established one hundred seventy four l s c is a private nonprofit corporation which promotes equal access to justice under the law by providing grants or programs for civil legal assistance for low income persons the programs which receive these grants to help the most vulnerable specifically those living at or below one hundred twenty five percent of the federal poverty level the grant programs help those who face a variety of matters including displaced persons attempting to federal emergency assistance following hurricanes or floods or  should happen and victims of predatory lending practices during this economic downturn the grantee program supplied an even more significant role the programs have provided legal assistance to families and individuals to obtain public benefits and to fend off foreclosures in the personal lives because alice c distributes more than ninety five percent of its total funding to over one hundred thirty five legal aid programs providing legal assistance and every congressional district we can be assured many of those in need are receiving legal assistance however according to recent report not all eligible potential clients of ella see funded programs are receiving the legal assistance they so desperately need in memphis my hometown met the syria legal services panel nearly fifty six hundred cases in two thousand and eight both the downturn in the economy and the resulting increase requests for legal representation the methods are legal services has handled over forty five hundred cases through the first six months of this year that would extrapolate to nine thousand cases or an increase of about forty percent at least i'm very interested in while s c funded programs have been unable to meet the needs of half of all the potential clients walk through the off served time as a general sessions judge in shelby county and legal services often represented people who otherwise would have been taken advantage of by landlords and it was important that the l a legal services people be available to represent  according to order receiving today's testimony and i now recognize mr frank distinguished ranking member the subcommittee for his opening remarks well thank you mr chairman and thank you folks for being here i know it's always a pretty heart stopping challenge sometimes to come before lunch members of congress that know a lot less about the issues than you do and yet have to say some of the things they have to say but i appreciate you being here mr chairman i welcome this opportunity to renew our oversight of the legal services corporation i don't think any hearings have been held on this topic since at least the beginning the hundred tenth congress and i think this oversight is long overdue and i say this because we know that eliseus had a troubling history of not to the contrary troubles continue even to this year as recently as july the washington times and c b s news reported numerous instances of wasted funds including unnecessary travel expenses in a decorative well costing over hundred eighty thousand dollars in july elysees inspector general reported problems with the organization's consultant contracts and as we speak the g a o is in the middle of pairing its third report on l s e and as many years eyewitnesses today undoubtedly will cite structural other changes being implemented by l s e in an effort to bring it into compliance with recommendations in the most recent g a o and inspector general reports and i do applaud those efforts of course at the same time i am sincerely concerned there's a pending legislation that would vastly expand elysees funding and lift restrictions on its activities before we know definitively that alice e has cleaned house and turned the page how can we trust that the most recent fixes at the corporation will be more effective than elysees past fixes given the fact that g a o and inspector general keep coming back and finding more problems that need fixing on an ongoing basis doesn't logic dictates that we wait and watch vigilantly at least another year or two to see if funding at current levels is used properly before we reward l s c with another increase in annual funds this time from three hundred ninety million to in two thousand and nine to four hundred forty million in two thousand  and doesn't logic demand that we refrain from lifting restrictions on how eles you i'm sorry ellice a c can use the funds in march of this year senator tom harkin introduced a bill that would lift restrictions on the ability of l s e grantees to file ideologically motivated lawsuits our colleague congressman scott introduced similar legislation h r thirty seven sixty four this month in the house these restrictions were enacted by congress in  six in response to evidence that legal services lawyers were systematically using taxpayer money to further partisan policies i guess that troubles me as much as anything mr chairman the restrictions ban credit restrictions band representation of undocumented aliens abortion related litigation class action lawsuits prisoner advocacy challenges to the welfare reform and congressional restrictive redistricting cases not only do they keep pelosi out of the partisan arena they focus l s c on what should have always been its true mission and that is to provide legal aid to the poor even with these restrictions however legal services lawyers funded by l s e have attempted to use federal funds to engage in prohibited prohibited activism as recent recently as two thousand and eight for example ls c's inspector general subpoenaed california rural legal assistance assistance to see if it had violated the restriction on representing undocumented aliens the national legal and policy center reported this year that a quote former c r l a lawyer said the organization had a policy of providing aid to illegal aliens but mr chairman evidence like this misuse of federal funds should stop before the war l s c with increased funds but it will probably take another year before elysees one hundred thirty plus even orientation on modernized auditing practices and it's absurd that congress is considering giving l s c more money and more ways to misuse its money at this particular time oversight and not increased funding and lifted in strict restrictions is what is needed today and in the forseeable future intel as intel l s c has proven over a sustained period of time that its funds are no longer being used for partisan activism we should not consider rewarding l s c with increased or decreased funds and lifted restrictions and i thank you mr chairman thank the gentleman for a statement i now recognize mr scott chairman of the crime subcommittee  project to help homeowners and participate in a volunteer lawyers program which recruit and train pro bono attorneys to help low income earners at risk of losing their homes are foreclosure and many of them are struggling to keep their families together and their children many programs have domestic violence projects including memphis area legal services and one of its cases the memphis program represented the mother of three children who was trapped in an abusive relationship with her estranged husband although she had left him he stalked her harassed her vandalized her property after being convicted for aggravated assault and burglary but before sentencing he taunted her by claiming her a divorce with the assistance of the memphis program the woman was able to obtain a divorce and is raising her children in a stable home  difference between the level of a bailable to low income americans and the level that is necessary to meet their need the two thousand and nine justice gap report update and expand the first report released by the corporation in two thousand and five the data collected in two thousand and nine confirmed the earlier conclusion that there continues to be a major gap between the civil  category for closure l s t funded programs are turning away to people to every client server programs are also meeting less than half of the requests for assistance with employment and family law matters there are people walking through the doors of our programs never imagined that they would find themselves in legal help many have lost their homes and their jobs their unemployment benefits are running out and they have no place to turn their only hope is for justice and it should not be denied our study shows that regrettably many people walk out those doors with no relief it is a would appreciate more staff to look at more grant to make sure their force barnett's contract ends at the end of this calendar year whereas the board and binding her replacement we have a committee that has reasons for the changes that we have a robust discussion about legal opinions that affect our program that i think many federal agencies government agencies and private institutions do however  within congress as to exactly what the funding levels and exactly what the mission of the organization that you work with should be but i think that one thing should be agreed upon by political culture that they should primarily focus on helping the under served those who can't afford legal representation for themselves i mean i'm hoping that you agree with that absolutely and do you think that in the future what can we do to try to make sure that the that the legal services focuses on its primary duty which is to give legal services and aid to the poor mr mckay if you had any connections with the reagan era got an opportunity to to tell us about those maybe that that would satisfy some of my colleagues on the on the  i'm wondering if you could just tell us a little bit about either one of you could tell us a little bit about how this legislation would help the legal services corporation  and i've just heard ms walker and i'm sorry that she left that role that she didn't agree with the restrictions put in place in one nine hundred ninety six and i will submit that is the will of congress and i'll just ask you the question how do you identify the licenses to undocumented aliens and you know i would suggest that that violated the restriction on assisting undocumented aliens however the there was a refusal to release some of the information on these related cases and it turns out that mary that grantee has to submit at least every three years and in that they attach their budgets in that they attach an answer many specific questions that gives us the ability to know whether this program is capable of providing high quality legal services in conformity with the mandates of congress we also do program visits we also have grant activity reports quarterly that give us information for us to review we get coordinated impact put from the office of the inspector general as well as based on their visits to programs we hear from the public we hear from members of congress so we is the starting salary for legal aid attorneys is the lowest of any public sector tourney's and these young attorneys are graduating with huge student debt from their law schools we in fact have started a pilot loan with payment assistance program to be able to attract and retain these attorneys in our programs in the course of our review of their budgets and  their quarterly grantee reports they indicate what their salaries are so we can see unfortunately we don't have any programs that are paying exceedingly high salaries because the average starting requests for foreclosure assistance and they're seeing a huge percentage increase over last year last year was the first year we started to collect data on foreclosures  themselves so we will have more recent data at the conclusion of zero nine when we can have a comparative basis we hadn't we hadn't thought to take out of housing the separate category of foreclosures up until last year instance in the foreclosure area taking a leadership role in hosting national call with national providers and legal aid programs that specialize in foreclosure and in every a monthly basis to share developments that are happening in los angeles with court mediation in philadelphia with the newly enacted federal legislation so that we get to share what the different individual cases they partnered with the banks to renegotiate the loans so i think this is based on a local basis where the program is a stablish is a partnership and what we want to do with the sauteed sharing that program well we are also very concerned as is our program on the non english speaking eligible applicants for our services and to find out which programs are doing the best job with language access sharing that information in foreclosure alone predatory lending not only impacts seniors but it's or and minority communities but also targets the less fluent english speakers as well so this is an area that we and i think our programs recognize we need to have culturally competent  i think our programs very much do that in the in particularly in communities where there are non english speaking languages that they make an effort to hire bilingual staff and many of our appreciate the second panels attendance here if you notice our attendance is diminishing regularly happens with lunch hour and as one of the downsides of being chairman and ranking member hunger but i'm pleased we have our second panel in our first witnesses mr harrison macgyver the third is how the executive legal managed to mention the position of legal aid and related organizations for twenty seven years in mississippi and washington d you follow mr macabre welcome corporation and urges the one hundred eleventh congress to enact bipartisan legislation to reauthorize strengthen and improve l s d at the same time the a b a and america's lawyers will continue to advocate for private bar involvement and pro bono service to supplement the work of l s d long before i became a b a president i began visiting my congressional delegation both republicans and democrats to explain how important l funding is to alabama and the most vulnerable citizens in our state until recently the only funding for alabama legal services was federal funding over the years strong bipartisan support for l s e has energized not just in alabama but around the country in addition to their year round work at home a b a members and state and local bar presidents many on their own dime travel to d c every year to remind congress how important l s c is to their states and their districts importantly in the past two years the bar presidents of all fifty states plus the district of columbia the u s virgin islands and puerto rico have jointly urged congress to increase funding for l in addition to the support of the legal community the american people strongly support a federal legal services program this past spring the a b a released a newly completed harris public opinion poll which demonstrated strong national support for providing free legal services to qualified low income families the l s c is the central foundation of the legal aid system other components state and local funding and pro bono contributions not private lawyers are catalyzed by l leslie seed funding and serve to supplement the l s c resources l s c is a model private public partnership the core federal funding provides for client intake and screening referral of  responding to emergency matters training pro bono lawyers and handling cases when no private lawyer can do so l s e leverage is and facilitates the utilization of private resources both in can pro bono services and private funding a comprehensive national system is necessary to assure that all persons have access to the justice system yet every energy indicator shows that the efforts described above have proven to be inadequate and that access to justice is still largely denied to the poor one significant problem is that resources that are provided to l s d are not able to be used to maximum effect the a b a strongly urges the subcommittee and congress to address in r that prevents recipients of l s c funding from freely utilizing state local private and other non l s c funds to provide navy needed legal assistance to poor clients second the restriction that prevents l s c recipient programs from obtaining statutorily permitted attorneys fees as the house did in its version of c g s bill and third the restriction on class actions another roadblock to closing the justice gap is that legal aid systems other funding sources are insufficient or unstable the good news is that most if not all state governments are now partners in the efforts to provide legal aid to the poor and now forty eight states in fact provide funding unfortunately that funding as you probably know has been either decrease stories in jeopardy in addition the several states have sharply reduced night appropriations and at the same time while there are many positive efforts to supplement their lesley's federal funding these efforts cannot supplant for example the a b a promotes generous contributions of pro bono service and money by private lawyers  source of funding for legal services has been essential eliminated the this week is sponsoring a national celebration a pro bono to draw the bar in the public's attention to the broader pro bono contributions of lawyers and to encourage even more lawyers to participate this week there will be over five hundred events nationwide while pro bono remains an important part of the delivery system a strong officiant well funded is the central practice today i will highlight key findings from our august two thousand and seven report on elsie's governance and accountability and our december two thousand and seven report on elsie's grants management and oversight i will put this in context by presenting the status of l s e actions to respond to the recommendations that we made we've been following up on these actions since may and will continue to do so elysees governance and accountability practices and internal control are key in maintaining trust and credibility l s e agreed with all twelve of our recommendations in this area and have implemented for recommendations that we made to l s e management l l c has implemented a formal risk assessment program stablished a conflict of interest policy establishment tested a continuity of operations plan and decided to base elysees financial reporting on standards set by the governmental accounting standards elysees board has fully implemented three of eight recommendations we made to the board to help strengthen governance the board established an audit committee charters for the board's committees and a shorter timeframe for issuing l s e's audited financial statement however the board has not fully implemented five remaining recommendations one of these was for the board to develop and implement procedures to periodically evaluate  management processes this recommendation is key because it contributes to establishing an effective internal control environment at l s e and it helps keep l s e management accountable the other recommendations to the board that remain outstanding are to establish an implemented orientation program develop a training plan establish the compensation committee function and conduct a periodic self assessment of the board's committees and members performance at this time all that way the board's terms have members terms have expired as new members transition to the board it will be important that the new board make it a priority to fully implement these recommendations turning to the area of grants management and oversight l s e continues to need improved internal controls our december two thousand and seven report identified weaknesses in l s d s internal controls that left grant funds vulnerable to misuse such weaknesses in improper expenditures can result in a loss of credibility to the grantee the grant or and allows instances of fraud to take place if not addressed l addressed two recommendations we made it has followed up on the improper use of grant funds that we identified and it developed and implemented policies and procedures for sharing information among the offices of the inspector general the office of performance program performance and the office of compliance and enforcement however l s e has not yet fully implemented a key recommendation to employ a systematic approach for assessing across its one hundred thirty seven grantees lsd needs a sound and a little call approach consistently applied to determine whether its oversight resources are being used effectively lsd management has also not fully implemented a recommendation to revise its guidelines for fiscal compliance reviews and the l s e board has not fully implemented a recommendation to clearly delineate organizational roles and responsibilities for granted the oversight and monitoring in conclusion elysees board of directors and management have made progress and fully implemented nine recommendations the improvements that l s e has made in its governance and accountability provide a good foundation alice he can build upon to effectively adjust to evolving practices and risk however l s e needs to complete implementation of the remaining recommendations and focus continuing attention on the elements needed for strong governance and internal control in particular continuing risk assessments and a robust risk management program and mitigation will be a crucial component of l s e overall internal control structure similarly although the board has taken an important step by establishing an audit committee it will be important for the board to continue to develop and implement procedures to periodically evaluate the management highlight in particular do you have any belief why they haven't completed that well it's i believe that it's a combination of factors that mr mckay referred to and that sometimes you need to do when stuff like establishing the audit committee first before you can take some of the other actions and so there's sort of a normal progression like that that basically the reasons that we until we feel until all the recommendations are fully implemented how much time do you think it would take to complete implementing all of your recommendations well i think that generally for our recommendations we look  these recommendations could be implemented if the board and the president knew that they were a priority of the subcommittee i can't say but i would think that that that would be something that would be helpful to have oversight and making sure restriction on non federal funds there are a number of legal services orders across the country that generate a substantial portion of their operating revenues from private fundraising and yet despite the fact that those are not being or not being given by the federal government they are subject to the same restrictions that has led to inefficiencies that i myself have personally seen during my years i'd be a president traveling across the country and seeing providers who are forced to set up a parallel organization to the federally funded one in order that they be able to wars or the state governments wishes in terms of what the money could be used for so the first is eliminating the non federal funding restrictions allow them to use those monies as the don't know or the state or the local person desires the monies to be used the second is and statutorily authorized attorneys as you know congressman many states have statutes that in their wisdom have decided that if a particular type of cases brought the plaintiffs like prevail should be able to get attorneys from the offending party right now legal services attorneys  prohibited from asking for those statutorily mandated we see that quite frankly as the concept of federalism if the state decides then why is the federal government saying that legal services lawyer shouldn't get those it puts them at a negotiating disadvantage if a settlement is negotiated in those cases and then the final one is the ability to bring class actions we believe that there are appropriate instances where class actions would be the most effective way to handle larger numbers of legal services client particularly in a situation where you have everyone for example in a housing complex who has a claim that the landlord is not keeping it up to habitable standards it makes no sense to bring one hundred separate actions to do that it makes a whole lot more sense to bring one consolidated a nd quite frankly we believe congress has handled the overall issue of class overall abuses of class actions and they are overarching legislation dealing with class actions such as the class granting oversight in recent years do you believe that l s e has proven that it can be trusted to use federal funds efficiently and for intended purposes in the future or how how soon can that come to pass  do do they have your seal of good housekeeping at the moment and what do you think the timeline would would be before they could accomplish that if not i think that they have made some progress but i do think there are still risks and as you increase funding to any program the level of risk increases so that you know the sooner that l s d is able to fully implement the that it's important for us to have a confidence about the last question i just asked rather before we make additional funding increases in and the only other thing it was suggested to potentially class actions know i can see positives here it seems to me like it could also present an opportunity for to magnify certain abuses and i put that down for the record you back thank you now i'd like to recognize mr watt of north carolina three things and particularly focusing on the first two as i did with the first panel of witnesses mr wales has given a description of some of the problems that each one of  those present the one that i think i'm the most sized about is the notion that the government should give should restrain the use of other people's money  just because it has a certain set of beliefs about the use of its own money and the question i asked the first panel was for some practical examples of that  on some of those practical impacts of failure to allow the use of other funds not government not taxpayer money but other money by the legal services corporation that is to is to discourage bad activity and encourage the prompt settlement ability to get attorney's fees assessed the opposing attorneys have just drug the case out and drug the case out because they really don't have any real incentive to minimize the litigation cost on the other side all of their incentive  not uniform throughout the corporations agencies well you know that this was something that does require a systematic way to address it and so that's why that's the basis for the record that we wrote the recommendation that we made it's important for us to have a structured and systematic approach to assess risk of noncompliance or weaknesses across all the grants and we also made another recommendation to revise the guidelines for compliance reviews of grants to include three elements which were a direct link to results of the reviews and other audit findings interview  questions which are for to you and ask you to answer promptly she can me back part of the record the record will without objection remain open for five legislative days for the submission of any other additional materials thank everybody for the time and patience i can graduate mr wells on the