Regulatory Criteria for Payment of Fees

1. Legal Framework for Fees

Introduction

This topic contains information on the legal framework for fees earned by an agent or attorney, including

• regulatory criteria for payment of fees
• requirements for a valid fee agreement
• definition of direct pay fee agreement
• additional requirements for direct pay fee agreements
• fee amount permitted for direct payment of fees
• when a direct pay fee agreement must be filed
• determining the work on which a fee can be charged – scope of case or claim
• fees for representation involving
• supplemental claims
• claims for increase
• requests to revise based on a clear and unmistakable error (CUE), and
• dependency claims, and
• historical fee eligibility requirements.

Change Date

June 4, 2026

8.A.1.a. Regulatory Criteria for Payment of Fees

Agents or attorneys may charge claimants fees for representation for review of decisions under 38 CFR 3.2500(a) after an agency of original jurisdiction (AOJ) has issued notice of an initial decision on a claim, if the agent or attorney has complied with regulatory power of attorney (POA) and fee agreement requirements.

Example: A regional office (RO) issued an initial decision on February 20, 2019, denying service connection (SC) for a right knee disability. The Veteran properly appointed an attorney, who timely submitted a completed direct pay fee agreement and filed a request for higher-level review (HLR) on March 10, 2019. The HLR resulted in a grant of SC, resulting in payment of compensation to the Veteran. Fees would be payable.

Important:

• Fees may be payable, even if the agent or attorney who signed the fee agreement is no longer the current representative.
• In claims for survivor benefits, such as Dependency and Indemnity Compensation or accrued benefits (even if there has been a substitution), there must be a fee agreement and POA between the agent or attorney and the survivor.
• When a surviving spouse files a fee agreement that is associated with a claim for accrued benefits, the month of death benefit is subject to the fee agreement.
• When deciding if a fee agreement is valid and if an agent or attorney is eligible for direct payment of fees, only consider the statutory and regulatory requirements for fees. Do not consider any other contractual terms in the fee agreement, unless those contractual terms violate the statutory or regulatory requirements for fees.

References: For more information on

• circumstances under which fees may be charged, see 38 CFR 14.636(c)
• considering only statutory and regulatory requirements when determining fee agreement validity and fee eligibility, see Cox v. McDonough, 34 Vet.App. 112 (2021)
• regulatory POA requirements, including accreditation and appointment, see
• M21-1, Part I, Subpart i, 2.A.2.a and c
• 38 CFR 14.627(p)
• 38 CFR 14.629(c), and
• 38 CFR 14.631
• the Office of General Counsel (OGC) list of accredited agents and attorneys and the email address for questions and complaints related to accreditation, see the OGC accreditation website
• the requirements for fee agreements, see
• 38 CFR 14.636(g), and
• M21-5, Chapter 8, Section A, 1.b and d
• determining the scope of the work on which a fee can be charged, see M21-5, Chapter 8, Section A, 1.g
• making a decision on direct pay fee eligibility, see M21-5, Chapter 8, Section B.3
• exceptions involving Chapter 37 loans and payment of fees by disinterested third parties, see 38 CFR 14.636(d), and
• historical criteria applicable for fee representation prior to February 19, 2019, see
• 38 CFR 14.636(c)(2) and (3)
• M21-5, Chapter 8, Section A, 1.b and d, and
• the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_4-28-17.docx.

8.A.1.b. Requirements for a Valid Fee Agreement

To be valid, fee agreements must

• be written
• be signed by the claimant and the representative, and
• contain the
• name of the Veteran (or the claimant or appellant if not the Veteran)
• name of any disinterested third-party payer and the relationship between that individual and the represented individual
• Department of Veterans Affairs (VA) file number or Veteran’s Social Security number (SSN), and
• specific terms under which the amount to be paid for the services of the agent or attorney will be determined.

Notes:

• Fee agreements involving disinterested third parties must include or be accompanied by the certification listed in 38 CFR 14.636(d)(2)(iii).
• Apply the principles outlined in the sub-bullets below when the fee agreement contains the specific terms of the representation, and the names and signatures of the parties, but does not include the VA file number or SSN.
• If the Agent and Attorney Fee Coordinator (AAFC) can reasonably identify the Veteran/claimant – notwithstanding the lack of a VA file number or SSN on the fee agreement – and an award has not yet been released to the claimant, accept the fee agreement as valid.
• If, after all past-due benefits have been released to the claimant, VA discovers that there was a fee agreement that had not been associated with the claims folder, the agent's or attorney’s failure to comply with the requirement of including the file number or SSN on the fee agreement would be a valid basis for a subsequent decision denying fees.

Reference: For more information on the requirements for fee agreements, see 38 CFR 14.636(g).

8.A.1.c. Definition: Direct Pay Fee Agreement

A direct pay fee agreement is one in which the representative’s fee is paid by VA from the award of past-due benefits to the claimant or beneficiary.

References: For more information on

• the direct pay fee agreements, see 38 CFR 14.636(g)(2)
• past-due benefits, see 38 CFR 14.636(h)(3), and
• fee agreements that do not meet the requirements of a direct pay fee agreement, see 38 CFR 14.636(g)(2) and (3).

8.A.1.d. Additional Requirements for Direct Pay Fee Agreements

In addition to the requirements applicable to fee agreements generally, direct pay fee agreements must

• clearly state that VA is to pay fees directly out of awarded past-due benefits
• specify a fee amount that does not exceed 20 percent of past-due benefits awarded, and
• be timely filed.

A direct pay fee agreement will only be honored if

• the amount of the fee is contingent on a claim being resolved favorabl y to the claimant, meaning any or all of the relief sought is granted, and
• the agent or attorney remains accredited by the date of the Fee Allocation Notice.

Important:

• A non-recurring payment to the claimant is not a prerequisite to payment of fees under a direct pay fee agreement. The Court of Appeals for Veterans Claim (CAVC), in Rosinski v. Wilkie, 32 Vet.App. 264 (2020), held that VA’s obligation to pay fees, and calculation of the fees owed, under a direct pay fee agreement are determined by the award’s evaluation and an effective date, even if a retroactive monetary amount will not be paid to the claimant because of another legal provision.
• VA regulations do not permit a law firm to be named as a client’s representative; however, fee agreements should not be found invalid simply because they state that fees are to be paid to the agent or attorney’s firm.

References: For more information on

• the requirements for fee agreements generally, see
• 38 CFR 14.636(g), and
• M21-5, Chapter 8, Section A, 1.b
• additional requirements for direct pay fee agreements, see
• 38 CFR 14.636(g)(2) and (3), and
• 38 CFR 14.636(h)
• the period to use for calculating past-due benefits, see
• 38 CFR 14.636(h)(3), and
• M21-5, Chapter 8, Section B, 2.c.
• withholding, paying fees, and corrective action for failure to withhold prior to the January 30, 2020, decision in Rosinski, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_1-24-20.docx
• presumptions on reasonableness of a fee, see 38 CFR 14.636(f), and
• the process for considering entitlement to direct payment of fees, see M21-5, Chapter 8, Section B, 1.a-c.

8.A.1.e. Fee Amount Permitted for Direct Payment of Fees

VA will only directly pay fees when the total fee payable (excluding expenses) is not greater than 20 percent of the total amount of past-due benefits. This fee amount is considered presumptively reasonable.

If the fee agreement specifies a total fee payable greater than 20 percent, the agent or attorney is responsible for collecting fees without assistance from VA.

The total fee payable includes the fee to be paid by VA from past-due benefits and any fee the claimant will pay the agent/attorney directly.

Example: If the fee agreement provides that VA will pay a 20-percent fee to the agent or attorney out of past-due benefits and the claimant will pay direct to the agent or attorney an additional 5-percent fee, the total fee payable is 25 percent of the total amount of past-due benefits awarded. As a result, the fee agreement would not qualify for direct payment.

Notes:

• In a case involving a required offset or reduction, as discussed in M21-5, Chapter 8, Section B, 2.e, an agreed fee of 20 percent or less of the past-due benefit awarded is not unreasonable because the calculated fee will amount to more than 20 percent of the reduced non-recurrent amount payable (if any) to the claimant from the award at that time.
• Expenses are not payable directly to the agent or attorney out of past-due benefits.
• If a non-direct pay fee agreement (agreement specifies payment is to be made directly by the Veteran, not by VA, out of past due benefits) is received, an invalid fee agreement letter is not required.

References: For more information on

• fees that are permitted generally, see 38 CFR 14.636(e)
• presumptions regarding fees, see 38 CFR 14.636(f)
• all requirements for direct payment of fees, see 38 CFR 14.636(g) and (h), and
• requirements for fee agreements that do not meet the requirements for a direct pay fee agreement, see 38 CFR 14.636(g)(2) and (3).

8.A.1.f. When a Direct Pay Fee Agreement Must Be Filed

A direct pay fee agreement generally must be filed with the AOJ within 30 days of execution. However, if a fee agreement is successfully associated with the claims folder prior to authorization of the award, the fact that the fee agreement was not filed within 30 days of execution would not be a basis for denying fees to an agent/attorney who would otherwise be entitled.

Important:

• VA applies the postmark rule of 38 CFR 20.110 to determine when the fee agreement is received.
• A fee agreement is fully executed once it is signed by both parties (the agent/attorney and the claimant/beneficiary). Measure the 30-day period from the date of the final signature applied to the document.
• Unless there is reason to question the authenticity of the fee agreement, the policy described in the above paragraph allows ROs to accept a fee agreement outside of the 30-day timeliness provision so long as the agent/attorney on the fee agreement is still the current representative.
• It is appropriate to request further evidence or verification from a claimant if there is substantial reason to challenge the submission due to lack of timeliness.

References: For more information on

• checking fee agreements, see M21-5, Chapter 8, Section A, 1.b.
• the action required when a direct pay fee agreement is untimely filed, see M21-5, Chapter 8, Section A, 3.d, and
• filing requirements for fee agreements, see 38 CFR 14.636(g)(3).

8.A.1.g. Determining the Work on Which a Fee Can Be Charged – Scope of Case or Claim

An agent or attorney earns fees for work within the scope of the representation (consistent with the appointment and detailed in the fee agreement), pursuing an available adjudicative review option to obtain a favorable result on an issue or issues that are within the scope of the case or claim.

The case or claim consists of only those issues

• on which notification was provided in the AOJ’s initial decision, and
• for which a review option was properly elected.

Note: Administrative debt collection proceedings and proceedings involving requests for waiver of indebtedness are considered proceedings involving Veterans’ benefits before VA.

References: For more information on

• issues within the scope of a claim, see M21-1, Part V, Subpart ii, 3.A, and
• special considerations on fees for representation on various claim types, see M21-5, Chapter 8, Section A, 1.h - k.

8.A.1.h. Fees for Representation Involving Supplemental Claims

The U.S. Court of Appeals for the Federal Circuit in Military-Veterans Advocacy v. Secretary of Veterans Affairs, 7 F.4th 1110 (Fed. Cir. 2021) invalidated 38 CFR 14.636(c)(1)(i) as inconsistent with the text of the Appeals Modernization Act of 2017 (AMA). The court held that once VA has initially adjudicated an issue, fees may be charged for work on later claims involving that issue without the requirement of a new initial decision, regardless of the date of any prior initial decision. As a result, agent/attorney fee eligibility now applies to all supplemental claims. This ruling applies to fee decisions on underlying claims processed under the AMA on or after July 30, 2021.

Example: Rating decision dated April 2, 2014, with notification letter dated April 4, 2014, denied SC for hearing loss. VA received a supplemental claim on August 3, 2022, with new and relevant evidence, a valid fee agreement, and complete VA Form 21-22a, Appointment of Individual as Claimant's Representative. Rating decision dated November 5, 2022, with notification letter dated November 6, 2022, granted SC for hearing loss.

Analysis: Fees are due even though the initial decision was prior to the AMA effective date. A Fee Allocation Notice is required.

8.A.1.i. Fees for Representation Involving Claims for Increase

For fee purposes, an initial decision on a claim includes an initial decision on a claim for increase in rate of a benefit. For a claim to be subject to fees, it must be pursued through one of the AMA decision review lanes (supplemental claim, HLR, or direct appeal to the Board of Veterans’ Appeals (BVA)) or be a claimant's request to revise a prior decision based on a clear and unmistakable error (CUE).

Example 1: In January 2018, the Veteran was granted SC for depression (under appeal) and assigned a 30-percent evaluation. The Veteran was represented by an attorney and a valid direct pay fee agreement was of record. As such, fees were paid on the appeal. Two years later, the Veteran submits an initial claim for increase on VA Form 21-526EZ, Application for Disability Compensation and Related Compensation Benefits. The RO issues a rating decision increasing the Veteran's evaluation for depression to 50 percent. Although the Veteran continues to be represented by the attorney, fees are not warranted on the increase of the previously appealed issue. The Veteran's claim for increase filed on VA Form 21-526EZ is considered an initial claim for purposes of determining fee eligibility.

Example 2: An initial rating decision granted SC for a right knee condition at 10 percent on February 20, 2019. The Veteran properly appointed an attorney, who timely submitted a completed direct pay fee agreement and filed a claim for increase on VA Form 21-526EZ for the right knee on March 10, 2019. The evaluation was confirmed and continued on a rating decision dated May 5, 2019. On April 10, 2020, a supplemental claim was received on VA Form 20-0995, Decision Review Request: Supplemental, Claim for the right knee condition. A rating decision dated May 15, 2020, granted an increased evaluation from 10 percent to 20 percent. Fees are payable on the supplemental claim.

Reference: For more information on fees in cases involving CUEs, see M21-5, Chapter 8, Section A, 1.j.

8.A.1.j. Fees for Representation Involving Requests to Revise Based on CUE

Prior to November 14, 2023, a fee can be earned for representation provided on a claimant’s request to revise a prior decision on the basis of CUE

• as long as notice of the decision being challenged based on CUE was issued on or after February 19, 2019, or
• where notice of the decision being challenged based on CUE was issued before February 19, 2019, as long as a legacy notice of disagreement (NOD) was filed with respect to the challenged decision on or after June 20, 2007.

Effective November 14, 2023, in accordance with Held v. McDonough, 37 Vet. App. 28 (2023), CAVC found 38 CFR 14.636(c)(2)(ii) to be invalid. Therefore, a fee can be earned for representation provided on a claimant's request to revise a prior decision based on CUE.

Notes:

• In all cases, regulatory POA requirements and fee agreement requirements must be satisfied.
• If VA identifies and corrects an error by calling a CUE that was not initiated by the claimant or representative, but was instead found while conducting a separate review, and it is not under adjudication of a prior qualifying review, fees are not payable regarding the CUE issue and a decision to deny fees is required.

Example 1: The Veteran files an HLR on January 1, 2023, for SC for migraines. While reviewing the claims folder, the Decision Review Officer discovers a CUE for the effective date of VA's grant of posttraumatic stress disorder (PTSD). The grant of PTSD addressed by the CUE was completed in a rating decision dated June 10, 2021, at which time the current attorney did not represent the Veteran. Because PTSD is not the issue currently under review, nor is it under final adjudication of a prior qualifying review, fees are not due on the end product (EP) 930 that is established for the correction.

Example 2: The Veteran files a supplemental claim on October 18, 2022, for evaluation of depressive disorder. Rating decision dated February 1, 2023, granted a 100-percent evaluation from June 1, 2022, at which time the Veteran was represented by the same attorney. On April 1, 2023, an EP 930 was established after VA discovered that the effective date was incorrect. A rating decision was completed under the EP 930 on April 30, 2023, which corrected the effective date to February 1, 2022. Although this was not claimant-initiated, the depressive disorder was still under final adjudication and therefore the representative is entitled to fees.

Reference: For more information on fees in cases involving CUE, see

• Held v. McDonough, 37 Vet. App. 28 (2023)
• 38 CFR 14.636(c)(1)(i) and (ii), and
• 38 CFR 14.636(c)(2)(ii).

8.A.1.k. Fees for Representation Involving Dependency Claims

For fee purposes, when fees are not inherently due based on the dependency claim being pursued under one of the AMA review lanes, the AAFC must review the facts of the case to determine whether the current entitlement to dependency (or earlier effective date for previously established dependents) is the result of a qualifying review.

If entitlement to dependency (or earlier effective date for previously established dependents) arose based on the grant of benefits from a qualifying review and was received within a year of the notification of the grant of benefits, then fees are warranted. If the entitlement was based upon an event (marriage, birth, etc.) or natural progression of an already established dependent (minor child to school child) and was not the result of the grant benefits from a qualifying review, then fees are not warranted.

Example 1: A decision on a supplemental claim, dated June 14, 2021, increased the Veteran's overall combined percentage from 20 percent to 40 percent. On August 1, 2021, VA received a VA Form 21-686c, Application Request to Add and/or Remove Dependents, for a spouse and two children. Additional dependency benefit for the spouse and children was granted based on the effective date of the supplemental claim. Fees are warranted for the grant of dependency because the entitlement to the additional dependency benefit was the result of the supplemental claim.

Example 2: A Veteran currently rated at 40 percent receives an increase to an overall combined percentage of 60 percent with a retroactive effective date of January 3, 2018, based on an HLR decision dated March 13, 2022. On May 5, 2022, VA receives a VA Form 21-686c for the birth of a new child. The minor child was added to the Veteran's award effective April 1, 2022, based on the date of birth of March 29, 2022. Fees are not warranted for the grant of dependency because the entitlement to benefits (or earlier effective date) was not the result of the HLR.

8.A.1.l. Historical Fee Eligibility Requirements

Under the law prior to February 19, 2019, representation for a fee was only permitted in legacy appeal cases.

• An agent or attorney could charge a fee after an AOJ issued a decision on a claim and a legacy NOD was filed with respect to that decision on or after June 20, 2007.
• In cases where a legacy NOD was filed on or before June 19, 2007, the agent or attorney could charge fees for services only when there was a final decision promulgated by BVA with respect to the issue or issues involved in the legacy appeal, and the agent or attorney was retained not later than one year after the BVA decision was promulgated.

Reference: For historical guidance on processing of claims for direct payment of fees to an agent or attorney under standards applicable to fee cases prior to February 19, 2019, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_4-28-17.docx.