Fee Agreements

The Fee Agreement Process

A fee agreement is a written statement signed by the claimant and his or her appointed representative specifying the fee the representative expects to charge and collect, and the claimant expects to pay, for services the representative provides in pursuing the claimant's benefit rights in proceedings before the Social Security Administration (SSA). For SSA to approve a fee agreement, the representative must submit it before the date of the first favorable determination or decision (hereinafter, we generally refer to both as a "decision") SSA makes on a claim after the representative's appointment. If the representative does not submit a fee agreement by that date, SSA assumes the representative either will file a fee petition or waive a fee.

If the representative submits a fee agreement before the date SSA makes a favorable decision, SSA will approve the fee agreement at the time of the favorable decision if the statutory conditions for approval are met and no exceptions to the fee agreement process apply. Once SSA approves the fee agreement, the fee specified in the agreement is the maximum fee the representative may charge and collect for all services in the claim.

The fee agreement and fee petition processes are not interchangeable. However, if a representative elects the fee agreement process but SSA does not approve the agreement, or if an SSA reviewing official upholds a disapproval of a fee agreement on administrative review, the representative must file a fee petition if he or she wants to charge and collect a fee.

SSA must consider a fee agreement for approval under the fee agreement process through all levels of the administrative appeals process.

The date SSA makes a favorable decision is the date shown on the notice of favorable decision. It is not the date of adjudication or effectuation. For claims decided at the initial or reconsideration level, the date of the notice to the claimant is the controlling date. Therefore, if the claimant or representative submits, and SSA receives, a fee agreement before SSA issues the notice of favorable decision, the claim(s) will be processed as a fee agreement claim. For claims decided by the Office of Disability Adjudication and Review (ODAR), the date of the notice of hearing decision or notice of Appeals Council decision is controlling.

The following statutory conditions must be met for a representative to obtain SSA's approval to charge and collect a fee under the fee agreement process:

• The claimant or representative filed the agreement with SSA before the date SSA made a favorable decision. In concurrent titles II and XVI claims, the date of the favorable decision under the first title decided is controlling for both titles.
• The claimant, the claimant's legal guardian or representative payee, and representative both signed the agreement. If the claimant is legally incompetent or under age 18, a court appointed representative or the person responsible for the claimant's care may sign the fee agreement. For example, a mother may sign an application for title XVI benefits, an appointment of representative form, and a fee agreement on behalf of her child.
• The fee specified in the agreement does not exceed the lesser of 25 percent of the past-due benefits or $5,300. (For fee agreements approved before February 1, 2002, this maximum dollar limit was $4,000.) The $5,300 ceiling also applies to concurrent titles II and XVI claims or to post entitlement actions with a common issue. For example, in concurrent titles II and XVI disability claims, SSA will not approve an agreement that calls for a fee greater than 25 percent of the combined titles II and XVI past-due benefits amount or $5,300.
• SSA's decision is fully or partially favorable to the claimant. In some concurrent titles II and XVI claims, SSA's decision may be favorable to the claimant under only one title. In such cases, the fee agreement will be approved if all other factors are met.
• The claim or post-entitlement action results in past-due benefits. In some concurrent titles II and XVI claims, there may be past-due benefits under only one title. In such cases, the fee agreement will be approved if all other factors are met.

In certain situations approval of a fee agreement is administratively unfeasible, either because it could lead to authorization of fees in excess of the statutory limit under the fee agreement process, or could otherwise cause inequity for a claimant or a representative. Therefore, SSA will not approve a fee agreement for purposes of authorizing a representative's fee in the following situations:

• The claimant appointed more than one representative associated in a firm, partnership, or legal corporation, and all did not sign a single fee agreement. This rule applies in all cases except when the representative(s) who did not sign the fee agreement waived charging and collecting a fee. SSA must have received the waiver(s) before the date of the favorable decision.

Note: A "single fee agreement" is defined as one agreement signed by all parties to the agreement. Therefore, if the claimant appoints a representative after submitting a fee agreement, the representative must sign onto the first agreement or the claimant and representative must submit an amended agreement signed by all.

• The claimant appointed representatives who are not members of a single firm, partnership, or legal corporation. This rule applies in all cases except when the claimant and the appointed representative(s) from a single firm, partnership, or legal corporation signed the fee agreement, and any other appointed representative(s) waived charging and collecting a fee. SSA must have received the waiver before the date of the favorable decision.
• The claimant discharged a representative, or a representative withdrew from the case, before SSA favorably decided the claim and the former representative did not waive charging and collecting a fee.
• The representative died before SSA issued the favorable decision.
• A State court declared the claimant legally incompetent and the claimant's legal guardian did not sign the fee agreement.

The Social Security Act (the Act) does not require using specific language in a fee agreement. Therefore, representatives may craft their own fee agreement language and SSA will approve the agreement if it meets the statutory conditions of the Act and no exceptions apply.

SSA has written fee agreement model language that complies with the statutory conditions for approval of a fee agreement. However, because a fee agreement is a contract between a representative and his or her client, each fee agreement is unique, may appear in any form, and may include provisions in addition to the fee. For example, a fee agreement may contain additional provisions for payment of out-of-pocket expenses for medical reports, interest on an unpaid balance of an authorized fee, or for establishing a trust or escrow account, etc.

Representatives may use stamped or photocopied signatures in lieu of their actual signatures on a fee agreement, and may submit a photocopy (or fax) of the original fee agreement. A fee agreement stamped only with a representative's firm's name is not acceptable.

SSA will not disapprove a fee agreement solely because it contains a provision stating that:

• The representative has the right to seek review of the amount that otherwise would be the maximum fee under § 206(a)(2)(A) of the Act.
• The authorized fee does not include any out-of-pocket expenses (e.g., costs involved in obtaining copies of medical reports or state sales tax, etc.).
• The fee agreement applies only to services through a specific level of the administrative appeals process. For example, the agreement may state that its provisions apply only if SSA favorably decides the claim(s) at or below the first Administrative Law Judge (ALJ) hearing decision, but that if the claim progresses beyond that level of the administrative appeals process, the representative will request a fee through the fee petition process. (If the fee agreement includes this or similar language and the first hearing decision is favorable, the fee agreement applies in that situation and the ALJ will approve the fee agreement if all the conditions for approval are met and no exceptions apply. If SSA issues the first favorable decision after the initial hearing decision, e.g., the Appeals Council issues the favorable decision, the decision maker must disapprove the fee agreement because it does not limit the fee to the lesser of 25 percent of past-due benefits or $5,300.)
• A named third party will pay the representative a fee equal to the lesser of 25 percent of the past-due benefits or $5,300, and the claimant will have no financial liability for paying the authorized fee.
• The representative will charge interest on the unpaid balance of the authorized fee.
• The representative will share the authorized fee with another person who referred the case.

The following are examples of provisions that are inconsistent with the statutory condition that the fee specified in the agreement does not exceed the lesser of 25 percent of the past-due benefits or $5,300. SSA will disapprove a fee agreement containing a provision stating that:

• The claimant will pay a minimum fee. For example, the fee agreement calls for a fee equal to 25 percent of the past-due benefits or $5,300, or at least $1,500.
• If 25 percent of the past-due benefits exceeds $5,300, the representative will receive a fee of $5,300 and retains the right to petition for an additional fee. (Representatives retain the right to request administrative review under the fee agreement process; however, they may not substitute the fee petition process for the fee agreement process once SSA issues a favorable decision.)

If SSA makes a favorable decision on the claim, SSA will either approve or disapprove the fee agreement when it issues the favorable decision. If SSA's decision on the claim is unfavorable, SSA does not make a determination on the fee agreement and will not provide notice about the fee agreement.

SSA's determination on a fee agreement is limited to whether the agreement meets the statutory conditions of the Act and is not otherwise excepted.

If an SSA decision maker approves a fee agreement that does not meet the statutory requirements of the Act, or is otherwise excepted, SSA cannot authorize a fee under the fee agreement process. In such cases, an SSA reviewer will disapprove the fee agreement and advise the claimant and the representative that:

• If the representative intends to charge and collect a fee for his or her services in the case, he or she must file a fee petition; and
  
• The determination is not subject to further review.

If SSA issues a partially favorable decision, the decision maker will approve the fee agreement if the statutory conditions are met and no exceptions apply, and SSA will authorize a fee under the terms of the agreement.

If on appeal, SSA makes a more favorable decision yielding additional benefits, SSA will use the additional benefits when recalculating the past-due benefits, and may authorize an additional fee under the fee agreement process, subject to the limits established by the fee agreement, but not to exceed $5,300.

If SSA authorized fees amounting to $5,300 under the fee agreement based on the past-due benefits resulting from the partially favorable decision, and SSA subsequently makes a more favorable decision on appeal that results in additional past-due benefits, SSA will not authorize additional fees under the fee agreement. However, if the representative wants to be able to charge more than $5,300 for any reason (e.g., because of the additional work anticipated on the appeal), within 15 days after receipt of his or her copy of the notice of fee authorization, the representative has the right to file a timely request for administrative review of the amount of the fee. If a request for administrative review is filed, an SSA reviewing official will process the request after SSA has completed its action on the appeal. If on appeal, SSA makes a less favorable or unfavorable decision, SSA will adjust both the past-due benefits, if any, resulting from the new decision, and the fee previously authorized. In these cases, the representative must refund any excess payment.

One of the statutory conditions for approval of a fee agreement is that the parties submit the agreement to SSA before the date of the favorable decision. In claims involving more than one favorable decision (i.e., partially favorable decisions resulting in a more favorable decision on appeal), SSA considers when the representative entered the claim in determining whether the statutory conditions for approval are met.

For SSA to approve a fee agreement in a claim(s) resulting in more than one favorable decision, the claimant or representative must file the agreement with SSA before the date of the first favorable decision SSA made after the representative entered the case.

Unless the claimant or representative files the fee agreement before the date of the first favorable decision SSA made after the representative's involvement began, SSA presumes that the representative will either waive his or her fee or use the fee petition process to obtain SSA's approval to charge and collect a fee. The fee agreement and the fee petition processes are not interchangeable. Therefore, a representative may not convert to the fee agreement process during the course of appealing a partially favorable decision.

For purposes of calculating a fee under an approved fee agreement in a claim(s) involving more than one favorable decision, "past-due benefits" are those additional benefits resulting from the favorable decision SSA made after the representative became involved in the claim.