The National Organization for Veterans’ Advocates, Inc. (NOVA) is committed to the continuing education of agents and attorneys who represent veterans and their families in claims before the Department of Veterans Affairs (VA), the Board of Veterans' Appeals (BVA), the U.S. Court of Appeals for Veterans Claims (CAVC), and the U.S. Court of Appeals for the Federal Circuit. Consistent with that goal, providing information to the public about how fees are charged for such representation is both appropriate and necessary. NOVA believes that it is important for veterans and their families to be fully informed on the subject of how fees are charged by agents and attorneys. The following information is being provided to ensure that all parties to a fee agreement understand the rules concerning the charging of fees for representation in this area of the law.
Fees for representation by agents or attorneys in proceedings before VA, BVA, and the CAVC are defined by statute and regulation.
See 38 U.S.C. § 5904 and 38 C.F.R. § 14.636.
Text of 38 USC 5904 - Recognition of agents and attorneys generally.
Text of 38 CFR 14.636 - Payment of fees for representation by agents and attorneys in proceedings before Agencies of Original Jurisdiction and before the Board of Veterans' Appeals.
WHEN FEES MAY BE CHARGED
Agents and attorneys may not charge or be paid for services with respect to services provided before the date on which notice of the initial claim is issued. 38 U.S.C. § 5904(c)(1).
Under current law, fees may not be charged by an agent or an attorney for work performed in connection with the filing of a claim for VA benefits. An agent or attorney may assist a veteran or a claimant without charge in the initial presentation of an application for benefits. Once VA makes its initial decision, only then may a fee be charged for services provided pursuant to the initial decision.
This limitation does not apply to fees charged, allowed, or paid for services provided with respect to proceedings before a court. 38 U.S.C. § 5904(c)(1).
FEE AGREEMENTS ARE REQUIRED
All agreements for the payment of fees for services of agents and attorneys must be in writing and signed by both the claimant or appellant and the agent or attorney. 38 C.F.R. § 14.636(g).
To be valid, a fee agreement must include the following information:
(1) The name of the veteran.
(2) The name of the claimant or appellant if other than the veteran.
(3) The name of any disinterested third‑party payer and the relationship between the third‑party payer and the veteran, claimant, or appellant.
(4) The applicable VA file number.
(5) The specific terms under which the amount to be paid for the services of the attorney or agent will be determined. 38 C.F.R. § 14.636(g)(1).
Fee agreements must also clearly specify if VA is to withhold and pay the agent or attorney directly out of the claimant’s award of past-due benefits. A direct‑pay fee agreement is a fee agreement between the claimant or appellant and an agent or attorney providing for payment of fees out of past‑due benefits awarded directly to an agent or attorney. See 38 C.F.R. § 14.636(g)(2).
A fee agreement that does not clearly specify that VA is to pay the agent or attorney out of past‑due benefits or that specifies a fee greater than 20 percent of past‑due benefits awarded by VA shall be considered to be an agreement in which the agent or attorney is responsible for collecting any fees for representation from the claimant without assistance from VA.
See 38 C.F.R. § 14.636(g)(2).
A copy of the agreement must be filed with the Office of the General Counsel within 30 days of its execution by mailing the copy to the following address: Office of the General Counsel (022D), 810 Vermont Avenue, NW, Washington, DC 20420. Only fee agreements and documents related to review of fees under paragraph (i) of this section and expenses under § 14.637 may be filed with the Office of the General Counsel. All documents relating the adjudication of a claim for VA benefits, including any correspondence, evidence, or argument, must be filed with the agency of original jurisdiction, Board of Veterans Appeals, or other VA office as appropriate.
38 C.F.R. § 14.636(g)(3).
FEES CAN BE WITHHELD FROM PAST-DUE BENEFITS
The payment of fees may be made by VA directly to an agent or attorney from past‑due benefits. 38 U.S.C. § 5904(d) and 38 C.F.R. § 14.636(h).
The claimant or appellant and an agent or attorney may enter into a fee agreement providing that payment for the services of the agent or attorney will be made directly to the agent or attorney by VA out of any past‑due benefits awarded in any proceeding before VA or the CAVC. VA will charge and collect an assessment out of the fees paid directly to agents or attorneys from past‑due benefits awarded. The amount of such assessment shall be equal to five percent of the amount of the fee required to be paid to the agent or attorney, but in no event shall the assessment exceed $100. 38 C.F.R. § 14.636(h)(1).
Such an agreement will be honored by VA only if the following conditions are met:
(1) The total fee payable (excluding expenses) does not exceed 20 percent of the total amount of the past‑due benefits awarded,
(2) The amount of the fee is contingent on whether or not the claim is resolved in a manner favorable to the claimant or appellant, and
(3) The award of past‑due benefits results in a cash payment to a claimant or an appellant from which the fee may be deducted. (An award of past‑due benefits will not always result in a cash payment to a claimant or an appellant. For example, no cash payment will be made to military retirees unless there is a corresponding waiver of retirement pay. See 38 U.S.C. 5304(a); 38 CFR 3.750; 38 C.F.R. § 14.636(h)(1)).
A claim will be considered to have been resolved in a manner favorable to the claimant or appellant if all or any part of the relief sought is granted. See 38 C.F.R. § 14.636(h)(2).
Fees are only withheld when the fee called for in the fee agreement is contingent, meaning that the fee is payable only when there is an award of past-due benefits.
FEE OPTIONS
Fees may be charged on an hourly basis, a flat fee, or a contingent fee basis, or a combination of all three. 38 C.F.R. § 14.636(e).
The fees payable for representation can be based on an agreed upon hourly rate. Although this type of payment is permitted, few agents or attorneys practicing in this area charge an hourly rate for two reasons. First, most veterans and their families are unable to pay for the services as those services are provided. Second, because of the length of time these matters take to be resolved, most agents and attorneys do not find charging on an hourly basis the most practical method for charging fees.
The fees payable for representation can be based on an agreed upon flat fee or fixed rate. This method means the agent or attorney work is paid based on a predetermined or specified amount for the services. Once again, agents or attorneys practicing in this area are unlikely to charge a fee in this manner.
The contingent fee basis is the most likely way in which fees will be charged.
A contingent fee agreement means that the agent or attorney is paid only when the veteran or claimant receives an award of past-due benefits. The fee is based on an agreed upon percentage of the amount of the past-due benefits awarded.
As noted above, when a contingent fee is limited to 20% of the amount of the past-due benefits awarded, those fees may be withheld from the award of past-due benefits and paid by VA directly to the agent or attorney.
For a contingent fee amount greater than 20% of the amount of the past due-benefits awarded, those fees are payable by the veteran or claimant to the agent or attorney.
FEES MUST BE REASONABLE
Fees may neither be excessive nor unreasonable. VA may on its own motion or at the request of a veteran or claimant seek review of a fee agreement concerning the amount of the fee to determine whether the amount called for in the fee agreement is either excessive or unreasonable. 38 U.S.C. § 5904(c)(3).
There are specific factors to be considered in determining whether the fee called for in the fee agreement is reasonable. Those factors include:
(1) The extent and type of services the representative performed;
(2) The complexity of the case;
(3) The level of skill and competence required of the representative in giving the services;
(4) The amount of time the representative spent on the case;
(5) The results the representative achieved, including the amount of any benefits recovered;
(6) The level of review to which the claim was taken and the level of the review at which the representative was retained;
(7) Rates charged by other representatives for similar services; and
(8) Whether, and to what extent, the payment of fees is contingent upon the results achieved. 38 C.F.R. § 14.636(e).
PRESUMPTIONS RELATED TO THE REASONABLENESS OF FEES
There are certain presumptions related to whether the amount of a contingent fee is reasonable. See 38 C.F.R. § 14.636(f).
Fees which do not exceed 20 percent of any past‑due benefits awarded shall be presumed to be reasonable.
Fees which exceed 33 1/3 percent of any past‑due benefits awarded shall be presumed to be unreasonable.
These presumptions may be rebutted through an examination of the factors in 38 C.F.R. § 14.636(e) establishing that there is clear and convincing evidence that a fee which does not exceed 20 percent of any past‑due benefits awarded is not reasonable or that a fee which exceeds 33 1/3 percent is reasonable in a specific circumstance.
FEE AGREEMENTS MAY BE REVIEWED
There is a specific procedure which must be followed when filing a motion for the review of a fee agreement for reasonableness. 38 C.F.R. § 14.636(i).
(1) The motion must be filed before the expiration of 120 days from the date of the final VA action, the Office of the General Counsel may review a fee agreement between a claimant or appellant and an agent or attorney upon its own motion or upon the motion of the claimant or appellant.
(2) The Office of the General Counsel may order a reduction in the fee called for in the agreement if it finds by a preponderance of the evidence, or by clear and convincing evidence in the case of a fee presumed reasonable under paragraph (f) of this section, that the fee is unreasonable.
(3) The Office of the General Counsel may approve a fee presumed unreasonable under paragraph (f) of this section if it finds by clear and convincing evidence that the fee is reasonable.
(4) The Office of the General Counsel’s review of the agreement under this paragraph will address the issues of eligibility under paragraph (c) of this section and reasonableness under paragraph (e) of this section.
(5) The Office of the General Counsel will limit its review and decision under this paragraph to the issue of reasonableness if another agency of original jurisdiction has reviewed the agreement and made an eligibility determination under paragraph (c) of this section.
(6) Motions for review of fee agreements must be in writing and must include the name of the veteran, the name of the claimant or appellant if other than the veteran, and the applicable VA file number.
(7) Such motions must set forth the reason, or reasons, why the fee called for in the agreement is unreasonable and must be accompanied by all evidence the moving party desires to submit.
A claimant’s or appellant’s motion for review of a fee agreement must be served on the agent or attorney and must be filed at the following address: Office of the General Counsel (022D), 810 Vermont Avenue, NW, Washington, DC 20420. The agent or attorney may file a response to the motion, with any relevant evidence, with the Office of the General Counsel not later than 30 days from the date on which the claimant or appellant served the motion on the agent or attorney. Such responses must be served on the claimant or appellant. The claimant or appellant then has 15 days from the date on which the agent or attorney served a response to file a reply with the Office of the General Counsel. Such replies must be served on the agent or attorney.
See 38 C.F.R. § 14.636(i)(1).
The Assistant General Counsel shall initiate the Office of the General Counsel’s review of a fee agreement on its own motion by serving the motion on the agent or attorney and the claimant or appellant. The agent or attorney may file a response to the motion, with any relevant evidence, with the Office of the General Counsel (022D), 810 Vermont Avenue, NW, Washington, DC 20420, not later than 30 days from the date on which the Office of the General Counsel served the motion on the agent or attorney. Such responses must be served on the claimant or appellant. See 38 C.F.R. § 14.636(i)(2).
The Office of the General Counsel shall close the record in proceedings to review fee agreements 15 days after the date on which the agent or attorney served a response on the claimant or appellant, or 30 days after the claimant, appellant, or the Office of the General Counsel served the motion on the agent or attorney if there is no response. The Assistant General Counsel may, for a reasonable period upon a showing of sufficient cause, extend the time for an agent or attorney to serve an answer or for a claimant or appellant to serve a reply. The Assistant General Counsel shall forward the record and a recommendation to the General Counsel for a final decision. Unless either party files a Notice of Disagreement with the Office of the General Counsel, the agent or attorney must refund any excess payment to the claimant or appellant not later than the expiration of the time within which the General Counsel’s decision may be appealed to the Board of Veterans Appeals.
38 C.F.R. § 14.636(i)(3).
ELIGIBILITY DETERMINATIONS ARE MADE BY THE REGIONAL OFFICE AND NOT THE OFFICE OF THE VA GENERAL COUNSEL
In cases where a fee agreement requires VA to withhold the fee of an agent or an attorney from the award of past-due benefits under the provisions of 38 U.S.C. § 5904(d), the VA regional office will make a written fee eligibility determination.
Unfortunately, VA has not written regulations addressing this process.
What will occur, generally, is that in the same notice which informs a veteran or a claimant of an award of past-due benefits, VA will inform both the veteran or claimant and the agent or attorney that a decision has been made on the eligibility of the agent or attorney to charge the fee called for in the fee agreement of the parties.
This notice will also inform the veteran or claimant and the agent or attorney that if either is dissatisfied with the VA’s decision on the eligibility of the agent or attorney to charge the fee called for in the fee agreement of the parties, that party may initiate an appeal.
APPEALING ELIGIBILITY DETERMINATIONS
An appeal of an eligibility determination may be taken by either the claimant or the agent or attorney and is initiated by the filing of a notice of disagreement. There is a significant difference between this appeal and an appeal of the VA’s denial of a VA benefit; the notice of disagreement must be filed within 60 days of the VA’s decision as opposed to one year.
The notice of disagreement will result in the VA’s submission of a statement of the case. Another significant difference in this circumstance is that the time for filing a substantive appeal is 30 days and not 60 days.
BVA reviews these decisions and makes a new decision which is appealable to the CAVC.
It is important that both the veteran or claimant and the agent or attorney recognize that when such appeals are initiated, the parties will thereafter have different and competing interests and continuing representation will not be possible.
FINAL THOUGHTS
No one wants disputes over fees.
Disputes over fees are unpleasant for all involved.
In order to avoid fee disputes, ask questions before signing a fee agreement.
If you do not understand anything in the fee agreement, then do not sign it.
The law presumes that a signed contract has been read and understood.
Take the time to ask questions before signing a fee agreement.
Take the fee agreement to an attorney and ask that attorney to explain the things that you do not understand.
Agents and attorneys, particularly members of NOVA, do not want to have disputes about fees.
Agents and attorneys, particularly members of NOVA, want to assist veterans and their families in obtaining every benefit which they are entitled to under the law.
Agents and attorneys, particularly members of NOVA, do not want to spend years representing veterans and their families and then spend years litigating with their former clients over fees.
NOVA believes that this information is of value to anyone entering into a fee agreement for representation before VA in understanding the fee process. A copy of the statute and the regulation follows this information.
ADDITIONAL CONSIDERATIONS
During the course of an appeal, a veteran or claimant may desire to change representation.
Veterans and claimants should understand that, in some states, attorneys are ethically prohibited from discussing a matter with an individual who is currently represented by another attorney.
In some states, it may be necessary for the new attorney to confirm that the prior attorney/client relationship has been terminated before the new attorney may ethically speak to a veteran or claimant who has been previously represented.
This confirmation should be in writing, indicating the date that representation ended with a description of the matter(s) on which the veteran or claimant was represented.
It would also be advisable for a veteran or claimant to obtain from former counsel a written waiver of the contingent fee called for in the fee agreement with that attorney.
It is important that if you have had a prior fee agreement on an issue(s) that you inform the new attorney of that prior representation and confirmation of the termination of that relationship.
There can be a number of issues which can arise when the veteran or claimant has been represented by and had fee agreements with multiple attorneys.
It is in the interest of all parties that these issues be addressed at the beginning of the representation and not at the end of that representation.
It is better to avoid problems which might create litigation about fees after you have received your award of past-due benefits.