Know what the VA owes your firm, from the decision to the check.

Only accredited agents and attorneys may charge a veteran for representation, and only at a set point in the claim. Under the modernized review system, a fee may be charged for representation provided after VA has issued notice of an initial decision on the claim, once the representative has a valid power of attorney and a fee agreement that meets VA’s requirements (38 CFR 14.636(c)).

Most VA disability firms work on a direct-pay fee agreement: the fee is contingent on a favorable result, it is no more than 20 percent of the past-due benefits awarded, and VA pays it to the firm out of those benefits. VA charges an assessment of five percent of the fee it pays directly, which the regulation caps at $100 (38 CFR 14.636(h)(1)).

Fees must be reasonable. Up to 20 percent of past-due benefits is presumed reasonable when the representation continued through the decision awarding benefits; above 33 1/3 percent is presumed unreasonable (38 CFR 14.636(f)). An agreement for more than 20 percent, or one that does not clearly say VA pays the firm, leaves the firm to collect from the veteran itself.

It must be in writing and signed by both the claimant and the attorney or agent. To be valid it names (38 CFR 14.636(g)):

• the veteran;
• the claimant, if it is not the veteran;
• any disinterested third party paying the fee, and their relationship to the veteran or claimant;
• the VA file number;
• the specific terms that determine the fee.

A direct-pay agreement must also clearly specify that VA pays the attorney or agent out of past-due benefits. It is filed with the agency of original jurisdiction within 30 days of signing; any other fee agreement goes to VA’s Office of the General Counsel instead. VA may accept a late agreement only on a showing of sufficient cause.

The agreement rides on the appointment: an attorney or agent represents a claimant on VA Form 21-22a, signed by the claimant and the representative and filed in the claims folder (38 CFR 14.631).

Past-due benefits are the lump sum of payments that accrued between the effective date of the award and the date of the decision granting it (38 CFR 14.636(h)(3)). The further back the effective date, the larger the backpay and the fee, which is one reason continuous pursuit of a claim matters so much.

• When service connection is granted, the amount is based on the initial rating VA assigns. If that rating is later increased on appeal and the firm represents the veteran in that phase, the firm is paid a supplemental amount based on the increase.
• When an award covers several issues, past-due benefits count only the issues for which a fee was permitted.
• An award has to produce a cash payment for VA to take a fee from it. A military retiree, for example, receives no cash without a corresponding waiver of retired pay.

When a decision awards past-due benefits and a direct-pay agreement is on file, VA issues a fee allocation notice. It decides whether each attorney or agent who filed an agreement is eligible for direct payment and allocates the fee: to the representative whose work continued through the decision, or, if there is none, split equally among the eligible representatives and the claimant (38 CFR 14.636(i)).

A party who disagrees with the allocation has 60 days from the notice to request a fee review from the Office of the General Counsel; a disagreement about eligibility goes to the Board. The attorney or agent must be accredited on the date of the fee allocation notice to be paid directly.

• The agreement was not filed in time. Thirty days from signing is short when intake is busy.
• The agreement does not say direct pay, or asks for more than 20 percent. VA will not pay it, and the firm is left collecting from the veteran.
• The effective date slipped. A missed one-year window ends continuous pursuit, and the backpay the fee is based on shrinks with it.
• The fee was won but never watched. Without one view of decisions awarded, notices received and checks paid, a firm cannot tell what VA still owes it.
• The costs went untracked. Independent medical opinions are ordered, invoiced and reimbursed on their own timeline.