GN 03940.003:
Fee Agreement Evaluation
Effective Dates: 11/06/2017 - Present- Effective Dates: 07/12/2018 - Present
TN 15 (09-04)- TN 21 (07-18)
- GN 03940.003 Fee Agreement Evaluation
A. Policy – statutory conditions for approval- A. General fee agreement evaluation policy
A fee agreement must meet the following five statutory conditions for the 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 the first favorable decision the representative worked toward achieving. See GN 03940.001D., Fee Agreement Determination, and GN 03940.004C., Fee Agreement Submitted After First Favorable Decision.- When we evaluate a fee agreement, we consider:
- * Whether the fee agreement meets all five statutory conditions for approval found in § 206(a)(2)(A) of the Social Security Act (Act);
- * Whether additional language or clauses in the fee agreement are unnecessary or irrelevant; and
- * Whether an exception to the fee agreement process exists.
NOTE 1: In concurrent Titles II and XVI claims, the date of the favorable decision under the first title is controlling for both titles (see GN 03940.001B.).* The claimant or the claimant's legal guardian or representative payee, and the 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 (e.g., a mother may sign an application for Title XVI benefits, an appointment of representative form, and a fee agreement on behalf of her child). If SSA has determined that a claimant under age 18 will be his/her own payee (see GN 00502.070), the claimant may sign the fee agreement. Refer to GN 03940.003B.5. for guidance when a legally incompetent individual signs the agreement. * 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. * If the representative's signature is illegible or the decision maker questions the representative's signature for any reason, the decision maker may contact the representative for clarification. * If, at the time the decision maker is prepared to issue a favorable decision, he/she realizes that the claimant or representative failed to sign the agreement, the decision maker must disapprove the agreement because both did not sign it. * SSA recognizes the appointment of individuals, not firms, corporations or other entities, as representatives.- NOTE: To identify the appropriate fee agreement decision maker, see GN 03940.002.
If a claimant attempts to appoint a firm or other entity, and a representative accepts the appointment on behalf of the firm (e.g., by signing an SSA-1696-U4 (Appointment of Representative) or a fee agreement that contains an appointment provision), SSA recognizes that representative, in his/her individual capacity, as the claimant's appointed representative. See GN 03910.040B.3.- B. Statutory conditions for fee agreement approval
If the individual who signs the fee agreement, on behalf of the firm or corporation, is the appointed representative, the decision maker must approve the fee agreement if all other conditions for approval are met and none of the exceptions in GN 03940.003B. apply.- When a representative utilizes a fee agreement to obtain our approval to charge and collect a fee for services, the fee agreement must meet the following five statutory conditions:
If someone other than the appointed representative signs the fee agreement on behalf of the firm or corporation, the decision maker must disapprove the fee agreement because the appointed representative did not sign the fee agreement.* The fee specified in the agreement does not exceed the lesser of 25 percent of the past-due benefits or: * $4,000 if the fee agreement is approved before February 1, 2002. * $5,300 if the fee agreement is approved on or after February 1, 2002. * $6,000 if the fee agreement is approved on or after June 22, 2009.- 1. Filed timely
NOTE 2: The specified dollar amount in the bullets above is established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act (the statute). This amount may be increased by the Commissioner of Social Security from time to time.- The claimant or representative must submit the fee agreement to us before the date of the first favorable decision that the representative worked toward achieving, as explained in GN 03940.001B.
NOTE 3: The ceiling also applies to concurrent Titles II and XVI claims or post entitlement (PE) 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 the specified dollar amount in the bullets above.* SSA will accept language in a fee agreement that would apply if the Commissioner increases the limit after the date of the agreement. In the examples below, if the decision maker approves the fee agreement on or after the date the Commissioner increases the limit, and the agreement meets all conditions of the fee agreement process and no exceptions apply, SSA will authorize a fee of the lesser of 25 percent of past-due benefits or the increased cap limit:- We use the date of the award or decision notice, not the date of adjudication or effectuation. The date of the first favorable decision under one title is controlling in concurrent claims.
EXAMPLE 3-1: If SSA favorably decides the claim, I will pay my representative a fee equal to the lesser of 25 percent of my past-due benefits or the dollar amount established pursuant to section 206(a)(2)(A) , which is currently [insert the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act], but may be increased from time to time by the Commissioner of Social Security.- If we receive more than one fee agreement, we act on the latest fee agreement received before the favorable decision date. We cannot consider a fee agreement filed after the favorable decision, even when signed prior to the favorable decision.
EXAMPLE 3-2: If SSA favorably decides the claim, I will pay my representative a fee equal to the lesser of 25 percent of my past-due benefits or [insert the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act] or such higher amount as the Commissioner of Social Security may prescribe pursuant to section 206(a)(2)(A ) of the Social Security Act).- NOTE: Parties cannot submit a new fee agreement in lieu of a request for appointment, withdrawal, or revocation. The claimant must submit a separate writing to appoint a new representative or revoke an appointment, and a representative must separately withdraw his or her own appointment.
EXAMPLE 3-3 I will pay my representative a fee equal to 25 percent of any past-due benefits from my claim or, if less, the maximum dollar amount allowed pursuant to section 206(a)(2)(A) of the Social Security Act, based on the date SSA approves my fee agreement.- 2. Submitted in writing
NOTE 4: Agreements that specify a minimum fee do not meet the statutory conditions for approval under the fee agreement process.- The claimant, the claimant's legal guardian, or the parent of a child under the age of 18 and the appointed representative must submit a fee agreement in writing. To validate the agreement, we also require that all parties sign the same agreement:
- * Either a court appointed representative, a parent of a child under age 18, or the legal guardian of legally incompetent claimant, refer to GN 00502.139 may sign the fee agreement.
- * If we determined that a claimant under age 18 can be his or her own payee, the claimant may sign the fee agreement. For developing capability for children, see GN 00502.070.
- * We can accept a representative’s stamped signature on a fee agreement unless we have reason to doubt the representative’s intent to sign the fee agreement. However, we must not accept a fee agreement with only the stamp or name of an entity. We only recognize individuals as representatives, not firms, corporations or other entities. The fee agreement must show the name(s) of each representative(s) who is party to the fee agreement.
- * We accept the claimant’s signature in pen and ink. While we cannot currently accept electronic signatures on fee agreements, we will as they become available through future systems enhancements.
- * We may contact the parties for clarification if the signatures are illegible or questionable.
- * The parties may submit a photocopy or fax of the original fee agreement.
- * We accept a fee agreement signed by multiple individuals as long as the claimant appointed at least one of them; however, we must only recognize and authorize a fee to the individuals who are properly appointed representative(s). We must not include in our fee considerations individuals who signed the fee agreement but were not appointed.
EXAMPLE 4: An agreement specifies that the representative's fee will be 25 percent of past-due benefits or [insert the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act], whichever is less, except that if 25 percent of past-due benefits does not exceed $1,500, the representative's fee will be $1,500.- 3. Meet the statutory fee limits
The language in example 4 is not consistent with the statutory provisions for approval because the controlling factor is the parties' agreement that the minimum fee will be $1,500.- The fee requested in the fee agreement cannot exceed the lesser of 25 percent of the past-due benefits or the fee limit set by the Commissioner under the authority provided by section of the Act 206(a)(2)(A)(ii)(II). The current limit is $6,000.
NOTE 5:Agreements may state a lower maximum amount than the current limit.- The fee limit also applies to concurrent claims with a common issue. We cannot approve a fee greater than 25 percent of the combined Titles II and XVI past-due benefit amounts or $6,000 (or other statutory fee limit in effect).
EXAMPLE 5: An agreement specifies that the representative’s fee will be limited to $2500 or 15%, whichever is less.* SSA's decision is fully or partially favorable to the claimant.- We accept language in a fee agreement that permits an adjustment for the statutory fee limit in effect as of the day we approve the fee agreement. We also accept language that sets the percent or fee limit at an amount lower than the statutory limit. We must not accept language that establishes a specific minimum fee amount that may result in a fee of more than 25 percent of the past-due benefits.
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 decision maker approves the fee agreement if all other factors are met.* The claim or PE action results in past-due benefits.- 4. Result in a favorably decided claim
The decision maker's approval or disapproval of a fee agreement is limited to whether the agreement meets the statutory conditions and is not otherwise excepted (i.e., the approval is contingent on whether the claim results in past-due benefits).- To approve a fee agreement, the claim or action must result in a fully or partially favorable decision. This can be an initial favorable decision or a post-entitlement decision that leads to new past due benefits.
In some concurrent Titles II and XVI claims, there may be past-due benefits under only one title. In such a case, the decision maker approves the fee agreement if all other factors are met.- We still approve a fee agreement even if our decision is favorable to the claimant under only one title in a concurrent claim, so long as the agreement meets all other statutory conditions and no exceptions apply.
B. Policy - exceptions to the fee agreement process- 5. Yield past-due benefits
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 the claimant or the representative. Therefore, SSA excepts or excludes an agreement from the fee agreement process (i.e., does not approve the 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.- We must only approve a fee agreement when the claim or post-entitlement or post-eligibility (PE) favorable decision results in past-due benefits for a single claim or at least one title in concurrent claims. If we initially approved a fee agreement on the condition that there are past due benefits, but, at the time we effectuate the favorable decision, we find that there are no past-due benefits, we cannot process the fee agreement approval. In these situations, we must notify the representative(s) and the claimant that the representative(s) must file a fee petition in order to charge and collect a fee. For notice language, refer to NL 00720.050.
NOTE 1: This exception does not apply if the representative(s) who did not sign the fee agreement waived charging and collecting a fee. (GN 03920.020 discusses waiver requirements.)- The fee agreement process applies to claims for initial entitlement, as well as PE actions that involve new entitlement for additional benefits or reopening after termination.
NOTE 2: “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 and not all representatives signed onto a single fee agreement.- We must disapprove fee agreements received in connection with processing PE actions that only adjust benefit amounts or remove payment suspensions from benefits for which we have already established entitlement (e.g., changes in workers’ compensation offset, resolution of earnings discrepancies, increased payments from work ending while disabled), even though the decisions may result in past-due benefits.
NOTE 3: This exception does not apply if the appointed representatives who have not signed onto the single fee agreement waived charging and collecting a fee.- NOTE: Other actions may result in past-due benefits; however, the fee agreement process applies only to claims for entitlement.
EXAMPLE: The claimant appointed attorneys Brown and Smith of the law firm Brown and Smith PC as her representatives. Subsequently, the claimant also appoints attorney Jones of the law firm Black and Jones PC. The claimant and attorneys Brown and Smith enter into a fee agreement that they submitted to SSA. Attorney Jones waived charging and collecting a fee. The decision maker in this situation would approve the fee agreement. However, if attorneys Brown and Jones had submitted the fee agreement and attorney Smith had waived charging and collecting a fee, the decision maker would have to disapprove the fee agreement because the representatives who signed the fee agreement were not members of a single firm, partnership or legal corporation.* The claimant discharged a representative, or a representative withdrew from the case, before SSA favorably decided the claim.- C. Factors immaterial to the fee agreement evaluation process
NOTE 4: This exception does not apply if the former representative waived charging and collecting a fee.* The representative died before SSA issued the favorable decision.- We do not require a standard fee agreement format. We accept various forms and language choices, so long as:
- * the agreement meets each of the five statutory requirements,
- * the case is for entitlement, and
- * no exceptions apply.
When the representative dies before SSA issues a favorable decision and the claimant or representative submitted an otherwise valid fee agreement, the decision maker will:* disapprove the fee agreement, and* notify the parties, including the deceased's estate, that the agreement is excepted from the fee agreement process, but that the estate of the deceased representative may request SSA's authorization to charge and collect a fee by filing a fee petition.* A State court declared the claimant legally incompetent and the claimant's legal guardian did not sign the fee agreement.* Do not confuse legal incompetency with the issue of whether a claimant is mentally capable of managing his/her funds. SSA does not except a fee agreement solely because the claimant is mentally incapable of managing his/her funds and requires a representative payee, or because SSA is evaluating the claimant's mental capability.* If SSA determined that the claimant is mentally incapable of managing his/her funds or is in the process of evaluating the claimant's mental capability, the effectuating component will defer sending notice regarding the amount of the fee under the fee agreement until SSA has selected a representative payee. (See GN 03940.037 and GN 03940.051 if mental capability is an issue.)- We may approve the fee agreement without considering certain terms or provisions appearing in the fee agreement, such as:
C. Policy – considerations related to the statutory conditions for approval and the exceptions- 1. Representative’s hours and services
1. Multiple fee agreements in file from same representative- We do not consider representative’s hours and services when deciding whether to approve or disapprove the fee agreement.
The decision maker will act on the last fee agreement SSA received before the date of the favorable decision.- 2. Agreements or arrangements unrelated to the authorized fee
2. Agreement provisions that will not cause SSA to disapprove a fee agreement- We do not consider agreements or other arrangements between the claimant and the representative unrelated to the authorized fee. Some examples include:
- * Agreements for the payment of out-of-pocket expenses (e.g., costs involved in obtaining copies of medical reports or paying state sales tax). Reasonable out-of-pocket expenses are not subject to our review. For more information on fees not subject to our review, see GN 03920.010.
- * Agreements that a third party will pay the representative part of the authorized fee. The representative cannot charge or receive a total fee for services provided on the claim(s) of more than the amount that we authorize. Importantly, when using the fee agreement process, the total amount requested may not exceed the statutory fee limits, even if the fee is being paid in part by the claimant and in part by a third party. A representative must submit a statement of the fee expected from a third party as part of or in addition to the fee agreement.
- * The right to charge interest on the unpaid balance of the authorized fee.
- * A plan to share the authorized fee with another person who referred the case.
SSA will not disapprove a fee agreement solely because it contains one or more of the following statements:* 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 representative may request administrative review under § 206(a)(3)(A) of the Act of the amount of the fee if the past-due benefits do not exceed a certain amount.* The authorized fee does not include any out-of-pocket expenses (e.g., costs involved in obtaining copies of medical reports or paying state sales tax).* A named third party will pay the representative a fee equal to the lesser of 25 percent of the past-due benefits or the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act (see GN 03940.003A. (3.), and the claimant will have no financial liability for paying the authorized fee. Refer to GN 03920.017, Payment of Representative's 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.- 3. Language related to the right to request review
3. Agreement provisions/situations that will cause SSA to disapprove a fee agreement- There is a statutory right to request administrative review of the amount set as the maximum fee. Therefore, we do not consider language in the agreement concerning administrative review. We explain administrative review rights in our fee determination notice.
a. Fee amount- 4. Death of claimant or representative
The following are examples of agreement 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 the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act (see GN 03940.003A. (3.). SSA will disapprove a fee agreement containing a provision stating that:* The claimant will pay a minimum fee (e.g., the fee agreement calls for a fee equal to 25 percent of the past-due benefits or the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act, or at least $1,500). See the Example 4 in GN 03940.003A. (3).* If 25 percent of the past-due benefits exceeds the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act, the representative will receive a fee equal to the specified dollar amount established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act and retain the right to petition for an additional fee.- We do not consider the death of the claimant, whether the claimant died before or after we issue a favorable decision.
NOTE: Do not confuse “petition” with “request administrative review.” Whereas a representative retains the right to request administrative review under the fee agreement process, he/she may not substitute the fee petition process for the fee agreement process after SSA issues a favorable decision.- We do not consider the death of the representative after we issue a favorable decision. The decision maker notifies the deceased representative’s executor or estate administrator of the fee agreement approval, redacting any personally identifiable information (PII) related to the claimant that is not necessary or relevant to the fee agreement approval process.
b. Unappointed representative- For fee payment in either situation, refer to GN 03940.009.
The representative may not delegate to an unappointed assistant the authority to undertake tasks that require making significant decisions regarding the case, such as appearing as the claimant's advocate in a hearing before an Administrative Law Judge (ALJ). This task requires making decisions about presenting evidence, cross-examining witnesses, arguing facts and law, and appealing any adverse ruling. Whoever performs such tasks is, by definition, a representative, and must be appointed as such by the claimant. Only an individual whom the claimant has appointed, and whom SSA has accepted as the claimant's representative, has the authority to perform such tasks.- If the representative dies before the favorable decision, refer to GN 03940.003 D.6 in this section.
Therefore, if a representative and claimant both signed the Form SSA-1696-U4 (or equivalent statement) and the fee agreement, and a person other than the appointed representative (e.g., a paralegal working under the supervision of the appointed representative) actually attended the hearing as the claimant's sole advocate, the decision maker will assume that the person is acting as a co-representative and request that the claimant appoint that person to be his/her co-representative. If the fee agreement is not signed by that person, the decision maker will disapprove the fee agreement.- D. Exceptions to the fee agreement process
NOTE: If the claimant had submitted a written document appointing the paralegal in the above scenario to be his/her representative, the paralegal had signed the fee agreement, the ALJ approved the fee agreement, and the claimant was entitled to past-due benefits, the paralegal would share the authorized fee (but not receive direct payment).- We do not approve fee agreements if the approval could lead to authorization of fees that would be unfair to the claimant or the representative, e.g., fees in excess of the statutory limit, erroneous approval of multiple fee agreements to different representatives, or payment to a representative who is not eligible for fees.
4. Factors not to consider- Therefore, the fee authorizer must review the entire case, including all representative appointments, withdrawals, revocations, and all fee agreements submitted during the life of the claim to determine if an exception applies.
a. Representative's hours and services- The fee authorizer must disapprove the fee agreement in the following situations:
The number of hours the representative spends on a claim and the representative's specific services are not conditions for approval of a fee agreement. Therefore, the SSA decision maker may not request this information when making the initial determination on the fee agreement.- 1. Claimant appoints multiple representatives and all did not sign a single fee agreement
b. Death of claimant before decision issued- The fee authorizer must disapprove a fee agreement if the claimant appoints more than one representative and not all of the appointed representatives signed a single fee agreement.
If a represented claimant dies before SSA completes action in the matter the claimant engaged the representative to handle, SSA will presume, absent evidence to the contrary, that the representative's authority continues. (See GN 03910.060A. for information about when a representative's authority ends.) Therefore, if a claimant or representative submitted a fee agreement before the claimant's death, and SSA issues a favorable decision after the claimant's death, SSA will approve the fee agreement, assuming it meets all other statutory requirements for approval and is not otherwise excepted from the fee agreement process. Refer to GN 03940.008C. for notice requirements.- We define a “single fee agreement” as one document signed by all parties (whether the representatives work for the same or different entities or for themselves). Therefore, if the claimant appoints another representative after submitting a fee agreement, this additional representative must sign onto the original agreement, or the parties must submit a new agreement signed by all.
c. Death of claimant or representative after decision issued- NOTE: The fee authorizer can approve the fee agreement if the representative(s) who did not sign the fee agreement waived charging and collecting a fee and the agreement meets all other conditions for approval. References:
- * GN 3920.020 Waiver of Fee or of Direct Payment of Representative's Fee
- * GN 3920.050 Releasing Withheld Funds for Representatives’ Fees
When a claimant or representative submitted a valid fee agreement and either party dies after SSA issues a favorable decision, the decision maker will approve the fee agreement.* If the claimant is deceased, the decision maker will notify the claimant's survivors or the representative of the claimant's estate of the fee agreement approval.* If the representative is deceased, the decision maker will notify the executor or representative of the representative's estate of the fee agreement approval.- 2. Approval could violate a provision in a two-tier fee agreement
NOTE: SSA may issue the fee payment only to the executor or other person the State recognizes as the representative of the deceased representative's estate.- A two-tier fee agreement functions as a fee agreement through a prescribed level, usually the first hearing. The fee authorizer can approve a two-tier fee agreement only if the level at which we make a favorable decision is within the confines of the fee agreement. For instructions on processing two-tier fee agreements, see GN 03940.005. If the claimant did not receive a favorable determination or decision during the indicated level and wants to appeal the determination or decision, the representative must submit a fee petition at the end of his or her service.
D. Policy – actions for which SSA can not approve a fee agreement- 3. Claimant revokes the appointment or the representative withdraws before we decide the claim
The fee agreement process applies in a claim of entitlement to past-due benefits. Actions, such as changes in workers' compensation offset and other similar actions are adjustments of benefit amounts to which entitlement has already been established. Consequently, the fee agreement process does not apply to this category of actions.- The fee authorizer must disapprove the fee agreement when the claimant discharges a representative or a representative withdraws from the case before we favorably decide the claim. We do not contact the representative after termination of services.
If SSA receives a fee agreement in connection with processing one of these actions, the basis for the fee agreement disapproval is that the agreement was not filed before the date SSA made a decision in the claim that resulted in past-due benefits.- The fee authorizer must approve a fee agreement for the remaining or new representative(s) if the revoked or withdrawn representative waived charging and collecting a fee and the agreement meets all other conditions for approval.
- 4. Claimant is legally incompetent and the legal guardian did not sign the fee agreement
- The fee authorizer must disapprove a fee agreement if a state court declared the claimant legally incompetent prior to a favorable decision and the claimant's legal guardian did not sign the fee agreement.
- The fee authorizer must not disapprove a fee agreement only because the claimant is mentally incapable of managing funds and requires a representative payee, or because we are evaluating the claimant's mental capability.
- References:
- * GN 03940.037 Title II - FO and PC Processing of Fee Agreements on Claims Involving Mental Capability - General
- * GN 03940.051 Field Office Processing of Fee Agreements on Title XVI or Concurrent Titles II and XVI Claims Involving Mental Capability
- 5. Representative is suspended or disqualified
- The fee authorizer must disapprove the fee agreement for a suspended or disqualified representative if we favorably decide the claim after the effective date of the individual’s suspension or disqualification. For more information on processing claims with suspended or disqualified representatives, see GN 03970.060.
- 6. Representative dies before the favorable decision
- When a representative dies before we issue a favorable decision, and the claimant or representative submitted an otherwise valid fee agreement, the fee authorizer must:
- * disapprove the fee agreement at the time of the decision, and
- * notify the parties, including the deceased's estate, (redacting PII, as necessary), that we disapproved the agreement, but the estate may request a fee for the deceased representative’s services by filing a fee petition. For processing payments, see GN 03940.009.
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