Working Paper: NBER ID: w29871
Authors: Hilary W. Hoynes; Nicole Maestas; Alexander Strand
Abstract: 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.
Keywords: legal representation; disability claims; Social Security Disability Insurance
JEL Codes: H55; J14; K15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Legal representation at the initial stage (L84) | Probability of initial awards (C46) |
| Legal representation at the initial stage (L84) | Probability of appeals to the hearing level (K41) |
| Legal representation at the initial stage (L84) | Total case processing time (C41) |