Legal Representation in Disability Claims
Legal representatives play a prominent role in the Social Security Disability Insurance adjudication process, earning fees totaling $1.2 billion in 2019. Long ubiquitous in appellate hearings, disability representatives—including attorneys and non-attorneys—have begun appearing more frequently at the beginning of cases, during the initial review. This development has raised questions about the motives of disability law firms, who are sometimes perceived to prioritize their own interests in response to incentives in the fee structure set by the Social Security Administration. We provide the first estimates of the causal impact of legal representation on case outcomes when representatives are engaged from the initial stage. To address selection into representation, we instrument for initial representation using geographic and temporal variation in disability law firm market shares in the closely related but distinct appellate market. We find that representation increases the probability of initial awards, reduces the probability of appeals, and induces no detectable change in the ultimate probability of award. This pattern indicates that legal representation in the initial stage leads to earlier disability awards to individuals who would otherwise be awarded benefits only on appeal. Furthermore, by securing earlier awards and discouraging unsupported appeals, representation reduces total case processing time by nearly one year.
We thank Manasi Deshpande, Dan Dowhan, Steve Duffy, Chris Earles, Sarah Eichmeyer, Jeremy Elder, Joel Feinleib, Kai Filion, Ben Gurga, Jetson Leder-Luis, Terri Lesko, Helge Liebert, Matt Messel, Steve Rollins, Reafel Rigg, Reilly Tuttle, Jim Twist, Chris Walters, Bob Weathers, Julia Yates and Tom Yates for helpful comments and insights on use of the data. We also thank participants in seminars at NBER Summer Institute, CESIfo, UC Berkeley, UC San Diego, University of Kentucky, Brandeis, and Rutgers. We thank Charlotte Biffar, Kevin Friedman, Jerry Lin, Thabo Samakhoana, and Leah Shiferaw for excellent research assistance. The research reported herein was performed pursuant to grants DRC12000002-05 and RDR18000003 from the US Social Security Administration (SSA), funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA, any agency of the Federal Government, or NBER. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.