Major disability law firm prepares for bankruptcy

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Law Firm Facing Bankruptcy

Law Firm Facing Bankruptcy

The nation’s largest law firm representing claimants seeking Social Security disability benefits is likely to soon file for Chapter 11 bankruptcy, the Wall Street Journal reported December 12.

Binder & Binder, which has nearly 1,000 employees, has 57,000 active cases of people applying for Social Security Disability Insurance and Supplemental Security Income benefits.

The firm is one of the nation’s most recognizable law offices. Its founders, Harry and Charles Binder, can be often be seen donning cowboy hats in TV and public transportation advertisements, across the more than a dozen states where it practices. The Hauppauge, N.Y.-based firm spent nearly $20 million on advertising in 2010 alone.

In 2004, Congress relaxed the rules for who could represent clients in Social Security disability hearings, allowing nonlawyer advocates to provide representation for the first time. During the next few years, Binder & Binder, which was founded in 1970, hired large numbers of non-lawyers advocates.

As the firm’s caseload spiked, the amount of attorneys fees it received from the Social Security Administration increased from $26 million in 2006 to $88 million in 2010, the Wall Street Journal reported in a 2011 profile.

Binder & Binder’s rapid expansion became a flashpoint for critics of the Social Security disability programs, who accused the firm of a range of unethical practices.

The Wall Street Journal reported in 2011 that the Social Security Administration reprimanded the firm for backdating documents and forging signatures of ex-employees. It has also been accused of withholding potentially unfavorable medical information from the SSA about clients.

As a result of fewer people seeking benefits – the number of new people seeking SSDI benefits fell from 2.9 million in 2010 to 2.6 million last year – and tougher enforcement, the firm owes nearly $40 million in debt, according to the Wall Street Journal.