804
Opinion of the Court
tort litigation, are also used in, e. g., patent litigation, real estate tax appeals, mergers and acquisitions, and public offerings. See ABA Formal Opinion 94-389, ABA/BNA Lawyers' Manual On Professional Conduct 1001:248, 1001:250 (1994). But see id., at 1001:248, n. 3 (quoting observation that controls on contingent fees are needed to "reduce financial incentives that encourage lawyers to file unnecessary, unwarranted[,] and unmeritorious suits" (internal quotation marks omitted)). Traditionally and today, "the marketplace for Social Security representation operates largely on a contingency fee basis." SSA Report 3; see also id., at 15, 66, 70; App. to Pet. for Cert. 56, 60, 88, 89, 91 (affidavits of practitioners).
Before 1965, the Social Security Act imposed no limits on contingent-fee agreements drawn by counsel and signed by benefits claimants. In formulating the 1965 Social Security Act amendments that included § 406(b), Congress recognized that "attorneys have upon occasion charged . . . inordinately large fees for representing claimants [in court]." S. Rep. No. 404, 89th Cong., 1st Sess., pt. 1, p. 122 (1965). Arrangements yielding exorbitant fees, the Senate Report observed, reserved for the lawyer one-third to one-half of the accrued benefits. Ibid. Congress was mindful, too, that the longer the litigation persisted, the greater the buildup of past-due benefits and, correspondingly, of legal fees awardable from those benefits if the claimant prevailed. Ibid.13
Attending to these realities, Congress provided for "a reasonable fee, not in excess of 25 percent of accrued bene-13 Congress also adopted a proposal recommended by the Social Security Administration that attorneys be paid directly with funds withheld from their clients' benefits awards; the Commissioner testified to the Senate Committee on Finance that "[a]ttorneys have complained that . . . awards are sometimes made to the claimant without the attorney's knowledge and that some claimants on occasion have not notified the attorney of the receipt of the money, nor have they paid his fee." Hearings on H. R. 6675 before the Senate Committee on Finance, 89th Cong., 1st Sess., pt. 1, pp. 512-513 (1965).
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