Reinforcing the Contingency-Agreement “Polestar”:
Christian Arnold v. Frank Bisignano (7th Cir. 2025)

Introduction

Christian Arnold v. Frank Bisignano, decided by the United States Court of Appeals for the Seventh Circuit on 31 July 2025, addresses when and how a district court may reduce attorney’s fees sought under 42 U.S.C. § 406(b) after a successful Social-Security disability claim. The ruling follows a remand ordered in Arnold v. O’Malley (“Arnold I,” 2024) and focuses on the law firm Binder & Binder’s contractual right to 25% of the claimant’s past-due benefits.

Although the district court twice cut Binder’s request, the Seventh Circuit reverses, holding that:

1. The contingency-fee agreement must remain the anchor, or “polestar,” of any § 406(b) reasonableness inquiry.
2. When a court deviates from the agreement, it must adequately explain why, addressing relevant comparative data and articulating how each factor is weighed.

These two points form the new precedent that will guide fee adjudications across the Circuit and, likely, beyond.

Summary of the Judgment

After Binder successfully secured $160,797.10 in past-due benefits for Arnold, it asked the district court for $40,199.27—the contractual 25% minus EAJA set-off—to which neither Arnold nor the Commissioner objected. The district court instead awarded $16,920, using a $600 “reasonable” hourly rate. On Binder’s first appeal the Seventh Circuit vacated, instructing that courts start with the contingency fee and then examine factors such as claimant satisfaction, counsel’s expertise, and risk undertaken.

On remand the district court again awarded $16,920, relying solely on its view that the effective hourly rate ($1,212.74) was “too high.” Binder appealed again. The Seventh Circuit (Per Curiam) finds:

• The district court abused its discretion by failing to justify why an hourly-rate comparison outweighed all other factors.
• The decision ignored comparable cases approving higher rates, and the court did not distinguish them.
• Because all other factors favored the fee and no coherent explanation supported the reduction, the requested $34,199.27 (25% minus § 406(a) fees already paid) must be awarded.

The Court reversed and remanded with instructions to release the full contractual amount and for Binder to refund the EAJA award to Arnold.

Analysis

1. Precedents Cited

• Gisbrecht v. Barnhart, 535 U.S. 789 (2002) – The Supreme Court’s foundational case instructing courts to begin with the fee agreement and then test it for reasonableness.
• Arnold v. O’Malley (“Arnold I”), 106 F.4th 595 (7th Cir. 2024) – The Seventh Circuit’s first articulation of the “contingency agreement as polestar” test, listing specific factors to consider.
• Fields v. Kijakazi, 24 F.4th 845 (2d Cir. 2022) – Upheld an effective hourly rate of $1,556.98, cited for comparative analysis.
• Wattles v. Comm’r of Soc. Sec., 2012 WL 169967 (C.D. Ill.) – Approved hourly rates $2,500–$3,125, demonstrating district-level acceptance of high effective rates.
• McGuire v. Sullivan, 873 F.2d 974 (7th Cir. 1989) – Emphasizes need for clear explanation when awarding fees.
• Other fee cases (e.g., Strong, Narug) cited by Binder to show comparable hourly rates.

2. The Court’s Legal Reasoning

The Seventh Circuit applied a two-step analysis rooted in Gisbrecht and refined in Arnold I:

1. Anchor on the Contract. Start with the 25% contingency fee agreed between attorney and claimant.
2. Reasonableness Factors. Evaluate:
   • Claimant’s satisfaction
   • Counsel’s skill, experience, and time expended
   • Absence of delay or overreaching
   • Risk of non-recovery
   • Comparative effective hourly rates in the jurisdiction
   Any reduction must be justified in light of these factors.

The district court’s error was two-fold:

• It obsessed over the hourly-rate comparison, ignoring record evidence that similar or higher rates were routinely approved.
• It provided no analytical bridge explaining why that single factor overrode the others, contravening McGuire’s requirement of a “concise but clear explanation.”

3. Impact of the Judgment

• Sharper Limits on Judicial Discretion. District courts remain gatekeepers but must articulate concrete reasons, supported by comparative data, when trimming contractual fees.
• Uniformity in Fee Awards. By requiring reference to comparable cases, the decision aims to harmonize awards throughout the Circuit and curtail forum shopping.
• Reduced Satellite Litigation. Clear standards and the likelihood of reversal for inadequate explanations may discourage repetitive appeals, conserving judicial resources.
• Empowerment of Contingent Representation. Attorneys relying on contingency fees in Social-Security work can be more confident that bargained-for percentages will be honored if no misconduct or delay exists.
• Guidance Beyond the Seventh Circuit. Other circuits often look to the Seventh for fee jurisprudence; the structured, factor-based method may influence nationwide practice.

Complex Concepts Simplified

• § 406(b) – A federal statute that lets courts approve attorney’s fees up to 25% of the claimant’s past-due benefits for work performed in court (after agency proceedings).
• EAJA (Equal Access to Justice Act) – Allows prevailing parties to recover fees from the government if the government’s position was not substantially justified. EAJA fees must be refunded to the claimant when § 406(b) fees are later collected, preventing double recovery.
• Contingency Fee Agreement – A contract where payment depends on success. In Social-Security cases the statutory cap is 25%.
• Effective Hourly Rate – The mathematical result of dividing the lump-sum fee by attorney hours recorded. It is not the actual billing rate but a reasonableness checkpoint to ensure the fee is not a windfall.
• Abuse of Discretion – An appellate standard of review; a decision is reversed if it is arbitrary, ignores controlling authority, or lacks rational explanation.

Conclusion

Christian Arnold v. Frank Bisignano fortifies the principle that, in § 406(b) fee adjudications, the contingency agreement between claimant and counsel is the primary compass. District courts may deviate only with a transparent, evidence-based rationale that weighs all relevant factors—especially comparative fee data. By reversing a second unexplained reduction, the Seventh Circuit sends a clear message: honor the contract absent compelling, articulated reasons to the contrary.

Practitioners should meticulously document comparable awards and ensure their fee motions address each Arnold I factor. Judges, in turn, must provide at least a brief but coherent explanation whenever they slice a fee. The decision thus enhances predictability, safeguards attorney incentives to represent disabled claimants, and refines the procedural fairness of Social-Security litigation.