Social Security Disability Law Profitability Revisited

Submitted by cgi on Fri, 05/06/2016 - 20:00

In late 2014, we published a blog analyzing the profitability of Social Security disability attorneys and advocates at the hearing level. Now, we've set out to revisit the topic and outline what has changed in the past 18 months.

To recap: Back in late 2014, many Social Security disability attorneys saw a decrease in hearing level profitability due to a 3.57% decrease in the hearing approval rate.

The rate of hearings held to hearings decided decreased from 93% in 2013 to 90% in 2014, further decreasing profitability. Additionally, hearing decisions were delayed by 3.89%, slowing profits, but not permanently realized. This was explained by the fact that ALJ staffing decreased from 1,576 ALJs making decisions in 2013 to 1,494 judges in 2014. In 2014, Social Security disability practices might have experienced a 7% decrease in year over year profitability with about 4% of the profit delayed.

Hearing Approval Rates

The first bit of good news is the fully favorable hearing rates have stabilized since 2014 despite declining 9.17% between 2011 and 2014. Between 2014 and 2016, the fully favorable hearing rates remain virtually unchanged from 47.48% in 2014 to 46.82% in 2016. If you include partially favorable decisions, the award percent has slightly risen from 53.73% in 2014 to 54.30% in 2016.

YearDeniedFully FavorablePartially FavorableTotal
2011 37.541756.65755.800862.4583
201242.279351.87785.843057.7207
201345.018449.00885.972954.9816
201446.269247.48326.247653.7308
201546.587346.57236.840453.4127
201645.703546.82257.474054.2965

(compiled from www.ssa.gov/appeals/DataSets/archive/archive_data_reports.html)

Since 2014, the rate of hearings held to hearing decisions has increased from about 90.2% in 2014 to, 96% in 2015 to 92.1% in 2016. This increase shows that judges are beginning to process claims more efficiently after the hearings. The increase in hearing decisions should account for about a 4% percentage point increase in profitability between 2014 and 2015. In 2016, the rate is at 92.1%, which is lower than 2015 but still higher than 2014. Hopefully, this number will increase as the year progresses.

Number of Hearings Held to Decisions

YearDecisionsHearings HeldHearings Held to Decisions
20116287386440570.976214838
20126468096723520.962009483
20136380636858400.93033798
20145544706146810.902045126
20155414445638930.960189256
20162513922729540.921005005

(compiled from www.ssa.gov/appeals/DataSets/archive/archive_data_reports.html) *projected at current pace

Volume of Disability Applications

While the volume of disability applications has continued to decline since 2011, this does not appear to be a reason for concern. After the economic downturn in 2008, many individuals turned to disability benefits as job availability become more constrained. We will likely continue to see a correlation between the unemployment rate and volume of disability applications.

As a company, we receive thousands of requests for free disability evaluation requests each week and have seen a very consistent volume over the past five years, despite the overall decline in disability applications. This is likely due to the fact that the Social Security disability space is less competitive than it was in 2011 when law firms flocked to the hot area of law.

YearApplications
20112,878,920
20122,820,812
20132,640,100
20142,521,459
20152,412,267
20162,300,312*

(compiled from http://www.ssa.gov/OACT/STATS/dibStat.html#f3) *projected at current pace

Staffing Considerations

Since 2014, the number of Judges making decisions has increased by about 100 in 2015 and by 50 thus far in 2016 vs. 2014. Even though applications and hearings requested have decreased, there are substantially more Judges. The increase in Judges is likely a large contributor to the aforementioned increase in hearings held to hearings decided. If the SSA maintains the current roster of judges, we should start to see a decrease in hearing wait times and hearing decision duration.

YearJudges Making Decisions
20111515
20121605
20131576
20141496
20151601
20161546

(compiled from www.ssa.gov/appeals/DataSets/archive/archive_data_reports.html) *projected at current pace

Average Representative Fee

While the previous data show that the Social Security disability legal industry has stabilized, perhaps the best news is that the average 2016 attorney fee has increased to its highest since 2011. After declining by $256.94 between 2011 and 2014, the average representative fee has increased by $139.3 to $3,006.67 thus far in 2016. This increase can likely be explained by the decrease in percent of hearings held to decisions we saw in 2014. Since the SSA was holding many more hearings than it was making decisions, back pay likely increased for claimants who were awaiting decisions in 2014 and 2015.

YearAvg Fee
2011$3,124.31
2012$2,961.25
2013$2,848.76
2014$2,867.37
2015$2,959.35
2016$3,006.67

(compiled https://www.ssa.gov/representation/statistics.htm)

Looking Forward

The Social Security disability industry is showing great improvement since 2014. The approval rate has stabilized, the ratio of hearings requested to hearings decided is increasing, there are more judges deciding cases, and average attorney fees are the highest since 2011. Hopefully these trends will continue and SSD attorneys and advocates will have a fruitful future.