## Facts

- A veteran initially was denied service-connected disability benefits in 1981 and sought to reopen the claim in 1993.
- In 1994, the veteran retained attorney Kenneth M. Carpenter under a written fee agreement providing a contingent fee of 30% of any past-due benefits, to be paid directly from those benefits.
- After VA granted service connection effective February 12, 1993, Carpenter pursued an earlier effective date based on clear and unmistakable error (CUE) in the 1981 denial.
- The CUE claim was denied at the agency level, appealed to the United States Court of Appeals for Veterans Claims, and later remanded on a joint motion.
- On remand, VA awarded approximately $206,000 in past-due benefits.
- The court also awarded approximately $2,400 in attorney’s fees and expenses under the Equal Access to Justice Act (EAJA), which was paid to Carpenter.
- Carpenter collected 30% of the past-due benefits under the contingency agreement and retained the EAJA award.
- The Board of Veterans’ Appeals reviewed the fee for reasonableness under 38 U.S.C. § 5904, reduced the contingent fee to 20%, and ordered Carpenter to refund the EAJA fees to the veteran as impermissible double recovery for the same work.
- Carpenter appealed the Board’s fee determination.

## Issues

1. What standard governs whether an attorney’s fee is “excessive and unreasonable” under 38 U.S.C. § 5904 when based on a contingency percentage of past-due benefits.
2. Whether an attorney may keep both an EAJA fee award and a contingency fee from past-due benefits for the same legal work, or must refund/offset the EAJA award to the client.

## Decision

- The court held that the Board has authority under 38 U.S.C. § 5904 and implementing regulations to review and reduce attorney fees that are excessive and unreasonable.
- The court agreed that Carpenter’s overall compensation was excessive and that reduction was warranted, while modifying the Board’s specific fee determination in part (affirmed in part and reversed in part).
- The court held that Carpenter could not retain both the contingency fee and the EAJA award for the same work and must refund or offset the EAJA fees so the veteran receives the benefit of EAJA.

## Legal Principles

- Fee agreements in VA benefits matters are subject to statutory oversight for reasonableness; client consent to a percentage fee does not bar agency and judicial review under 38 U.S.C. § 5904.
- Reasonableness is assessed under the totality of circumstances, including the services performed, case complexity, time spent, and results obtained; a contingency percentage is not automatically reasonable in application.
- EAJA fee shifting is intended to reduce the prevailing party’s litigation burden; when EAJA fees and private contingent fees compensate the same work, the attorney may not obtain full payment twice.
- Where both EAJA and contingent fees are awarded for overlapping services, the attorney must offset or refund the EAJA amount to ensure the client receives the benefit of the EAJA award.

## Conclusion

The Veterans Court confirmed the Board’s authority to police unreasonable attorney fees in veterans benefits cases and required counsel to refund or credit EAJA fees against a contingent fee when both compensate the same work, while otherwise modifying the Board’s particular fee reduction.


Carpenter v. Principi, 15 Vet. App. 64 (2001)