits recovered, plus actual costs.
ERISA departs from the American rule. Under 29 U.S.C. § 1132(g)(1), the court may award fees and costs to either party, and a claimant needs only some degree of success on the merits, not a full victory. Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010). In the Second Circuit, courts then weigh the five Chambless factors: the losing party's culpability or bad faith, its ability to pay, whether an award would deter similar conduct, whether the suit benefited all plan participants or resolved a significant legal question, and the relative merits of each side's position. Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869 (2d Cir. 1987). The Second Circuit has reversed district courts that denied fees to a successful claimant without adequate reason. Donachie v. Liberty Life Assurance Co. of Boston, 745 F.3d 41 (2d Cir. 2014).
Two limits apply. A fee award covers time in the district court and on appeal, not the internal appeal inside the insurer. Peterson v. Continental Casualty Co., 282 F.3d 112 (2d Cir. 2002). And a remand to the insurer for a new review counts as success for fee purposes, but the fee is measured by the court work, not the benefits ultimately paid.
Your contingency agreement should say what happens if the court orders the insurer to pay fees. Common approaches are that the lawyer keeps the greater of the court award or the contingency percentage, or that the court award is credited against the percentage. Ask which one applies before you sign.
Individual Policies and Government Employee Plans
ERISA does not cover a policy you bought yourself, or a plan maintained by a government employer or a church. 29 U.S.C. § 1003(b). That includes disability benefits for New York City and New York State employees, teachers, and uniformed personnel. Denials under those plans are challenged in state court by an Article 78 proceeding (CPLR Article 78), not an ERISA suit. An individual policy is enforced by an ordinary breach-of-contract action in Supreme Court.
New York follows the American rule, so each side pays its own lawyer absent a statute or contract clause saying otherwise. Hooper Assocs. v. AGS Computers, 74 N.Y.2d 487 (1989). For that reason these claims are almost always handled on contingency at 30% to 40%, with the lawyer advancing costs. Because a disabled client is rarely in a position to pay hourly rates, a lawyer who insists on hourly billing for a non-ERISA claim should be asked why.
New York DBL and Paid Family Leave
New York employers must provide short-term disability (DBL) coverage under Workers' Compensation Law Article 9 for off-the-job injuries and illnesses. The benefit is 50% of your average weekly wage up to $170 per week, after a seven-day waiting period, for at most 26 weeks. Paid Family Leave, also under Article 9, pays a percentage of wages for up to 12 weeks for family care, and combined DBL and PFL cannot exceed 26 weeks in any 52-week period.
If the carrier denies a DBL or PFL claim, you may request review by the Workers' Compensation Board. Any lawyer's fee in a Board proceeding must be approved by the Board and is deducted from the award rather than billed to you. Workers' Compensation Law § 24. Given the size of the benefit, most claimants handle DBL disputes without counsel. DBL does matter to your larger claim, though: most LTD policies and some pension plans offset DBL and SSDI against the LTD benefit, which changes the recovery on which a contingency fee is computed.
What New York Law Requires in Your Disability Retainer
New York regulates how lawyers document fees. A disability retainer that does not meet these rules may be unenforceable against you.
- Written contingency agreement: Rule 1.5(c) of the New York Rules of Professional Conduct (22 NYCRR Part 1200) requires a contingency agreement to be in writing and signed by the client. It must state the percentage at each stage (settlement, trial, appeal), which expenses are deducted from the recovery, and whether expenses come off before or after the percentage is calculated.
- Letter of engagement: 22 NYCRR Part 1215 requires a written engagement letter or retainer when the fee is expected to reach $3,000, covering the scope of the work, the fee basis, billing practice, and the client's right to fee arbitration where it applies.
- Closing statement: At the end of a contingency matter, Rule 1.5(c) requires the lawyer to give you a writing showing the outcome, the remittance to you, and how it was calculated.
- Advanced costs: Rule 1.8(e) permits a lawyer to advance litigation costs with repayment contingent on the outcome. The agreement should say whether you owe costs if you lose.
- Fee disputes: Fee disputes between $1,000 and $50,000 fall under the Part 137 Fee Dispute Resolution Program (22 NYCRR Part 137). A lawyer must notify you of your right to arbitrate before suing you for a fee.
- Separate SSA agreement: The fee agreement filed with the SSA must be signed by you and the representative before the favorable decision and must not exceed the statutory cap. Representation in federal court requires a separate agreement.
Sample fee agreement language for an SSA claim
The clause below is illustrative. Your own agreement will differ, but a compliant SSA agreement contains the same elements.
If the Social Security Administration issues a favorable decision on Claimant's application, Claimant agrees to pay Representative a fee equal to the lesser of (a) 25% of the past-due benefits awarded to Claimant and any auxiliary beneficiaries, or (b) the maximum amount permitted under 42 U.S.C. § 406(a)(2)(A) on the date of the decision, currently $9,200. If the claim is not successful, no fee is owed. Claimant remains responsible for actual costs, including charges for medical records, which Representative will itemize. This agreement covers representation before the Social Security Administration only. Representation in federal court will be governed by a separate written agreement.
Three Things to Check Before You Sign
- Actual costs: Costs are separate from the fee. Medical record charges in New York are limited by Public Health Law § 18 to 75 cents per page, but narrative reports from treating physicians are not capped and can run several hundred dollars. A lawyer who takes a cost deposit must hold it in an attorney trust account and account for each withdrawal.
- Future benefits: An SSA fee agreement reaches only past-due benefits. An LTD contingency agreement, by contrast, may claim a percentage of every future monthly check for the life of the policy. Ask whether the percentage applies to future benefits and for how long. If it does, ask for a cap or a lower rate on future payments.
- Negotiation: Contingency percentages on LTD and individual-policy claims are negotiable. A lawyer who has reviewed your medical file knows whether the claim is strong. If the proposal is 40%, there is no harm in asking for 30%.
Back Pay, SSI, and Special Needs Trusts
A disability award can create a second problem. SSI and Medicaid have a resource limit of $2,000 for an individual. SSI back pay is excluded from resources for nine months after receipt. 20 C.F.R. § 416.1233. After that, whatever remains counts, and a large lump sum from an SSDI or LTD settlement can end SSI and Medicaid eligibility the month it arrives. A first-party supplemental needs trust under EPTL 7-1.12 and 42 U.S.C. § 1396p(d)(4)(A) can hold the funds without disqualifying you. Our practice handles those trusts; see the benefits of a special needs trust. Planning for the lump sum before it is paid is far cheaper than repairing eligibility afterward.
Common Questions
Do I pay anything if I lose?
In a Social Security claim, no fee. You may owe actual costs if the agreement says so. In an LTD contingency matter, the same rule applies: no fee without a recovery, but check whether advanced costs are your responsibility on a loss.
Does the 25% apply to my future monthly checks?
Not in a Social Security claim; the fee is limited to past-due benefits. In an LTD claim it depends on the contract you sign, so read the definition of "recovery" carefully.
Can the insurer be ordered to pay my lawyer?
Only in an ERISA case, and only for court work, under 29 U.S.C. § 1132(g)(1). Individual-policy and government-plan claims follow the American rule.
Can my lawyer be paid twice for a federal court appeal of an SSA denial?
The lawyer may apply for both an EAJA fee from the government and a § 406(b) fee from your past-due benefits, but must refund the smaller amount to you.
Talk to Us About Fees Before You Sign Anything
We put every disability fee arrangement in writing in the form Rule 1.5(c) and Part 1215 require, and we explain which statute governs the fee before the work starts. If you have been denied SSDI, SSI, or LTD benefits in New York, or you are weighing a federal court appeal in the Southern or Eastern District, call 212-233-1233 or email [email protected].
About the author: Albert Goodwin is a New York attorney. This article cites the SSA fee cap notice effective November 30, 2024, 42 U.S.C. § 406, 28 U.S.C. § 2412(d), 29 U.S.C. § 1132(g)(1), the New York Rules of Professional Conduct, and the Second Circuit decisions named above. It is general information, not legal advice for your situation.
