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Kane v. Commissioner of Social Security

United States District Court, Third Circuit

December 18, 2013

DANIELLE KANE, ON BEHALF OF DAVID KANE, Plaintiff,
v.
COMMISSIONER OF SOCIAL SECURITY, Defendant.

OPINION

KATHARINE S. HAYDEN, District Judge.

After plaintiff prevailed in this Social Security appeal, Langton & Alter, her attorneys, filed a motion for fees under the Equal Access to Justice Act ("EAJA, " 28 U.S.C. ยง 2412(d)). [D.E. 20.] The Commissioner of Social Security opposes this motion [D.E. 23], but does not contend that the amount requested by Langton & Alter is unreasonable, that the firm's fee calculations are incorrect, or that the government's position in this matter was "substantially justified." Rather, the Commissioner "asserts that [the] sole issue before this Court is whether Plaintiff is entitled to compensation for hours worked by her Counsel when her Counsel simultaneously was declared by the New Jersey State Supreme Court to be administratively ineligible to practice law in the State of New Jersey." (Response 1-2.)

I. Background

Although this case arose under federal law, the Commissioner's argument is based on the interplay of several New Jersey Court Rules-which, in turn, reflect New Jersey's procedures for licensing, registering, and assessing attorneys. As such, a brief overview of the relevant New Jersey rules and procedures is in order.

A) New Jersey Annual Registration and Assessment

Lawyers admitted to the bar in New Jersey must file an annual attorney registration statement. See, e.g., N.J. Ct. R. 1:20-1(c). They must also pay a single, annual assessment that is divided among four recipients: the Lawyers' Fund for Client Protection (the "Fund"), the Lawyers Assistance Program ("LAP"), the New Jersey state attorney disciplinary system, and the Board on Continuing Legal Education. See New Jersey Lawyers' Fund for Client Protection, 2013 Instructions, http://www.judiciary.state.nj.us/attyreg/cpfinstructions.pdf (last visited Dec. 8, 2013); see also Frequently Asked Questions, Annual Assessment - New Jersey Attorneys Rule 1:28-2, http://www.judiciary.state.nj.us/cpf/annual.htm (last visited Dec. 8, 2013). The amount to be paid by an attorney is determined by year of bar admission:

2013 Fee Schedule - New Jersey Attorneys Admitted: Fee if received on or before Fee if received after April 26, 2013 but April 26, 2013 before Ineligible List 1964 or prior to Exempt from payment Exempt from payment - No late fee 1964 1965 - 2009 $199 $239 2010 or 2011 $170 $210 2012 $35 $75 2013 Exempt from payment Exempt from payment - No late fee

Annual Assessment, https://www.judiciary.state.nj.us/cpf/fee.htm (last visited Dec. 8, 2013).

An attorney's obligation to update registration and pay the required assessment is enforced, in the breach, by Order of the Supreme Court deeming him/her administratively ineligible to practice law in New Jersey. Although placement on this status is "not a disciplinary action akin to suspension or disbarment, " the names of the affected attorneys go on an Ineligible List that is published both on the website of the New Jersey Courts and in the New Jersey Law Journal. See N.J. Ct. R. 1:20-1(b), (d); N.J. Ct. R. 1:28-2(a); N.J. Ct. R. 1:28B-1(e); Frequently Asked Questions - Annual Assessment, http://www.judiciary.state.nj.us/cpf/billing.htm (last visited Dec. 8, 2013). The most recent list, from September 2013, contains 44 pages of in-state New Jersey attorneys and 189 pages of out-of-state attorneys. See Supreme Court of New Jersey, Attorney Ineligibility Order Pursuant to Rule 1:28-2(a), http://www.judiciary.state.nj.us/ notices/2013/n131003a.pdf (last visited Dec. 8, 2013). In practice, the "separate" ineligibility provisions of the disciplinary system, the Fund, and LAP work in tandem because each is based on a single assessment, so the published list covers all three categories of ineligibility.

Getting one's name removed requires payment of the past-due amount plus late fees and penalties. Once that is done, the attorney is "reinstated automatically... without further order of the Court." See, e.g., N.J. Ct. R. 1:28-2(a). The attorney's name is then published on one of the occasional "reinstatement" lists promulgated by the Fund. See, e.g., http://www.judiciary.state. nj.us/notices/2013/n131031f.pdf (last visited Dec. 8, 2013). Extreme delay in compliance brings additional penalties, including revocation of the license to practice law in New Jersey upon seven consecutive years of nonpayment. See, e.g., N.J. Ct. R. 1:28-2(c).

B) Interest On Lawyers' Trust Accounts (IOLTA)

New Jersey lawyers in private practice are required to set up business and trusts accounts that conform to New Jersey Court Rule 1:21-6, the recordkeeping rule. Relevant here is the provision that client funds be held in trust accounts at approved New Jersey banks, and that at least one of the trust accounts be for the benefit of the IOLTA program (which will be explained below). Annually, attorneys must verify that their firm's trust and business accounts comply with the recordkeeping rule and with New Jersey Court Rule 1:28A-2, which requires that any IOLTA fund trust account be registered, i.e., that banking information about it (institution and account number) be sent to the IOLTA Trustees. According to the Commissioner, the instant case requires that the Court determine whether Langton & Alter's oversight in failing to provide this information in a timely manner disentitles them to an award of fees under the EAJA.

IOLTA is a law-related public service program, enacted in various forms throughout the United States and Canada, that creatively transforms an unremarkable aspect of legal practice into a ...


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