The opinion of the court was delivered by: Nickerson, District Judge:
This matter concerns the conduct of plaintiff's attorney,
Calvin C. Saunders, in representing plaintiff in 80 CV 2638, an
appeal from a denial of disability insurance benefits (the
"disability" claim), and in 83 CV 0237, an action seeking
compensatory and punitive damages against defendant for alleged
delay and mishandling of the earlier case (the "damages"
Saunders was appointed from the pro bono panel on October 25,
1985, to represent plaintiff, Wallace Krauss, in his two
earlier commenced actions. The court consolidated these actions
on defendant's motion on March 23, 1984. The procedural history
of these actions both before and after Saunders' appointment is
set forth in the court's memorandum and order of August 18,
1989, familiarity with which is assumed.
On February 20, 1987, Assistant United States Attorney Deborah
Zwany filed a memorandum of law in support of defendant's
motion to dismiss the damages claim on the grounds of sovereign
immunity. That day she informed the court and Saunders at a
status conference that her office was asking the Department of
Justice for permission to decline to defend the denial of
Krauss' disability claim. The motion was argued on March 27,
1987 with Saunders present. The court reserved decision.
On May 8, 1987 the Assistant United States Attorney sent
Saunders a proposed stipulation, dated May 8, 1987, providing
that the disability claim be remanded to the defendant "solely
for the purpose of calculation and payment of benefits."
Saunders, on behalf of Krauss, rejected the stipulation. On May
27, 1987, Zwany sent Saunders a second set of proposed
stipulations. The first provided for remand of the disability
claim "solely for the purpose of calculation and payment of
benefits from December 31, 1975, the date of onset alleged by
plaintiff." The second provided for dismissal of plaintiff's
damage claim with prejudice. Krauss again refused to agree to
these. Saunders did not respond to this offer, or to a second
mailing of these proposed stipulations on June 17, 1987.
Assistant United States Attorney Bruce Nims took over the case
from Zwany. In April 1988 he explained to Saunders that Krauss'
latest conditions for signing a stipulation to remand the
disability claim, namely, that the defendant not review Krauss'
eligibility for disability benefits for at least three years,
would contravene 42 U.S.C. § 421(h). Nims again enclosed a
proposed stipulation to remand the disability claim for
calculation and payment of benefits from December 31, 1975.
Saunders prepared a counter-stipulation dated April 25, 1988,
with new conditions, including that defendant reimburse
plaintiff for various costs, provide him with various records,
and provide a physical examination before denying or reducing
benefits in the future. In a letter dated July 29, 1988, Nims
informed Saunders the defendant would not agree to any terms
other than those it had proposed, and again sent a proposed
stipulation for remand of the disability claim.
On November 1, 1988, Saunders sent another counter-stipulation
with further conditions, including that the defendant pay
various costs Krauss had incurred, and attorneys fees on the
damage claim for Krauss' self-representation, although the
counter-stipulation also provided for dismissal of the damage
claim with prejudice. Apparently aware these conditions would
be unacceptable, Saunders wrote in an accompanying letter that
further negotiation was useless, and that his client requested
the "matter be brought before the court . . . per Rule 11, to
be heard as expediently as possible."
On April 11, 1989, shortly after Krauss was notified of the
amounts defendant would pay him, Saunders sent him a
contingency fee arrangement to review and sign. The arrangement
was in the form of a letter from Krauss to Saunders, which read
in relevant part:
At the time your firm agreed to represent me before the Eastern
District Court of New York, I agreed to a legal fee of 25% of
all retroactive benefits receive by me, if successful.
Subsequent to this agreement you informed me that the [sic] in
the event the Court determined that the reasonable value of
your legal services was determined by the Court to be less than
25% of the retroactive benefits, I would be entitled to any
difference between the amount you were awarded, and the 25%
that Social Security would withhold from my award. [. . . .]
As a result of the expertise of the law firm of Calvin C.
Saunders., an acceptable decision was rendered, and I will be
receiving monthly Social Security benefits as well as the
retroactive monies due.
I am thoroughly satisfied with the way in which the Social
Security matter was handled and I approve and consent to the
25% of any retroactive benefits withheld for legal fees
(. . .).
This was accompanied by a cover letter that said, "if [the fee
arrangement] contains anything that is inaccurate please feel
free to correct it" and "I will submit [the arrangement] to
Judge Nickerson and allow him to determine the appropriate
amount of attorney's fees."
Saunders subsequently applied to this court for fees equal to
25% of the considerable benefits due plaintiff, or $24,466. In
his papers to support this application, Saunders included
timesheets — all captioned with the docket number of the
damages action — stating he spent a total of 1831/2; hours of
his time (incorrectly totaled on those documents as 182 hours)