Memph

Shreveport

Milwaukee

Chicag

Ft. Worth Dallas

Little Rock

St. Louis

Topeka

Omaha

Lincoln

Sioux Falls

Davenport

Minneapolis

Wichita

Kansas City

Springfield

E. St. Lou

Springfield

Des Moines

Tulsa

Oklahoma City

Fort Smith

Duluth

Fargo

Jackson

Madison

St. Paul

smarck

Pierre

Greenville

Wichita Falls

Waterloo

Peoria

TX

OK

KS

NE

SD

IL

MS

AR

LA

MO

IA

MN

WI

PROGRESS IN THE NEW MILLENNIUM

Legal Services Corporation

ANNUAL REPORT 2000-2001
Laurie Tarantowicz, ASSISTANT INSPECTOR 

GENERAL & LEGAL COUNSEL

LEGAL SERVICES CORPORATION BOARD OF DIRECTORS

Douglas S. Eakeley, CHAIRMAN

LaVeeda Morgan Battle, VICE CHAIR

Hulett H. Askew

John T. Broderick, Jr.

John N. Erlenborn

Edna Fairbanks-Williams

F. Wm. McCalpin

Maria Luisa Mercado 

Nancy H. Rogers

Thomas F. Smegal, Jr.

Ernestine P. Watlington

MANAGEMENT AND ADMINISTRATION

Alice Dickerson, DIRECTOR OF HUMAN 

RESOURCES

Michael A. Genz, DIRECTOR OF PROGRAM 

PERFORMANCE

John C. Meyer, ACTING DIRECTOR OF 

INFORMATION MANAGEMENT

David Richardson, TREASURER & 

COMPTROLLER 

Leslie Q. Russell, DIRECTOR OF 

INFORMATION MANAGEMENT

John N. Erlenborn, PRESIDENT*

Victor M. Fortuno, VICE PRESIDENT 

FOR LEGAL AFFAIRS, GENERAL COUNSEL & 

CORPORATE SECRETARY

Mauricio Vivero, VICE PRESIDENT FOR 

GOVERNMENTAL RELATIONS & 

PUBLIC AFFAIRS

Randi Youells, VICE PRESIDENT 

FOR PROGRAMS

John Eidleman, ACTING VICE PRESIDENT 

FOR COMPLIANCE AND ADMINISTRATION

Danilo A. Cardona, DIRECTOR OF 

COMPLIANCE AND ENFORCEMENT

OFFICE OF INSPECTOR GENERAL

Leonard J. Koczur, ACTING INSPECTOR 

GENERAL

David C. Maddox, ASSISTANT INSPECTOR 

GENERAL FOR RESOURCE MANAGEMENT

*John McKay served as LSC president through May 2001.

LEGAL SERVICES CORPORATION
Legal Services Corporation

ANNUAL REPORT 2000-2001

PROGRESS IN THE NEW MILLENNIUM
LEGAL SERVICES CORPORATION

2000-2001 ANNUAL REPORT

Written and produced by 

Mauricio Vivero

Eric Kleiman

Daniel Cox

Perry Wasserman

Elizabeth Cushing

Designed by

Marcos A. Navarro

CREDITS CREDITS

The Legal Services

Corporation (LSC) is

a private, nonprofit

corporation established by Congress 

in 1974 to seek to

ensure equal access

to justice under the

law for all Americans.

LSC is headed by a

bipartisan Board of

Directors appointed

by the President and

confirmed by the

Senate. It receives

funds annually from

Congress and makes

grants directly to

independent local

programs that 

provide civil legal

assistance to those

who otherwise 

would be unable to

afford it. In 2001,

LSC funded 207

local programs which

served every county

in the nation and the

U.S. territories.
CONTENTS

Introduction

Client-centered

Bipartisan Support

Building State Justice Communities

Technology

Responding to Terror

Conclusion

6

8

10

14

18

22

25

CONTENTS

FINANCIAL CONTENTS

27

28

29

30

31

41

Independent Auditor’s Report

Balance Sheets

Statements of Support, Revenue and Expenses,

and Changes in Fund Balance

Statements of Cash Flows

Notes to the Financial Statements

Report on Compliance and Internal Control Over

Financial Reporting
St. Louis

Topeka

Wichita

Kansas City

Springfield

E. St. Louis

Colorado 

Springs

Pueblo KS

CO

MO

Legal Services Corporation 2000-2001 ANNUAL REPORT

INTRODUCTION

IN 1974, CONGRESS CHARTERED THE LEGAL SERVICES

Corporation (LSC) in an effort to provide equal access to

the system of justice for all Americans. Twenty-eight years

later, LSC continues to promote civil justice for all, helping

millions of low-income citizens solve critical, even lifethreatening, legal problems.

Despite the success of LSC and its many contributions to

equal justice in this country, the need for legal services is still

overwhelming. More than 43 million Americans are potentially eligible for LSC-funded services. Yet because of insufficient resources, local legal services programs are forced to

turn away the majority of low-income individuals who seek

out their help. A benchmark legal needs study conducted in

the mid-1990s by the American Bar Association concluded

that 80 percent of eligible clients do not secure legal assistance when they are in serious situations in which a lawyer’s

advice and assistance could make a difference. Since the

ABA study’s release, more than 15 individual state legal

needs studies have reached similar conclusions. LSC is committed to promoting a new vision of legal services that will

reverse these statistics and dramatically increase the number

of low-income Americans who can access the civil justice

system through the provision of quality legal services.

At the close of the tenure of its longest-serving Board of

Directors, LSC enjoys a level of bipartisan support unrivaled in its history. LSC has embraced its mission with

resolve and purpose, determined to help as many Americans as possible gain access to the civil justice system and

achieve a fair resolution to their critical legal problems.

6

INTRODUCTION
Legal Services Corporation 2000-2001 ANNUAL REPORT 7

The LSC Board of Directors is responsible for establishing national policy for

federally funded legal services that ensures high-quality service to clients and

grantees’ compliance with congressional requirements. 

In 2000, as a new millennium dawned and a new President took office, it

appeared that the record-long tenure of LSC’s bipartisan Board was finally

drawing to a close. Yet the Board—its original members appointed by President Clinton in November 1993—served out the year 2001, as President Bush

displayed his confidence in the direction of the national legal services program.

An Enduring Legacy

LSC Board members (clockwise, from upper left) F. Wm. McCalpin, Vice Chair LaVeeda M. Battle, Edna

Fairbanks-Williams, Nancy Rogers (with Douglas Eakeley), Hulett H. Askew, Maria Luisa Mercado, John

N. Erlenborn, John T. Broderick, Ernestine Watlington, Thomas F. Smegal, Jr., and Board Chair Eakeley.
Gary

C

Cleveland

Ne

Milwaukee Detroit

Chicago

Davenport

Peoria

Ft. Wayne

Philadelphia

Harrisburg

Pittsburgh

PA

IL OH

8

Cumberland Trace Legal Services

Heart of Texas Legal Services

Legal Aid Foundation of Los Angeles New Orleans Legal Assistance Corp. Community Legal Services (Ariz.)

IN 2001, LSC REDEDICATED ITSELF TO ITS MOST

important constituency: clients. LSC’s Office of Programs

invested considerable time and resources in exploring how

legal aid advocates can work together to create a more

“client-centered” legal services system. In April 2001, LSC

clients, program staff, board members, representatives from

the courts, IOLTA directors, and other stakeholders convened in Hershey, Pa., for a three-day LSC conference entitled “Creating Client-Centered Communities of Justice.”

Some of the issues identified at the conference: the challenges posed by a surge in Hispanic, African, and Asian

client populations; the employment hurdles faced by welfare-to-work clients in an era of waning low-wage job

opportunities; the challenges of single parents and grandparents raising kids; and the proliferation of predatory lending and consumer fraud against immigrants and the elderly.

For more information on LSC’s commitment to clients and

additional details about the Hershey conference, go online

at www.rin.lsc.gov/Rinboard/Rinboard.htm

Legal Services Corporation 2000-2001 ANNUAL REPORT

Legal Services of the Virgin Islands

CLIENT-CENTERED CLIENT-CENTERED
Income 

Maintenance 12.3%

Consumer 11.7%

Other 6.2%

Health 3.3%

Employment 2.1%

Individual Rights 1.8%

Education 0.7%

Juvenile 0.9%

Family 37.6%

Housing 23.4%

237,580 cases 

124,396 cases 

118,212 cases 

63,412 cases 

381,476 cases 

CONSUMER

Collections/Repossessions . . . . . 4.2%

Bankruptcy/Debt Relief . . . . . . . .3.8%

Credit Access, Energy, Loans, . . . .2.4% 

Public Utilities, Unfair Sales

Practices, Other Consumer 

Contracts/Warranties . . . . . . . . . 1.4%

FAMILY

Divorce/Separation . . . . . . . . . . 14.5%

Custody/Visitation . . . . . . . . . . . 8.9%

Spouse Abuse . . . . . . . . . . . . . . . . 5.6%

Support . . . . . . . . . . . . . . . . . . . . . 3.8%

Adoption, Name Change, Parental 3.4%

Rights Termination, Paternity,

Support, Other Family

Guardianship . . . . . . . . . . . . . . . 1.4%

HOUSING 

Landlord/Tenant . . . . . . . . . . . . .13.7%

Federally Subsidized Housing . . .3.9%

Other Housing . . . . . . . . . . . . . . . .3.3%

Homeownership . . . . . . . . . . . . . . .2.5%

INCOME MAINTENANCE

SSI (disability) . . . . . . . . . . . . . . .4.6%

TANF/Welfare . . . . . . . . . . . . . . . .2.6%

Social Security . . . . . . . . . . . . . . .1.6%

Unemployment Comp. . . . . . . . . . .1.3%

Food Stamps/Commodities . . . . .1.1%

Veterans Benefits, Black Lung, . .1.0%

Workers Compensation, Other 

INDIVIDUAL RIGHTS 

Immigration/Naturalization, . . . . .1.8%

Mental Health, Disability Rights

OTHER

Wills/Estates . . . . . . . . . . . . . . . . .2.8%

Miscellaneous . . . . . . . . . . . . . . . .2.3%

Torts . . . . . . . . . . . . . . . . . . . . . . . .0.6%

Licenses (Auto & Other) . . . . . . . .0.4%

Indian/Tribal Law . . . . . . . . . . . . .0.1%

Incorporation/Dissolution . . . . . . .0.1%

Source: 2001 Grant Activity Reports 

LSC Office of Information Management

LSC Caseloads

The official breakdown of the more than one million cases

closed by LSC-funded programs in 2001 shows that federal

dollars for civil legal aid are spent on the basic legal needs

of the poor.

Jacksonville Area Legal Aid Legal Services of Northeastern Wisconsin

Legal Services Corporation 2000-2001 ANNUAL REPORT 9

Heart of Texas Legal Services
Topeka

Colorado 

Springs

Pueblo

Denver

Boulder

KS

CO

AT NO TIME IN RECENT HISTORY HAVE LSC AND THE

national legal services community been in a stronger political position. Today, LSC enjoys broad bipartisan support.

President Bush’s decision to support LSC’s budget request

of $329.3 million for Fiscal Years 2001 and 2002 are vivid

examples of how LSC has dispelled old myths about the

work of local legal aid offices and solidified support for the

core mission of the national legal services program.

Bipartisanship surrounding federally funded legal aid has

extended to Congress, which in 2001 passed LSC’s full

funding request without a recorded dissent, ending six

years of sustained efforts to dramatically reduce LSC’s

funding in committee.

LSC earned this support by demonstrating its commitment

to enforce the will of Congress, whether through courtroom

advocacy defending congressional restrictions or through

increased oversight and regulatory activities ensuring

grantee compliance with new laws and regulations. In 1996,

Congress enacted fundamental change to the national legal

services program, reaffirming the federal government’s

commitment to providing free civil legal assistance to poor

Americans while enacting a series of new restrictions governing the activities in which federal grantees may engage,

either with federal or non-federal funds. LSC has made

every effort to ensure that these congressional restrictions

are strictly observed. LSC has not only enforced the restrictions passed by Congress, it has zealously defended their

Constitutionality all the way to the U.S. Supreme Court.

10

BIPARTISAN SUPPORT BIPARTISAN SUPPORT

Legal Services Corporation 2000-2001 ANNUAL REPORT

“I believe that

the LSC can

play a valuable

role in ensuring

that poor 

families are not

treated unfairly

and illegally by

landlords, 

creditors, and

others merely

because they

cannot afford

adequate legal

representation.”

–GEORGE W. BUSH, 

the candidate (Fall 2000)
L i ill

Charleston St. Louis

y

E. St. Louis

Springfield Cincinnati

Richmond

Nor

Indianapolis

Anna

Roanoke

VA

WV IN

Washington DC

11

“The federal government, through LSC, ensures

equal access to our nation’s legal system by 

providing funding for civil legal assistance to

low-income persons. For millions of Americans,

LSC-funded legal services is the only resource

available to access the justice system.” 

PRESIDENT GEORGE W. BUSH (Spring 2001)

Legal Services Corporation 2000-2001 ANNUAL REPORT
Albuquerque

Oklah

Amarillo

Phoenix

Santa Fe

Wichita Falls

NM

AZ

All the while, LSC has implemented bold reforms and

embraced new technology to enhance its grantees’ ability to

provide high-quality, cost-effective legal assistance to clients.

In Legal Services Corporation v. Velazquez, the U.S. Supreme

Court struck down, 5-4, one of the 1996 restrictions on

LSC grantees that barred welfare reform challenges but left

standing the remainder of the restrictions on federally

funded programs. By defending restrictions that were

decidedly unpopular throughout the national legal services

community, LSC demonstrated it is a responsible regulatory agency committed to enforcing the will of Congress and

ensuring that federal funds are utilized in the manner mandated by America’s elected leaders. In December 2001,

opponents of congressional restrictions on federally funded legal services filed another lawsuit in federal district

Rep. Mel Watt (D-NC)

Rep. Loretta Sanchez (D-CA)

BIPARTISAN SUPPORT BIPARTISAN SUPPORT

12 Legal Services Corporation 2000-2001 ANNUAL REPORT
Memphis

Charl

Atlanta

Colum

Birmingham

Augusta

Little Rock

Fort Smith Greenville

TN

SC

AL

MS

AR

court challenging the 1996 reforms, Dobbins v. Legal

Services Corporation. Once again, LSC stands ready to

mount a vigorous defense of congressional prerogatives.

Not only has LSC gone to court to defend Congress’ right to

determine how federal dollars are spent on legal aid for the

indigent, LSC has taken careful efforts to ensure that its

grantees are following the rules set by Congress. LSC management, working with the independent Inspector General,

has developed a system of effective oversight for federally

funded legal aid grantees. LSC has taken strong action to

ensure compliance with applicable federal law and regulations, imposing sanctions where appropriate, including termination of a grant in its entirety. LSC’s Office of

Compliance and Enforcement follows up on referrals from

LSC’s Office of the Inspector General regarding possible

violations discovered through audits of local programs,

which are conducted by Independent Public Accountants.

Rep. Judy Biggert (R-IL)

Rep. Lincoln Diaz-Balart (R-FL)

Legal Services Corporation 2000-2001 ANNUAL REPORT 13
Rapid City

Boise

Idaho Falls

Sheridan

Pier

SD

WY

ID

14

BUILDING STATE JUSTICE COMMUNITIES

Enlisting state supreme court

allies like Indiana Chief

Justice Randall T. Shepard 

has created new sources of 

support for legal aid.

Teresa Cosby, former 

assistant deputy attorney 

general under S.C. Gov. 

Jim Hodges (right), was 

chosen to lead the South

Carolina Centers for 

Equal Justice. The Centers

were created as part of a

statewide merger in South

Carolina endorsed by LSC. 

RIGHT: In Denver, nearly 

100 legal services advocates

attend Colorado’s inaugural

Access to Justice 

Conference in 2001.

BUILDING STATE JUSTICE COMMUNITIES

LSC HAS RADICALLY CHANGED THE LANDSCAPE OF

the national legal services system through the State

Planning Initiative. Since 1998, LSC has required all recipients of federal dollars to participate in a local process to

develop and implement a more effective structure for delivering critical legal assistance to low-income Americans.

LSC refers to this process as “building state justice communities.” State Planning requires all LSC grantees to work

together with local stakeholders to develop an assessment

of the strengths and weaknesses of every state civil justice

system and to formulate a comprehensive plan to ensure

that all clients within a state receive high-quality legal assistance. The overall goal of this effort is to achieve the highest and best use of federal funding in every state.

To date, the State Planning Initiative has resulted in significant and positive change in the delivery of legal services

throughout the country. State Planning’s strongest legacy has

been its success in fostering cooperation. In 1998, ten states

had designated state planning bodies dedicated to

strengthening legal services.

Today, 36 states have such

bodies,and the rest are in the

process of creating one. Also

central to the reform effort is

the ongoing retooling of existing systems that began in 1998.

Through reconfiguration, the number of grantees receiving

LSC funding has decreased from 262 in 1998 to 207 in 2001.

Federally funded legal services programs continue to serve

every county, city, and state in the nation.

Legal Services Corporation 2000-2001 ANNUAL REPORT
15

The quality and effectiveness of advocacy have improved

under State Planning, which emphasizes statewide training

and cross-program advocacy. In addition, grantees now

routinely partner with other service agencies to offer holistic approaches to solving client problems.

The goal of the State Planning

Initiative is to develop state justice communities that will

expand and improve client

services. In an effort to ensure

that all clients within a state,

regardless of their geographic

location, have equal access to high-quality legal services,

local programs were asked to develop additional resources.

Many programs have increased revenue through innovative

grant projects and key partnerships with courts, legislatures, bar associations, and private funders. In addition,

many LSC grantees have used federal dollars to hire

resource development directors.

STATE PLANNING,

THEN & NOW

10

Number of states,

in 1998, that had

planning bodies

designated to

strengthening

legal services.

36

Number of states

with such bodies

in 2001, after

State Planning.

58.9

Millions of dollars

appropriated by

state legislatures

for civil legal

services in 1999.

85.4

Millions of dollars

appropriated by

states in 2001,

after LSC

instructed

grantees to focus

on legislative

outreach.

Legal Services Corporation 2000-2001 ANNUAL REPORT

Southern Arizona Legal Aid in Tucson partners with state Attorney General Janet

Napolitano (front, left) and Arizona Chief Justice Thomas Zlaket (back, right) to celebrate the program’s 50th anniversary in December 2001. BELOW: Woody Bradford

leads a statewide equal justice meeting in Lincoln, Neb., in June 2001.

JACOB CHINN
Rapid City

Boise

Idaho Falls

Sheridan

Pier

SD

WY

ID

BUILDING STATE JUSTICE COMMUNITIES These partnerships and staffing decisions have helped

increase revenue through increased state appropriations,

filing fee surcharges, private fundraising, bar campaigns,

and grants from state and local governments. In 2001, LSC

grantees received state appropriations

totaling $85.4 million, compared to

just $58.9 million in 1999. Private bar

campaigns more than quadrupled

their fundraising from $5.3 million in

1997 to $23.6 million in 2001.

Another important step in building

successful and effective state justice

communities is to ensure that staff

and pro bono attorneys receive technical assistance and

education essential for the delivery of high-quality legal

services. States have employed a variety of methods to

16

BUILDING STATE JUSTICE COMMUNITIES

Legal Services Corporation 2000-2001 ANNUAL REPORT

LaVeeda Morgan Battle, 

John Erlenborn, and their 

fellow LSC Board members

endorse State Planning 

as “LSC’s primary strategy 

for increasing access to 

and availability of 

services throughout the

United States.”

Facilitator Deborah Howard

(left) leads a communications

panel at a workshop in 

Miami dedicated to promoting

diversity in legal services. 

OPPOSITE PAGE: Conferees at

the Miami workshop 

brainstorm solutions to the

challenges facing special

client populations.
provide advocates

with training on

substantive law and

skill development,

providing practice

manuals and related

law materials, information on various

developments in the

law and legal strategies, and co-counsel support for less

experienced staff and pro bono lawyers. LSC’s Board of

Directors has worked diligently over the past two years to

simplify and consolidate LSC’s rules concerning reconfiguration and State Planning. A task force was established

on June 30, 2001, to review existing policies, standards,

and procedures governing State Planning. The LSC Board

ultimately adopted the task force’s recommendation to

codify reconfiguration standards and establish a review

process for disputed LSC planning decisions.

STATE PLANNING,

THEN & NOW

5.3

Millions of dollars

raised by private

bar campaigns in

1997, before

State Planning.

23.6

Millions of dollars

raised by private

bar campaigns

after LSC

instructed its

grantees to seek

partnerships with 

state bars.

0

Federal funding 

to implement

technology in

legal services

offices in 1999.

11.2

Millions of 

technology dollars

awarded by

Congress in 2000

and 2001.

Legal Services Corporation 2000-2001 ANNUAL REPORT 17
Bakersfield Las Vegas

Santa Barbara

CA

IN 2000, LSC LAUNCHED THE TECHNOLOGY INITIATIVE

Grant program (TIG), a vigorous campaign to integrate

technology into the delivery of legal services. Congress

allocated $11.2 million in special technology funding in

2000 and 2001, including a record $7

million appropriation in 2001, which

LSC distributed to 55 legal aid programs in 28 states.

Since the TIG program was introduced, the legal services community

has responded with inventive projects

and imaginative uses for technology.

In 2000 and 2001, LSC received 154 applications from legal

aid organizations nationwide and awarded 86 grants to 74

different programs. Among the projects funded by LSC

grants were statewide legal services web sites, toll-free

phone hotlines, sophisticated computer intake systems to

screen new and prospective clients, touch-screen self-help

kiosks, virtual law offices, online brief banks and pleading

libraries for attorneys, and video conferencing so isolated

clients can meet with attorneys hundreds of miles away.

Legal services agencies are pioneering new self-help systems that will enable pro se clients to access the justice system more readily when an attorney is not available. In

several pilot projects, Internet-ready computers stationed

in courthouses, libraries, and other public buildings offer

easy access to legal information and allow users to download and fill out their own legal forms and court documents without a lawyer’s assistance.

18

TECHNOLOGY TECHNOLOGY

Legal Services Corporation 2000-2001 ANNUAL REPORT

Statewide, toll-free legal

advice hotlines are one of 

the major innovations 

funded by LSC to better 

serve clients living 

in geographically 

isolated areas.

YANA BRIDLE
19

Thirty-three legal services programs have used LSC

funds to implement sophisticated case management

software and toll-free advice hotlines—eliminating

costly duplication of efforts while giving clients an

easy-to-remember, toll-free number to call for help.

To serve large and isolated service areas, LSC has

awarded 15 innovation grants for initiatives such as

video conferencing for rural clients and voice-over

internet protocols to reduce long-distance phone

costs. In addition, 26 states were preparing to launch

statewide legal services web sites created with LSC funds by

the end of 2002. Each site will be uniquely tailored to the

individual state and client community it will serve. The sites

will provide links to other local providers and offer a range

of self-help materials for self-represented litigants. In partnership with two web site developers, Probono.net and

Kaivo Software Inc., the legal aid community now has a

choice between two standardized web site templates that

can easily be exported from state to state.

In California, the Legal Aid Society of Orange County’s

Interactive Community Assistance

Network (I-CAN!)—allows clients

to electronically format and file

court documents dealing with

domestic violence restraining orders

and child custody. The pro sesystem

is designed to help clients navigate

the complex legal system in a way

that does not require them to have

any legal background or computing

Legal Services Corporation 2000-2001 ANNUAL REPORT

“I-CAN kiosks” allow

California clients to solve

their own legal problems with

an easy-to-understand,

touch-screen system offered

in three languages. LSC

awarded more than a halfmillion dollars to Legal Aid

Society of Orange County in

2000 and 2001 to pioneer the

unique self-help technology.

St. Louis

Wichita

Springfield

E. St. Lou Pueblo KS

MO

YANA BRIDLE YANA BRIDLE
Sacramento

Oakland

Salt Lake City

Fresno

San Francisco

Provo

UT

NV

experience. Procedures are described clearly and concisely in a familiar, conversational style in English, Spanish,

or Vietnamese, which removes educational and language

barriers to accessing civil justice. The system is expandable and could eventually be made available statewide

and even nationally.

South Carolina, meanwhile, is implementing a model

intake system accessible from virtually the entire state.

With a $500,000 grant from LSC, the

South Carolina Centers for Equal

Justice (in cooperation with

Appleseed Justice Center and 47

other agencies) is establishing “virtual law” offices throughout the

state. These offices—housed in

churches, elementary schools, libraries and homeless shelters—will allow real-time video conferencing between staff and clients. They also will provide

legal forms for pro se litigants. Each South Carolina county ultimately will have at least one virtual law terminal,

with accompanying support staff available to assist local

residents seeking help.

In an effort to ease the transition to technologically proficient offices, LSC has chartered the National Technology

Assistance Project (NTAP). Set up to help programs implement a wide array of technology projects, NTAP provides

technical assistance to programs by phone and makes

available “hi-tech mentors” who can help design, trou20

TECHNOLOGY TECHNOLOGY

Legal Services Corporation 2000-2001 ANNUAL REPORT

LSC was joined by several

members of Congress to

announce the most innovative

TIG grants. In 2001, 

a bipartisan collection of

political leaders left

Washington, D.C., to return

home and deliver the good

news to their constituents 

at LSC-sponsored news 

conferences. Among them

were Senator Maria Cantwell

(D-WA) and Reps. Vic Snyder

(D-AR), Julia Carson (D-IN),

Judy Biggert (R-IL), and 

Kenny Hulshof (R-MO).
Topeka

Omaha

Lincoln

Kansas City

Springfield

Des Moines

Denver

Peoria

CO

21

bleshoot, and implement TIG projects.

NTAP also serves as a

forum for legal services leaders to discuss

and share their ideas

and initiatives, avoiding costly investments

in ineffective technology. By holding regular workshops

and training sessions, NTAP increases communication

among programs and facilitates the replication of effective technologies.

The Ohio Statewide Legal Services Web Site is a national

model of how the Internet can help serve more clients and

foster involvement of more advocates. The site includes a

directory of free and low-cost legal assistance providers

searchable by city, county, and zip code; a library of legal

information in areas such as housing, family, consumer,

health care and education law; and links to advocacy

groups and state and federal agencies and statutes. The

web site also provides a listing of job opportunities in public interest law in Ohio, as well as information for pro bono

attorneys interested in volunteering their time. The site

features an online interactive community for those who

provide civil legal services to low-income Ohioans. More

than 500 legal services staff members statewide can participate in a collaborative network of information-sharing

designed to centralize legal information and expertise on

poverty law issues in Ohio.

Legal Services Corporation 2000-2001 ANNUAL REPORT

LSC took a big step toward

bridging the digital divide for

the Navajo and Hopi Nations,

awarding DNA-People’s Legal

Services a quarter-million

dollars to use computers to

inform Native Americans in

Arizona, New Mexico, and

Utah of their legal rights.
Buffalo

New York Cit

Bo

Albany

Hartford

Newark

aukee Detroit

Lansing

MI NY MA

RI

CT

Legal Services Corporation 2000-2001 ANNUAL REPORT

IN THE MIDST OF IMPLEMENTING NEW REFORMS,

the national legal services community was suddenly forced

to refocus its attention in the aftermath of September 11,

2001. The terrorist attacks on the World Trade Center and

the Pentagon heralded a host of legal problems for lowincome clients in and around New York City and

Washington, D.C. Not only did grieving families need help

obtaining death certificates and securing vital government

benefits, many indirect victims sought out legal aid for

help after losing businesses and jobs as a result of the

attacks. With one of its subgrantee’s offices located just

blocks from Ground Zero, Legal Services of New York

(LSNY) helped train more than 1,000 volunteer attorneys

to help victims and their families after 9/11. LSC also provided funding for two Web-based resources used by LSNY

to help victims find answers to legal problems. At

www.lawhelp.org, LSNY posted 20 different documents to

help clients determine eligibility for social security survivor benefits, locate housing agencies, obtain emergency

financial assistance, file for unemployment benefits and

defend against eviction actions until government benefits

and charity resources could be distributed. At

www.probono.net, advocates could download the “Helping

Handbook: Legal Resources for Families and Victims of

the World Trade Center Disaster.”

InVirginia, Legal Services of Northern Virginia (LSNV) created a Nine-Eleven response team to assist victims of the

Pentagon attack as well as secondary victims such as airport

personnel and cab drivers who lost their jobs as a result of

22

RESPONDING TO TERROR

Firefighters helped 

rescue victims of

September 11, while

those whose jobs and

financial security were

threatened turned to

lawyers for help. 

"It's as important as

pulling debris, helping

people rebuild their

lives," says Andrew

Martin of the New York

City Bar.

RESPONDING TO TERROR
Legal Services Corporation 2000-2001 ANNUAL REPORT 23

ALEXIOS MONOPOLIS
Gary

Columbus

aha

Kansas City

Springfield Cincinnati

Des Moines

Indianapolis

Peoria

Ft. Wayne

WV

OH

IN

IL

W

24

Reagan National Airport’s temporary closing. LSNV also

offered clients help in applying for rent assistance, getting

medical care, filing for bankruptcy, and paying off debts.

While New York and Virginia’s legal services communities

were the first to be confronted with the repercussions of

9/11, programs in other states soon got involved as well. In

Portland, Pine Tree Legal Assistance (PTLA) responded to

a race-related backlash set off by September 11. PTLA hosted a variety of anti-discrimination programs in the Greater

Portland area, which has a sizable multiethnic population.

The program offered joint training sessions and outreach

workshops with the public school system’s multicultural

office. In downstate Illinois, Prairie State Legal Services

(PSLS) helped members of the National Guard and their

families secure protection under the Soldiers and Sailors

Relief Act in addition to assisting in the preparation of wills,

powers of attorney, and temporary custody orders. PSLS

also educated National Guard members on how to apply

for reduced rates on mortgages. “We’re sort of like an

ambulance,” PSLS Executive Director Joe Dailing says.“You

don’t always need it, but you want it there when you do.”

RESPONDING TO TERROR RESPONDING TO TERROR

Legal Services Corporation 2000-2001 ANNUAL REPORT

“We’re sort of like an ambulance. You 

don’t always need it, but you want it 

there when you do.”

—Joe Dailing, PRAIRIE STATE LEGAL SERVICES DIRECTOR
Mem

Little Rock

e

Tulsa

Oklahoma City

Amarillo Fort Smith

Wichita Falls

OK

MS

AR

CONGRESS ESTABLISHED THE LEGAL SERVICES

Corporation “to provide equal access to the system of justice

in our Nation for individuals who seek redress of grievances,”

according to the LSC Act of 1974. Almost a quarter century

later,LSC established the State Planning Initiative to assist the

tens of thousands of low-income Americans still being

denied access to civil justice. Before State Planning, little consideration was paid to whether the national legal services

community had adapted to meet the needs of its clients over

time. Today, advocates are utilizing new technology, forging

new parternships, and implementing broad institutional

reforms to help more low-income Americans obtain legal

assistance. Twenty-seven years after its founding, LSC has

been transformed from a mere funding agency into a

reformer and equity partner capable of cultivating bipartisan

support and effecting large-scale change.

25

CONCLUSION CONCLUSION

Legal Services Corporation 2000-2001 ANNUAL REPORT

SEAN DRISCOLL
26 Legal Services Corporation 2000-2001 ANNUAL REPORT

FUNDING FOR THE NATIONAL 

LEGAL SERVICES SYSTEM, 2001

Private Grants

$37,920,937 (5.7%)

Other Federal Grants

$63,575,205 (9.6%)

Other Non-LSC Funding

$52,841,232 (7.9%)

IOLTA

$65,127,151 (9.8%)

State and Local

$117,507,386 (17.7%)

LSC Field Grants

$327,161,049 (49.3%)

(federal and non-federal sources)

SOURCE: LSC Office of Information Management
27

We have audited the accompanying balance sheet of Legal Services Corporation (the

Corporation) as of September 30, 2001 and the related statements of support, revenue and

expenses and changes in fund balance, and cash flows for the year then ended. These financial statements are the responsibility of the Corporation’s management. Our responsibility is

to express an opinion on these financial statements based on our audit. The financial statements of the Corporation as of September 30, 2000 were audited by other auditors whose

report dated November 23, 2000, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the

United States of America and the standards applicable to financial audits contained in

Government Auditing Standards, issued by the Comptroller General of the United States.

Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting principles used and significant

estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material

respects, the financial position of the Corporation as of September 30, 2001 and the results

of its operations and changes in its fund balance and cash flows for the year then ended in

conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated

November 30, 2001 on our consideration of the Corporation’s internal controls over financial reporting and on our tests of its compliance with certain provisions of laws, regulations,

contracts, and grants. That report is an integral part of an audit performed in accordance

with Government Auditing Standards and should be read in conjunction with this report in

considering the results of the audit.

M.D. Oppenheim & Co.

November 30, 2001

Silver Spring, Maryland

INDEPENDENT AUDITOR’S REPORT

Legal Services Corporation 2000-2001 ANNUAL REPORT
BALANCE SHEETS

28 Legal Services Corporation 2000-2001 ANNUAL REPORT

$63,286,101 

20,420 

368,659 

63,675,180 

2,369,064 

(1,564,486)

804,578 

$64,479,758 

$56,192,751 

450,034 

570,045 

126,692

4,941,337

62,280,859

-0-

62,280,859

140,881 

1,253,440

804,578 

2,198,899 

$64,479,758 

$54,512,955 

20,331 

315,069 

54,848,355 

2,289,739 

(1,198,150)

1,091,589 

$55,939,944 

$50,823,681 

489,482 

611,375 

190,039 

1,599,831 

53,714,408 

126,692 

53,841,100 

153,767 

853,488 

1,091,589 

2,098,844 

$55,939,944 

September 30 2001 2000

ASSETS 

Current assets

Cash and cash equivalents (Note 3)

Due from employees

Prepaid expenses and deposits

Total current assets

Property and equipment

Less accumulated depreciation and amortization

Net property and equipment

TOTAL ASSETS 

LIABILITIES AND FUND BALANCE

Current liabilities

Grants and contracts payable

Accounts payable

Accrued vacation and other liabilities

Deferred rent credit – current portion (Note 10)

Deferred revenue

Total current liabilities

Deferred rent credit – non-current portion (Note 10)

TOTAL LIABILITIES

Fund balance

Federal appropriations (Notes 2 and 8)

Designated

Undesignated

Net investment in property and equipment

Total fund balance

TOTAL LIABILITIES AND FUND BALANCE

The accompanying notes are an integral part of these financial statements.
STATEMENTS OF SUPPORT, REVENUE AND EXPENSES,

AND CHANGES IN FUND BALANCE

Legal Services Corporation 2000-2001 ANNUAL REPORT 29

YEARS ENDED SEPTEMBER 30, 2001 2000

SUPPORT AND REVENUE

Federal appropriations

Less: change in deferred revenue

Grant revenue (Note 5)

Interest and other income

TOTAL SUPPORT AND REVENUE

EXPENSES

Program activities:

Grant and contracts (Note 6)

Supporting activities:

Management and administration (Notes 7)

Total expenses

Excess (deficit) of support and revenue 

over (under) expenses

Fund balance, beginning of year

Fund balance, end of year 

The accompanying notes are an integral part of these financial statements.

$329,274,000

(3,320,200)

873,696 

298,977

327,126,473

313,884,095

13,142,323

327,026,418

100,055

2,098,844

$2,198,899 

$303,841,000

(1,553,014) 

885,991

388,520

303,562,497

292,214,190

11,756,029

303,970,219

(407,722)

2,506,566

$2,098,844 
STATEMENTS OF CASH FLOWS

30 Legal Services Corporation 2000-2001 ANNUAL REPORT

2001 2000 

CASH FLOWS FROM OPERATING ACTIVITIES: 

Excess (deficit) of support and revenue 

(under) over expenses $ 100,055 $ (407,722) 

Adjustments to reconcile excess (deficit) 

of support and revenue over (under) expenses 

to net cash provided by (used in) 

operating activities: 

Depreciation and amortization 526,610 158,200 

Loss on disposal of assets 7,309 4,323 

(Increase) decrease in accounts receivables (90) 4,786 

(Increase) decrease in prepaid expenses and deposits (53,590) 11,306 

Increase in grants and contracts payables 5,369,070 2,184,228 

Decrease in accounts payable (39,448) (275,036) 

Decrease in accrued vacation and other liabilities (41,330) 170,316 

Decrease in deferred rent credit (190,039) (190,039) 

Increase (decrease) in deferred revenue 3,341,506 1,577,024 

Net cash provided by operating activities 9,020,053 3,237,386 

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchase of fixed assets (246,907) (399,120) 

Net increase in cash 8,773,146 2,838,266 

Cash and cash equivalents, beginning of year 54,512,955 51,674,689 

Cash and cash equivalents, end of year $ 63,286,101 $ 54,512,955 

SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INVESTING ACTIVITIES:

Write-off of fixed assets disposed of with related 

accumulated depreciation of $135,446 and 

$14,714, respectively $ 167,583 $ 19,037 

The accompanying notes are an integral part of these financial statements.

For the YEARS ENDED SEPTEMBER 30, 2001 AND 2000
NOTES TO THE FINANCIAL STATEMENTS

Legal Services Corporation 2000-2001 ANNUAL REPORT 31

NOTE 1 – NATURE OF THE CORPORATION

The Legal Services Corporation (the Corporation) is a private non-membership District of

Columbia nonprofit corporation, established by Congress in the Legal Services

Corporation Act of 1974, Public Law 93-355, and amended in 1977 by Public Law 95-

222. The purpose of the Corporation is to provide financial support to independent organizations that directly provided legal assistance in non-criminal proceedings or matters

to persons financially unable to afford such counsel.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies utilized by the Corporation.

Basis of Accounting: (fund accounting) 

The accounts of the Corporation are maintained on the accrual basis of accounting. To

ensure observance of limitations and restrictions placed on the use of resources, the

accounts are maintained in accordance with the principles of fund accounting whereby resources are classified for accounting and reporting purposes into funds established to their activities and objectives.

The federal appropriations fund includes amounts received and expended in furtherance of the Corporation’s objective, including general operations. The property fund

represents investments in property, equipment and computer software, net of accumulated depreciation and amortization. Capital assets purchased or proceeds from

their sale are recorded by transfer from or to the federal appropriations fund. Separate

accounts are maintained for each fund; however, for reporting purposes they are combined in the accompanying financial statements.

Federal appropriations fund balances have been stated as either designated or undesignated. Designated fund balances represent amounts that have been earmarked by the

Board of Directors for continuing programs and administrative activities. Undesignated
NOTES TO THE FINANCIAL STATEMENTS

32 Legal Services Corporation 2000-2001 ANNUAL REPORT

fund balances represent appropriated federal carryover and other operating excess,

which are available for future use at the discretion of the Board of Directors.

Estimates: 

The preparation of financial statements in conformity with generally accepted

accounting principles requires management to make estimates and assumptions

that affect certain reported amounts and disclosures. Accordingly, actual results may

differ from those estimates.

Support and Revenue: 

The federal appropriations are reported as support and revenue in the period expended. The appropriation remains available until expended.

Grant Refunds: 

Grantees who have not complied with the requirements of the Legal Services

Corporation Act of 1974 and implementing regulations may be subject to actions that

result in a recovery of grant funds. Sources of grant refunds generally include recoveries of disallowed costs, excess fund balances, unexpended funds on Private

Attorney Involvement programs and sanctions imposed by the Corporation for failure

to comply with other regulatory requirements.

Grants and Contracts to Recipients: 

Liabilities, expenses and revenues related to grant and contract awards are recognized

when the awarding document is fully executed. Grant awards are made to recipients on

a calendar year basis from appropriations received by the Corporation for its fiscal year. 

Property and Equipment: 

Property and equipment are stated at cost and depreciated using the straight-line

method over the estimated useful lives of the assets of five to ten years.
Legal Services Corporation 2000-2001 ANNUAL REPORT 33

NOTES TO THE FINANCIAL STATEMENTS

Income Taxes: 

The Corporation is exempt from federal income tax under section 501(c)(3) of the Internal

Revenue Code and the applicable income tax regulations of the District of Columbia, except

for unrelated business income. The Corporation had no unrelated business income for 2001

and 2000, and accordingly, no provision for income taxes has been made in the accompanying financial statements.

Concentration of Revenue: 

The corporation receives substantially all of its revenue from a direct federal appropriation.

Concentration of Credit Risk: 

During the year, the cash balances in some bank accounts exceeded the $100,000

limit insured by the Federal Deposit Insurance Corporation. Management believes any

risk associated with this is minimal.

GASB No. 34 - Basic Financial Statements–and Management’s

Discussion and Analysis–for State and Local Governments:

In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement

No. 34–Basic Financial Statements and Management’s Discussion and Analysis–for

State and Local Governments. This statement is effective for governments with revenues of $100 million or more for periods beginning after June 15, 2001. Therefore, the

Corporation plans to adopt this statement beginning with its FY 2002 financial statements. The primary effect of this statement is to modify the form of the financial statement presentation and to provide for additional information. The statement requires

the restatement of prior periods where adjustments to prior periods are necessary to

comply with this statement. If restatement of prior periods is not practical, the cumulative effect of applying this Statement should be reported as a restatement of beginning fund balance. 
NOTES TO THE FINANCIAL STATEMENTS

34 Legal Services Corporation 2000-2001 ANNUAL REPORT

NOTE 3 – CASH AND CASH EQUIVALENTS 

Cash and cash equivalents consist of cash on deposit at financial institutions and

undisbursed appropriations which constitute spending authority that remain available

in the Corporation’s account held by the U.S. Treasury. Cash consists of the following:

2001 2000 

Cash in financial institutions

Cash in U.S. Treasury

Total 

NOTE 4 – PROPERTY AND EQUIPMENT 

Property and equipment consists of the following at September 30, 2001 and 2000 as

follows:

2001 2000 

Furniture and equipment $1,842,063 $1,793,500

Software 230,881 200,119

Leasehold improvements 296,120 296,120

Subtotal 2,369,064 2,289,739

Less: Accumulated depreciation (1,564,486) (1,198,150)

Total $804,578 $1,091,589 

$ 26,187,479

37,098,622

$ 63,286,101 

$ 26,376,846

28,136,109

$ 54,512,955 
NOTES TO THE FINANCIAL STATEMENTS

Legal Services Corporation 2000-2001 ANNUAL REPORT 35

NOTE 5 – GRANT REVENUE

The Corporation was awarded grants from the U.S. Court of Veterans Appeals for the

purpose of furnishing legal assistance to veterans. Grant revenue for the years ended

September 30, 2001 and 2000 are $ 873,696 and $ 885,991, respectively.

NOTE 6 – GRANT AND CONTRACTS EXPENSE 

Grant funding provided to the Legal Services Corporation, pursuant to Public Law 106-

553, was for basic field programs. Grant and contracts expense consists of the following:

2001 2000 

Basic field programs $309,221,790 $288,607,360

U.S. Court of Veterans Appeals fund 873,696 $885,991

Technology Initiatives 3,760,609 2,696,986

Grant from other funds 28,000 51,500

Grant refunds/recoveries -0- (27,647)

Total $313,884,095 $292,214,190
NOTES TO THE FINANCIAL STATEMENTS

36 Legal Services Corporation 2000-2001 ANNUAL REPORT

NOTE 7 – MANAGEMENT AND ADMINISTRATIVE EXPENSES 

Management and administrative expenses consist of the following:

2001 2000 

Personnel compensation $8,297,942 $7,179,855

Temporary employee pay 168,391 186,010

Consulting 1,171,490 1,497,943

Travel and transportation 888,142 826,318

Communications 147,816 133,653

Occupancy cost 1,307,449 1,296,518

Printing and reproduction 99,832 71,767

Other operating expenses 507,102 457,166

Capital expenditures 267,147 343,396

Subtotal 12,855,311 11,992,626

Depreciation and amortization 526,610 158,200

Loss on disposal of assets 7,309 4,323

Purchase of assets (246,907) (399,120)

Total 13,142,323 11,756,029

NOTE 8 – FUND BALANCE 

The Board of Directors through its fund allocation process, has designated $140,881

and $153,767 of the federal appropriations fund balance for continuing programs

and administrative activities as of September 30, 2001 and 2000, respectively.
Legal Services Corporation 2000-2001 ANNUAL REPORT 37

NOTES TO THE FINANCIAL STATEMENTS

NOTE 9 – RETIREMENT PLANS 

Pursuant to the Legal Services Corporation Act, all officers and employees hired before

October 1, 1988 are participants in the Civil Service Retirements System (CSRS),

although they are neither officers nor employees of the federal government. The CSRS

plan is administered by the United States Office of Personnel Management (OPM). The

Corporation makes contributions at rates applicable to agencies of the federal government. The contributions do not equal the full service cost of the pension expense, which

is the actuarial present value of benefits attributed to services rendered by covered

employees during the accounting period. The measurement of service cost requires the

use of actuarial cost methods to determine the percentage of the employees’ basic compensation sufficient to fund their projected pension benefit. These percentages (cost factors) are provided by OPM. 

The excess of total pension expense over the amount contributed by the Corporation and

by Corporation employees represents the amount which must be financed directly by

OPM. The Corporation does not recognize in its financial statements these excess

amounts as they are deemed to be immaterial. 

Several employees also participate in the Federal Employees Health Benefits plan

(FEHB), also administered by the OPM. The Corporation pays the cost of current employees. Post-retirement benefits are paid for by the OPM. No amounts have been recognized

in the financial statements for these imputed costs as they are not deemed material.

The Corporation does not report in its financial statements CSRS or FEHB assets,

accumulated plan benefits or unfunded liabilities, if any, applicable to its employees.
NOTES TO THE FINANCIAL STATEMENTS

38 Legal Services Corporation 2000-2001 ANNUAL REPORT

Eligible employees may contribute up to 5% of their pretax earnings to the Federal

Thrift Savings Plan. Also, all officers and employees hired after September 30, 1988

are ineligible for the Civil Service Retirement System, but are eligible to participate in

the Corporation’s pension and thrift plan, which is a tax deferred annuity plan subject

to Section 403(b) of the Internal Revenue Code. Individuals can make contributions up

to the maximum permitted by law. Prior to July 1, 1999, the Corporation matched the

first 1% contributed by the employee; effective July 1, this percentage was increased

to 2.51%. In addition, the Corporation contributes 6% of each eligible employee’s

salary regardless of their participation to the maximum permitted under federal

income tax rules.

The Corporation’s contributions to these plans for fiscal years 2001 and 2000 were

$540,206 and $454,626, respectively. These amounts are included in supporting

activities for management and administration expenses.

The Corporation also offers a tax deferred annuity savings plan for eligible employees.

No contributions are made to this plan by the Corporation.

NOTE 10 – LEASES

Operating Leases: 

The Corporation’s lease for its headquarters office space provides for increases in annual base rent based on consumer price index increases, and payment of a portion of the

building operating expenses. The lease commenced on June 1, 1992 also provided for

rent abatement for the first twelve months of the lease term. This deferred rent credit

is amortized over the life of the original lease. The lease was amended in November
Legal Services Corporation 2000-2001 ANNUAL REPORT 39

NOTES TO THE FINANCIAL STATEMENTS

2001 to extend it through May 2007. Future minimum lease payments required under

this lease are as follows:

September 30, 

2002 $ 1,031,320 

2003 1,433,415 

2004 1,462,824 

2005 1,492,767 

2006 1,523,379 

2007 and thereafter 1,029,310 

Total $ 7,973,015 

The Corporation has termination rights under the lease at any time after May 2003 if

certain conditions are met, and providing nine months notice.

Total minimum future payments have not been reduced by $137,584 of sublease

rentals to be received in the future under a non-cancelable sublease.

2001 2000 

Gross rental expense $1,330,265 $1,310,391 

Adjustment for rent deposit (250) -0- 

Deferred rent expense (190,039) (190,039) 

Sublease income (203,839) (200,827) 

Net rent expense $ 936,137 $ 919,525 

Subleases: 

The Corporation’s sublease of its headquarters office space provides for increases in

annual base rent of 1.5%, and payment of any excess operating expenses or real estate

taxes. The lease commenced on June 3, 1996 and expires in May 2002. Future minimum

rentals as of September 30, 2001 are $120,000.
NOTES TO THE FINANCIAL STATEMENTS

40 Legal Services Corporation 2000-2001 ANNUAL REPORT

NOTE 11 – CONTINGENCIES 

Grants and Contracts: 

The Corporation receives its funding from appropriations by Congress and grants

from federal agencies and, accordingly, may be subjected to audits from the respective agencies. In addition, the Corporation provides significant funding to several

independent organizations, which are subjected to their own independent audits and

audits by the Corporation.

The Corporation’s management does not expect any significant adjustments as a result

of audits from federal agencies should they occur or from the audits of the subgrantee

independent organizations.

Claims: 

During 1999, charges were filed with the District of Columbia Office of Human Rights

against the Corporation by three employees alleging that LSC engaged in discriminatory employment practices. The claims request damages of $2 million. Management has

indicated it plans to vigorously contest these charges. The Corporation believes it has

not violated any laws and that any loss would be substantially below the $2 million. No

amounts have been recorded in the financial statements for this contingent liability.
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN 

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

We have audited the financial statements of Legal Services Corporation (the

Corporation) as of and for the year ended September 30, 2001, and have issued our

report thereon dated November 30, 2001. We conducted our audit in accordance with

auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,

issued by the Comptroller General of the United States.

Compliance: 

As part of obtaining reasonable assurance about whether the Corporation’s financial

statements are free of material misstatement, we performed tests of its compliance

with certain provisions of laws, regulations, contracts, and grants, noncompliance

with which could have a direct and material effect on the determination of financial

statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such opinion. The results of our test disclosed no instances of noncompliance that are required

to be reported under Government Auditing Standards.

Internal Control Over Financial Reporting: 

In planning and performing our audit, we considered the Corporation’s internal control

over financial reporting in order to determine our auditing procedures for the purpose

of expressing our opinion on the financial statements and not to provide assurance on

the internal control over financial reporting. Our consideration of the internal control

over financial reporting would not necessarily disclose all matters in the internal conLegal Services Corporation 2000-2001 ANNUAL REPORT 41

REPORT ON COMPLIANCE AND INTERNAL

CONTROL OVER FINANCIAL REPORTING
trol over financial reporting that might be material weaknesses. A material weakness

is a condition in which the design or operation of one or more of the internal control

components does not reduce to a relatively low level the risk that misstatements in

amounts that would be material in relation to the financial statements being audited

may occur and not be detected within a timely period by employees in the normal

course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material

weaknesses. However, we noted other matters involving the internal control over financial reporting, which we have reported to management of the Corporation in a separate letter dated November 30, 2001.

This report is intended solely for the information and use of the Acting Inspector

General, the Board of Directors and management and others within the organization.

However this report is a matter of public record and its distribution is not limited.

M.D. Oppenheim & Co.

November 30, 2001

Silver Spring, Maryland

42 Legal Services Corporation 2000-2001 ANNUAL REPORT

REPORT ON COMPLIANCE AND INTERNAL CONTROL 

OVER FINANCIAL REPORTING
“Legal Services Corporation-funded 

programs are the nation’s primary source 

of legal assistance for low-income women 

who are victims of domestic violence. 

Over two-thirds of Legal Services Corporation’s

clients are women, most of them 

mothers with children.”

“We have a magnificent Constitution 

making us the freest country in the world, 

with liberty and justice for all. 

But all Americans do not have 

the same rights.... Income should not 

determine whether or not Americans 

have access to the civil justice system.”

—U.S. Rep. Nancy Pelosi (D-CA)
mphis

Buffalo

Gary

Columbus

Cleveland

ukee Detroit

hicago

Charlotte

Charleston

Savannah

Albany

Atlanta

Nashville

Louisville

Charleston

Columbia

Knoxville

Birmingham

Tallahassee Jacksonville

Augusta

Montgomery

Louis

ld

Cincinnati

Lansing

Durham

Richmond

No

Indianapolis

Ralei

Anna

Wilmington

Asheville

Roanoke

Greenville

Mobile

Ft. Wayne

Philade

Harrisburg

Pittsburgh

FL

MD

KY

NY

PA

MI

VA

WV

OH

IN

NC

TN

SC

AL

S

GA

Legal Services Corporation Washington DC 750 First Street, NE

11th Floor

Washington, DC 20002-4250

www.lsc.gov