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LEGAL SERVICES CORPORATION: INQUIRY INTO

THE ACTIVITIES OF THE CALIFORNIA RURAL

LEGAL ASSISTANCE PROGRAM AND TESTIMONY

RELATING TO THE MERITS OF CLIENT COPAY

HEARING

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MARCH 31, 2004

Serial No. 100

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://www.house.gov/judiciary 

(II)

COMMITTEE ON THE JUDICIARY 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

MELISSA A. HART, Pennsylvania 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

JOHN R. CARTER, Texas 

TOM FEENEY, Florida 

MARSHA BLACKBURN, Tennessee 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California

PHILIP G. KIKO, Chief of Staff-General Counsel 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

CHRIS CANNON, Utah Chairman

HOWARD COBLE, North Carolina 

JEFF FLAKE, Arizona 

JOHN R. CARTER, Texas 

MARSHA BLACKBURN, Tennessee 

STEVE CHABOT, Ohio 

TOM FEENEY, Florida 

MELVIN L. WATT, North Carolina 

JERROLD NADLER, New York 

TAMMY BALDWIN, Wisconsin 

WILLIAM D. DELAHUNT, Massachusetts 

ANTHONY D. WEINER, New York

RAYMOND V. SMIETANKA, Chief Counsel 

SUSAN A. JENSEN, Counsel 

DIANE K. TAYLOR, Counsel 

JAMES DALEY, Full Committee Counsel 

STEPHANIE MOORE, Minority Counsel 

(III)

C O N T E N T S 

MARCH 31, 2004

OPENING STATEMENT 

Page 

The Honorable Chris Cannon, a Representative in Congress From the State 

of Utah, and Chairman, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 1

The Honorable Melvin L. Watt, a Representative in Congress From the State 

of North Carolina, and Ranking Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 2

WITNESSES 

Ms. Helaine M. Barnett, President, Legal Services Corporation 

Oral Testimony ..................................................................................................... 5

Prepared Statement ............................................................................................. 7

Mr. Jose R. Padilla, Executive Director, California Rural Legal Assistance, 

Inc. 

Oral Testimony ..................................................................................................... 15

Prepared Statement ............................................................................................. 17

Ms. Jeanne Charn, Director, Hale and Dorr Legal Services Center, and Director, Bellow-Sachs Access to Legal Services Project, Harvard Law School 

Oral Testimony ..................................................................................................... 25

Prepared Statement ............................................................................................. 27

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Letter submitted by Members of the Congressional Hispanic Caucus ............... 45

Letter submitted by the Brennan Center for Justice at New York University 

School of Law ........................................................................................................ 49

Letter submitted by the Mexican American Legal Defense and Education 

Fund (MALDEF) .................................................................................................. 54

Letter submitted by the League of United Latin American Citizens .................. 57

Letter submitted by the Farmworker Justice Fund, Inc. ..................................... 60

Letter submitted by the California Catholic Conference ...................................... 63

Letter submitted by the Mexican American Bar Association .............................. 66

Letter submitted by 12 Law Professors ................................................................. 69

Letter submitted by the National Hispanic Leadership Agenda ......................... 75

Report of Leonard J. Koczur, Acting Inspector General, Legal Services Corporation ................................................................................................................. 78

Photographs submitted by California Rural Legal Assistance Inc. ..................... 133

Supplemental Prepared Statement of Jeanne Charn, Director, Hale and Dorr 

Legal Services Center, and Director, Bellow-Sacks Access to Civil Legal 

Services Project, Harvard Law School ................................................................ 139

Response to Post-Hearing Questions from Helaine M. Barnett, President, 

Legal Services Corporation ................................................................................. 141

Response to Post-Hearing Questions from Jose R. Padilla, Executive Director, 

California Rural Legal Assistance, Inc. .............................................................. 151

Response to Post-Hearing Questions from Jeanne Charn, Director, Hale and 

Dorr Legal Services Center, and Director, Bellow-Sachs Access to Legal 

Services Project, Harvard Law School ................................................................ 160

(1)

LEGAL SERVICES CORPORATION: INQUIRY 

INTO THE ACTIVITIES OF THE CALIFORNIA 

RURAL LEGAL ASSISTANCE PROGRAM AND 

TESTIMONY RELATING TO THE MERITS OF 

CLIENT CO-PAY 

WEDNESDAY, MARCH 31, 2004

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, COMMITTEE ON THE JUDICIARY, Washington, DC.

The Subcommittee met, pursuant to notice, at 1:03 p.m., in Room 

2141, Rayburn House Office Building, Hon. Chris Cannon (Chair of 

the Subcommittee) presiding. 

Mr. CANNON. The Subcommittee will come to order. 

The Subcommittee on Commercial and Administrative Law is 

meeting this afternoon to receive testimony from various sources as 

part of its continuing oversight of Legal Services Corporation and 

the activities of its grantees. The focus of today’s hearing is on the 

potential benefits of a co-pay system whereby clients partially subsidize the cost of their legal representation. In addition, the hearing will focus on certain recent complaints brought against the 

California Rural Legal Association and the efforts undertaken to 

resolve and hopefully prevent the recurrence of these problems. 

The Legal Services Corporation was formed by Congress to distribute Federal money to provide legal services for civil legal assistance to those who otherwise may not be able to afford legal representation. LSC does not provide services directly but, instead, 

acts as the funding source to various grantees organized across the 

country who in turn provide the actual legal services. 

Congress relies on the LSC to effectively oversee the activities of 

its grantees by ensuring they act in accordance with the scope and 

purpose of restrictions that Congress has periodically imposed upon 

their activities. This is intended to maximize the efficient delivery 

of services with the highest degree of client representation and professionalism in the discharge of legal representation. Congressionally mandated restrictions specify which cases a grantee may undertake. 

In our discussions today, we hope to obtain a better appreciation 

of the potential benefits that may be derived from requiring LSC 

clients to pay some portion of the cost of legal services they receive. 

Such a co-pay system that can be applied to LSC grantees could 

have several positive results. First and foremost, the client, by payVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00005 Fmt 6633 Sfmt 6601 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
2

ing a portion of the cost of representation, might expect and demand a higher level of professionalism and performance from his 

or her attorney, thus causing the grantee to provide better service. 

In addition, more funds could be available to serve eligible clients. 

Finally, such a system may make grantees less dependent on fluctuating Federal appropriations and help stabilize the LSC funding 

process. 

Additionally, we hope to gain insight into the activities of the 

California Rural Legal Association, or CRLA, since the restrictions 

were enacted pursuant to the 1996 Appropriations Act. LSC grantees are partnered with groups active in restricted activities under 

a so-called community justice program. 

The partnership approach requires strict scrutiny by LSC and 

Congress to ensure that congressionally mandated restrictions are 

not being circumvented. Based upon the report filed by LSC’s Inspector General, CRLA has been, in spirit if not in fact, failed to 

comply with certain of these restrictions. Issues are presented as 

to whether this is the cause of willful disobedience, negligent management, or a breakdown in communication and understanding between LSC and its grantees. 

I now turn to my colleague Mr. Watt, the distinguished Ranking 

Member of the Subcommittee, and ask him if he has any opening 

remarks. 

Mr. WATT. Thank you, Mr. Chairman, and thank you for convening this hearing. 

The Legal Services Corporation is an important part of our legal 

system, providing free, quality representation for the poor and assisting in expanding the number of lawyers with the appropriate 

understanding and expertise to serve the needs of the poor and underprivileged. And for that, I’m always grateful to have a hearing 

so that we can highlight the wonderful things that the Legal Services Corporation and legal services lawyers throughout the country 

are doing for poor people who cannot afford to have representation 

otherwise. 

I have a longstanding association with Legal Services going all 

the way back to working in the Hill community in New Haven, 

Connecticut, when I was in law school, and then going to the board 

of directors of our local Legal Services Corporation in Charlotte, 

North Carolina, Mecklenburg County Legal Services. So I know the 

value that the Legal Services Corporation and its lawyers and 

other legal services lawyers play in the administration of justice in 

our system. 

I do, however, have two concerns about today’s hearing that are 

somewhat troubling to me. First, I’m concerned about the decision 

to call one of the witnesses, Mr. Padilla. He is the executive director of the California Rural Legal Assistance program, CRLA, as it 

is called. It is a legal services grantee and, as such, is subject to 

various restrictions imposed by Congress on its activities. And last 

fall, the Office of Inspector General issued a report of its investigation into whether California Rural Legal Assistance violated some 

of those restrictions. 

CRLA has responded and the process is ongoing, and I believe 

that bringing Mr. Padilla before this Committee to respond to inquiries about the allegations is inappropriate and threatens to inVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00006 Fmt 6633 Sfmt 6601 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
3

fluence the outcome of an ongoing investigation. It would be tantamount to calling witnesses in a trial that is going on before a court. 

So I think we could be very counterproductive in what we are 

doing. I believe that Legal Services Corporation governing body is 

perfectly capable of monitoring compliance with the regulations 

and that we should tread lightly as we proceed with this hearing 

so as not to prejudice or influence the outcome of the investigation, 

which, as I have indicated, is ongoing. 

Second, if we are going to tread on these waters, it seems to me 

that we should tread with a degree of balance that may not—we 

may not be able to have. When I learned that we were going into 

this inquiry, we sought the testimony of a former Legal Services 

Corporation president, Mr. John McKay, who has substantial 

knowledge of the CRLA and this process for investigating complaints. Mr. McKay would have provided valuable testimony about 

the internal machinery of the Legal Services Corporation and how 

it has effectively resolved concerns about compliance with the law 

and regulations governing the Legal Services Corporation up to 

and including defunding those grantees who refuse to take corrective action when they are found to be in violation. 

We have here today on the panel the current Chair of the Legal 

Services Corporation, Ms. Barnett, whom I admire and respect 

greatly, and in the audience, Mr. Frank Strickland, who I also have 

utmost confidence in. Unfortunately, they are new to this process 

and would not be able to give the kind of testimony that Mr. 

McKay would have been able to give on this important subject. 

And it’s unfortunate that Mr. McKay, who is now the U.S. Attorney for the Western District of Washington, was denied clearance 

to testify by the Department of Justice. This Administration seems 

to be not real sure whether it wants anybody in the Administration 

to testify about anything, apparently. Perhaps if we had had a little bit more time, we could have gotten this resolved. But they refused to allow him to come to testify, and I know, Mr. Chairman, 

that you share our concern about establishing and maintaining cooperation among our co-equal branch of Government. And I know 

you are also disappointed that this witness could not be here to testify. But I think it leaves us—leaves open the possibility that we 

could not get the entire picture of what we are here to inquire 

about, even if it is an appropriate inquiry. 

Finally, Mr. Chairman, I would just say one thing on whether we 

should be consider—whether we should consider imposing a co-pay 

structure on the Legal Services Corporation. I am a firm opponent 

of that and believe that instituting a system of co-pay, even on a 

voluntary basis, might lead to the end of a comprehensive free legal 

services system in this country. And I know that there are people 

who are being served by legal services lawyers who simply don’t 

have the capacity to do it. It’s not because they don’t want to pay 

for their legal services. They simply don’t have the wherewithal to 

do so. 

I look forward to hearing the testimony of the witnesses and 

hope that we will tread lightly and not do damage to an ongoing 

investigation as we proceed. And I yield back Mr. Chairman. 

Mr. CANNON. I thank the gentleman. 

4

Without objection, the gentleman’s entire statement will be 

placed in the record. Also, without objection, all Members may 

place their statements in the record at this point. Any objection? 

Hearing none, so ordered. 

And without objection, the Chair will be authorized to declare recesses of the Subcommittee today at any point. 

Hearing none, so ordered. 

I ask unanimous consent that Members have 5 legislative days 

to submit written statements for inclusion into the hearing record. 

So ordered. 

I now am pleased to introduce the witnesses for today’s hearing. 

Our first witness is Helaine Barnett, the newly appointed president of Legal Services Corporation. Ms. Barnett has devoted her 

life to providing legal services to the indigent. For 27 years, she 

has served as an advocate and manager for the Legal Aid Society 

of New York City, which is the oldest and largest legal aid organization in the country. Ms. Barnett is a graduate of Barnard College 

and received her law degree from New York University School of 

Law. 

Our next witness is Jose Padilla, executive director of the California Rural Legal Assistance program. Mr. Padilla has been the 

executive director of CRLA since 1984 and worked as a staff attorney prior to that, resulting in a total of 25 years of affiliation with 

CRLA. Mr. Padilla has received numerous awards and honors, including being listed as one of the 100 most influential lawyers in 

California—a nation unto itself, I might point out. 

A child of migrant workers in California’s Imperial Valley, Mr. 

Padilla has maintained a deep commitment to representing the interests of migrant workers. Mr. Padilla received his undergraduate 

degree from Stanford University and his law degree from the University of California at Berkeley, Boalt Hall School of Law. 

I might just interject that Mr. Padilla and I spent some time 

speaking yesterday. We had a very pleasant discussion and have 

agreed that the purpose of America and of Government is to give 

people opportunity, and education is a core concept there. And so 

we look forward to Mr. Padilla’s testimony today. 

Our last witness is Jeanne Charn. She is the director of the Hale 

and Dorr Legal Services Center as well as the director of the Bellows-Sachs Access to Civil Legal Services Project, both of which are 

located at Harvard Law School. These programs were conceived by 

Ms. Charn and her late husband, Mr. Gary Bellows, appointed assistant dean for clinical programs at Harvard Law School in 1973. 

Ms. Charn has been part of the Harvard Law tradition for nearly 

30 years. In addition, Ms. Charn has served as a consultant to the 

Legal Services Corporation. A native of Illinois, Ms. Charn obtained her undergraduate degree from the University of Michigan 

and her law degree from the Harvard Law School. 

I would also like to take this opportunity to note the attendance 

of Mr. Frank Strickland, Chairman of LSC’s Board of Directors. 

Mr. Strickland, we appreciate your taking the time from your active law practice to make this trip from Atlanta to monitor this 

hearing. We appreciate your being there. I personally had the 

pleasure to meet with you and to discuss the work of LSC. You’ve 

made yourself available to my staff. We very much appreciate your 

5

cooperation and efforts on behalf of LSC. Again, thank you for your 

attendance. 

In addition, I would like to note that there is no minority witness 

at today’s hearing. This late-breaking development appears to have 

resulted from the Department of Justice’s confusion as to the propriety of the requested witness testifying. I can assure you that I 

intend to follow up on this matter with my colleague, Mr. Watt, to 

ensure that such problems do not occur in the future. 

We have a prerogative in Congress. We on a bipartisan basis 

tend to assert that prerogative with great clarity. Every Administration has its confusions about this, which we tend to be able to 

clarify and to regularly do so. And so we will work together to do 

that, and I apologize for the fact that we don’t have a minority witness. I agree with the Ranking Member that that would have made 

this hearing more beneficial, and we shall try other ways to include 

some of the ideas that we may have missed by not having him here 

today. 

I extend to each of you my warm regards and appreciation for 

your willingness to participate in today’s hearing. In light of the 

fact that your written statements will be included in the record, I 

request that you limit your oral remarks to about 5 minutes. So, 

accordingly, feel free to summarize your most salient points in your 

testimony. We do have a lighting system, and it is green for 4 minutes and then turns yellow for a minute, then turns red. That 

doesn’t mean you have to stop, if you’ll just sort of wrap at that 

point. I have a tendency to tap, not to stop you, but to just remind 

you that it’s moving on. I think that we’re all benefited by a hearing that moves fairly quickly today. 

After all the witnesses have presented their remarks, the Subcommittee Members in the order they arrived will be permitted to 

ask questions of the witnesses subject to the 5-minute limit. 

Ms. Barnett, would you now proceed with your testimony? 

STATEMENT OF HELAINE M. BARNETT, PRESIDENT,

LEGAL SERVICES CORPORATION 

Ms. BARNETT. Thank you, Mr. Chairman, Congressman Watt, 

and Members of the Subcommittee. I am pleased to be here today, 

along with Frank Strickland, Chairman of the Legal Service Corporation Board of Directors. I want to thank you for this opportunity to appear before you on behalf of the Legal Services Corporation to discuss LSC’s ongoing efforts to promote equal access 

to civil justice in America and to answer, to the best of my abilities, 

any questions that Members may have about LSC. 

I assumed the presidency of LSC on January 20th, after 37 years 

of providing legal services to the indigent in New York City. Having spent my entire professional career helping low-income people 

in times of legal crisis and having seen the critical difference that 

legal service attorneys make in the individual lives of poor clients 

facing homelessness, hunger, unemployment, and threats to their 

health and safety, I can say unconditionally that the support of 

Congress, this Subcommittee, and the Administration is crucial. 

LSC grantees assist victims of domestic violence to achieve liberty and self-sufficiency in a safe environment. They help seniors 

preserve maximum independence. They help uninsured individuals 

6

access health care. They help persons with disabilities obtain disability benefits that dramatically improve the quality of their lives. 

They preserve housing of families with children and prevent homelessness and shelter stays. Their clients include parents who seek 

custody arrangements to protect their children from abuse; children who are in foster care seeking adoption by a loving and supportive family; elderly consumers seeking protection from fraudulent loan and collection practices; small family farmers in financial 

difficulties; veterans seeking Government benefits to which they’re 

entitled; victims of natural disaster. 

Without question, the Federal Government remains the single 

largest and most important funding source for civil legal services 

nationally. Yet even with Congress’ support, only an estimate one 

in five eligible low-income persons across this country is receiving 

assistance when confronted with these pressing civil legal problems, leaving 80 percent of our poor with unmet legal needs. 

Moreover, the 2000 U.S. Census reported an increase in the 

number of Americans living in poverty. More than 43 million people are now eligible for Federal legal assistance, yet fewer than 

3,700 LSC-funded attorneys nationwide are charged with providing 

that critical help to those most vulnerable and in need. 

Because of insufficient resources, LSC-funded programs are 

forced to turn away annually tens of thousands of eligible individuals with urgent civil legal problems. In 1996, Congress passed a 

series of reforms requiring recipients of LSC funds to focus on the 

basic day-to-day legal problems of America’s poor. I strongly support Congress’ decision to focus Federal dollars in this way. The 

LSC board and staff share a deep commitment to the mission of 

promoting equal access to our system of justice for low eligible— for low-income eligible Americans in unequivocal conformity with 

the mandates of Congress. 

As LSC president, I am committed to ensuring full and faithful 

compliance with all congressional requirements and restrictions. 

LSC is proud of its strong record on grantee oversight and compliance. By and large, our grantees are very diligent and careful in 

complying with congressional requirements and restrictions. Nevertheless, LSC will continue to devote very considerable staff resources to these activities in order to ensure that Federal recipients 

abide by the 1996 restrictions, as well as all other laws and rules 

governing thoroughly funded legal aid entities. 

Working with our Inspector General, LSC will closely monitor 

our programs and take strong corrective action whenever a grantee 

fails to comply with the law or LSC regulations. 

LSC will also continue to devote considerable attention and energy to devising strategies that promote the best and most efficient 

use of Federal funds in every State. Congressional funding of innovative technology grants has been extremely successful in this regard. The Corporation has awarded grants that have made possible 

expanded access through hotlines, increased access to information 

through an array of self-help and community education materials 

to help clients help themselves, as well as more efficient intake 

structures and case management system. 

LSC grantees close nearly 1 million cases a year as well as approximately 4 million matters, such as community legal education 

7

1Pre-rescission figures are used throughout this testimony. 

sessions. Only about 10 percent of LSC-funded cases are resolved 

through a court decision, while nearly 75 percent are resolved 

through advice, counsel, or brief service. Oftentimes a letter or a 

phone call from a legal services attorney can resolve a problem at 

the outset, saving a substantial number of hours and dollars. We 

seek to provide meaningful assistance to individual clients while 

serving as an efficient, problem-solving program and as a model of 

efficient dispute resolution. 

This year, LSC is exploring how to better and more effectively 

promote quality in the delivery of legal services to the poor. We are 

examining how to define and measure quality and how we transmit 

the learning of this generation of leaders to the next. 

In conclusion, I believe there are fewer responsibilities more important in a democracy than ensuring equal justice under law. I 

know from personal experience that legal services programs are 

often the last line of defense for hard-working poor men and 

women and their families who desperately need our help and who 

seek some degree of self-sufficiency and a measure of fairness in 

our society. I am proud to play a role in this vital effort, and I look 

forward to working closely with Congress in the future and welcome your thoughts and suggestions with respect to the work of 

LSC as we pursue the goal of equal justice for the poor in America. 

Thank you. 

[The prepared statement of Ms. Barnett follows:]

PREPARED STATEMENT OF HELAINE M. BARNETT

INTRODUCTION

Mr. Chairman, Congressman Watt, and Members of the Subcommittee, thank you 

very much for the opportunity to testify before the House Judiciary Subcommittee 

on Commercial and Administrative Law. On behalf of the Board of Directors and 

Legal Services Corporation’s (LSC) management, we are pleased to report on LSC’s accomplishments since we last testified before the Subcommittee in 2002 and to answer any questions Committee Members might have. 

Legal Services Corporation is a private, nonprofit corporation created by Congress 

with bipartisan support in 1974. LSC’s charge is to ensure equal access to justice 

by supporting the provision of civil legal assistance to those who otherwise would 

not be able to afford it. For Fiscal Year 2004, Congress appropriated $338,848 million to LSC, $322,948 million of which has been allocated in grants to fund 143 legal 

services programs serving every U.S. county and territory.1 LSC spends less than 

4 percent of its total appropriation for the management and administration of the 

national program. 

The LSC Board and staff are committed to our mission, as defined by the LSC 

Act, to promote equal access to our system of justice for low-income people throughout the United States. Given funding realities, LSC has focused in recent years on 

devising and implementing strategies that promote the highest and best use of federal funds in every state and territory. We continue to devote considerable LSC staff 

resources to compliance and enforcement activities, in order to ensure that federal 

recipients abide by congressional requirements and restrictions enacted in 1996, as 

well as all other laws and regulations governing federally-funded legal aid entities. 

ADMINISTRATION

LSC is governed by an 11-member Board of Directors appointed by the President 

of the United States with the advice and consent of the Senate. By law, the Board 

must be bipartisan; no more than six members may be of the same political party. 

The Board appoints LSC’s President, who serves as LSC’s chief executive officer, 

subject to general policies established by the Board. The 1988 Amendments to the 

Inspector General Act (the IG Act) required LSC to establish an Office of Inspector 

General (OIG) and extended specific provisions of the IG Act to LSC. Accordingly, 

8

such an office was established by and for LSC. The Inspector General is appointed 

by, reports to, and serves under the general supervision of LSC’s Board of Directors. 

Submitting written testimony are LSC President Helaine M. Barnett and LSC 

Chairman Frank B. Strickland. Ms. Barnett assumed her position as President of 

LSC on January 20, 2004. She has been a legal services attorney for 37 years, employed throughout that time at the Legal Aid Society of New York City, the country’s oldest and largest legal services organization. For nearly three decades prior 

to assuming the LSC presidency, Ms. Barnett was involved in the management of 

the Legal Aid’s Society’s multi-office civil division, heading it since 1994. In that capacity, she oversaw the provision of legal services covering the full range of civil 

legal problems of the poor, established a major initiative for homeless families with 

children, created citywide health law and domestic violence projects, and mobilized 

the organization’s 911 Disaster Assistant Initiative. Ms. Barnett also assumed many 

additional leadership responsibilities within the legal community at the national, 

state, and local levels. She is a co-chair of the New York State Commission to Promote Public Confidence in Judicial Elections; Treasurer of the Association of the Bar 

of the City of New York; a member of the American Bar Association Governance 

Commission and House of Delegates and a past member of the ABA Board of Governors, where Ms. Barnett was the first and only legal services attorney to serve. 

Ms. Barnett was also a member of the ABA Executive Committee. 

Mr. Strickland is a partner in the Atlanta law firm of Strickland Brockington 

Lewis, LLP. He served for seven years on the board of the LSC-funded Georgia 

Legal Services Program and for four on the board of LSC-funded Atlanta Legal Aid 

Society. President George W. Bush nominated him to the LSC Board in 2002, and 

he was sworn in as a member and elected Chairman in 2003. Mr. Strickland has 

been a member of the Board of Governors of the State Bar of Georgia since 1985 

and is a former member and chairman of the Georgia State Ethics Commission. He 

has been general counsel of the Georgia Republican Party and is a member of the 

Board of Governors of the Republican National Lawyers Association. In addition, he 

is Chairman of the Atlanta Lawyers Chapter of the Federalist Society. When Mr. 

Strickland was President of the Atlanta Bar Association (1985–1986), he received 

the American Bar Association’s Harrison Tweed Award for coordinating the year’s 

outstanding pro bono project in America—mobilizing more than 400 volunteer lawyers to provide representation to more than 800 Cuban detainees in administrative 

parole proceedings. 

ENSURING COMPLIANCE

LSC’s Office of Compliance and Enforcement (OCE) was established to ensure 

that congressionally-mandated restrictions and other regulations are adhered to by 

LSC grantees. OCE’s responsibilities include reviewing compliance by grantees with 

the LSC Act and regulations; responding to public complaints; approving major expenditures by LSC recipients; conducting accountability training; and providing follow-up to certain findings and recommendations contained in grantees’ audited financial statements. The FY04 budget for OCE is $2.47 million, which supports a 

17-member staff comprised of a Vice President of Compliance and Enforcement, a 

Director of Compliance, a dozen attorneys, two fiscal analysts, two support staff and 

a management analyst. 

New restrictions enacted by Congress in 1996 prohibit grantees who accept LSC 

funding from, among other things, filing or litigating class action lawsuits, engaging 

in most types of lobbying, seeking or receiving attorneys’ fees, litigating on behalf 

of prisoners, or representing undocumented aliens. LSC has implemented these restrictions by regulation and monitors its grantees closely to ensure strict adherence. 

The LSC Board and management have not hesitated to take strong and decisive action when grantees fail to comply with the law or LSC regulations. Fiscal sanctions 

have and will be imposed where necessary and appropriate, up to and including termination of the program’s LSC grant. 

In 2003, OCE performed 39 on-site reviews, surpassing its ambitious goal of 32 

annually. OCE investigates public concerns, closely reviews mandatory annual audits filed by each LSC grantee, and performs on-site reviews to ensure that all congressional restrictions on LSC-funded programs are enforced. OCE selects programs 

for on-site review based on a combination of a number of criteria, including complaints of non-compliance, referrals from the Office of the Inspector General, a considerable change from one year to the next in Case Services Reports, and other indicators. Since 2001, LSC has had the authority to conduct random compliance reviews as well. Finally, if OCE uncovers a serious violation of the restrictions, or if 

a grantee implements a corrective action plan to resolve a compliance problem, OCE 

9

will perform a follow-up review within one year of the last review and provide technical assistance to ensure effective implementation of the corrective action plan. 

LSC feels confident in the effectiveness of its compliance efforts. Because we use 

indicators such as complaints from Congress and the public to determine which programs to review, we give especially close attention to those grantees against which 

serious allegations have been made. In addition, the possibility of random audits occurring at any time is an effective safeguard against non-compliance. Finally, Independent Public Accountants (IPAs) perform an annual review of the compliance of 

each LSC grantee with LSC regulations and congressional restrictions. IPAs report 

any evidence of non-compliance to the Inspector General, who in turn refers the 

findings to LSC management for follow-up and resolution. 

Since October 1997, LSC management and the Inspector General have instituted 

an official audit follow-up process with its grantees known as the A–50 Follow-up 

Process. This process is based on Office of Management and Budget (OMB) Circular 

A–50 for agency follow-up of OIG reports. The process sets out a general timeline 

for handling OIG findings and resolving any differences between the OIG and LSC 

management regarding such findings. OCE receives approximately fifty A–50 referrals a year. The overwhelming majority of issues are resolved in less than 30 days 

to the satisfaction of both management and the OIG. If OCE substantially agrees 

with the OIG that a grantee is not in compliance and that a satisfactory plan has 

not been submitted by the grantee to bring it into compliance, LSC may impose a 

number of sanctions. LSC may put the grantee on a short-term funding schedule; 

it may suspend part or all of a grantee’s funding for up to 30 days; and it may terminate funding if the grantee engages in continued serious violations. 

IMPLEMENTING COMPETITION

The central role of LSC is to manage and oversee the use of federal funds that 

support the direct provision of legal services by 143 LSC-funded legal services providers. Since 1996, LSC has used a system of competition for grants to promote the 

economical and effective delivery of services, as required by the LSC Act. This system supplanted the previous system of presumptive refunding of LSC grantees. 

We encourage non-incumbent legal services providers to compete for available 

grants by broadly circulating information on the availability of grant funds and by 

providing outreach and technical support to potential applicants. LSC announces 

the grants competition each year in national and local newspapers, on the LSC 

website, in the Federal Register, and in bar journals. 

During the competition process, LSC evaluates applications according to established quality standards and awards grants to those providers best able to efficiently provide high-quality legal services in accordance with all applicable legal requirements. LSC provides three channels through which competitive grant applicants, including non-incumbents, can raise questions, issues, and complaints about 

the grants process. LSC surveys all applicants who file a notice of intent to compete 

but fail to subsequently file a grant application. LSC has an applicant service desk 

that responds to applicant questions and concerns throughout the grants competition period. Additionally, LSC hosts an ‘‘Applicant Information Session,’’ which is a 

free telephonic conference used to inform potential applicants about how to file a 

viable grant application. It also provides a formal vehicle for LSC to respond to 

questions and issues regarding its grants competition process. 

LSC has held a grants competition each year since 1996 and recently completed 

the grants competition for calendar year 2004 funding. During the past eight years, 

there have been three competitions in which an incumbent LSC grantee lost to an 

applicant that had never previously received a grant from LSC. Whether or not 

there are multiple applicants for an LSC service area contract, every entity seeking 

LSC funds must submit a comprehensive application for LSC funding for a term not 

to exceed three years, and each grantee must submit an annual application for a 

renewal of LSC funding. 

Over time, we have examined the competition process to learn how it can be improved and how to potentially attract more applicants. However, many factors help 

explain the lack of emergence of competitors for LSC funds. There are many situations across the country in which the legal community believes that the current LSC 

provider is performing well, and there simply has been no expressed interest by another entity seeking to become a legal services grantee. In our experience, law firms 

with an initial interest in offering one type of free service to low-income clients, such 

as representation in custody and divorce, are not interested in providing a full array 

of legal services, including housing, family, consumer and income maintenance 

work. Offering such services also requires establishing costly intake structures, 

emergency access, and other core capacities. Potential applicants also have reported 

10

2Legal Services Corporation 2002 Summary of Average Salaries by Job Classification for Full 

Time Staff. (www.rin.lsc.gov) 

that extensive reporting requirements attached to LSC funding are a deterrent to 

applying for LSC funds. Some firms have made the economic determination that the 

limited LSC funding does not compensate for the time-consuming extra administrative tasks they would be required to perform. Congressionally mandated restrictions 

on LSC grantees also make it somewhat more difficult to attract qualified applicants 

able to compete with incumbent programs. In particular, some applicants have 

noted that the restriction on accepting attorneys’ fees makes it difficult to stay financially competitive as a potential LSC service provider. 

CASELOADS AND STAFFING

LSC grantees close approximately 1 million cases a year on behalf of low-income 

clients and handle an additional estimated 4 million ‘‘matters’’—assistance that falls 

short of the official definition of a case (i.e., pro se assistance, dissemination of community legal education materials, referrals, mediation assistance, etc.). To serve the 

individuals and families these cases represent, LSC programs employ 8,277 full-time 

staff, of whom 3,652 are attorneys. The average starting salary for a staff attorney 

is $33,489, making legal services lawyers among the lowest-paid members of the 

legal profession.2

Well over 50 percent of our clients are served through the advice and counsel efforts of our programs. Almost another 20 percent are assisted by brief service efforts. Fewer than ten percent of LSC grantee cases are resolved through a court decision. About three-quarters of LSC’s client population are women, many with young 

children. Almost 11 percent are elderly. About one-quarter of the client population 

is African-American; about 20 percent is Hispanic; and approximately two percent 

are Native American and another two percent are Asian or Pacific Islander in origin. 

IMPLEMENTING STRATEGIC PLANNING

LSC has used its State Planning Initiative to help grantees address emerging client populations, diminishing resources and important new technological advances 

that are revolutionizing the practice of law and helping legal services practitioners 

reach underserved client populations. State Planning requires that grantees supplement and enhance technology structures to improve client services and access. It requires grantees to coordinate functions with local and state stakeholders, including 

other LSC grantees, so more eligible clients who need legal assistance can receive 

it. State Planning also stresses local resource development and instructs grantees 

to undertake efforts to leverage their federal dollars with non-federal resources. 

State Planning, in combination with federally mandated competition for LSC 

grants, is fully in accord with strategies set forth in President Bush’s Management 

Agenda. In 2001, all federal agencies were instructed to leverage resources to maximize the use of limited government funds. The most enduring legacy of LSC’s State 

Planning Initiative may be its success in achieving that directive. Through State 

Planning, LSC spawned partnerships with judges, state legislators and private bar 

members to help increase state funding and private contributions for legal services. 

PROMOTING EFFICIENCIES THROUGH TECHNOLOGY

LSC’s Technology Initiative Grant (TIG) program supports projects to develop, 

test and replicate technologies that enable programs to improve program efficiency 

and enhance client access to high-quality assistance in the full range of legal services. Initiated with a special appropriation in FY00 and funded by Congress every 

year since, the TIG program awards grants to LSC grantees through a competitive 

grant process. LSC awarded 51 TIG grants in 2003. In FY05, LSC plans to allocate 

$4 million to the TIG program. Since the program’s inception, LSC has funded a 

range of pioneering and effective technology projects. Pro se initiatives have 

equipped clients with the tools and support to protect their legal interests on their 

own while increasing the efficiency of the courts. Web-based systems, video-conferencing and related approaches have increased access to justice for clients living in 

remote areas. Newly designed case management and intake systems, as well as 

other infrastructure investments, offer increased efficiencies that enable programs 

to save time and money and ultimately serve more clients. Finally, client-centered 

statewide legal services web sites provide legal information in 49 states and territories, thanks in part to TIG grants and ongoing technical assistance funded with 

11

TIG monies. Using these tools, clients can more easily obtain legal information 

through computers in their homes or at public venues such as libraries. 

The TIG program has increased access to legal information, self-help resources 

and other legal assistance for low-income Americans. It has also given traditionally 

hard-to-reach clients living in isolated areas a new avenue to pursue and obtain 

legal aid. TIG awards have allowed many LSC grantees to leverage matching funds 

from other sources. For instance, our program in Alaska received matching funds 

from the Alaska Court System to install and configure workstations in each of the 

six state courthouses. These provide access to public legal education and self-help 

materials in both English and in Yup’ik, a traditional Alaskan language. 

Another replicable TIG innovation is our Montana pilot project on teleconferencing, which has enabled the Sixteenth Judicial District (200 miles in diameter) 

to hold trials in county courthouses throughout the area by utilizing video conferencing technology to hear from witnesses who live far from the actual courthouse. 

Many judges throughout the state now hold trials via teleconferencing. Sheriffs no 

longer have to bring in witnesses and litigants who lack transportation and judges 

can make better assessments of witnesses’ and litigants’ mental capacities when 

they are in familiar surroundings. Overall, court proceedings take far less time. 

A further innovative example of a TIP project is California’s I-CAN! project, a 

web-based legal services kiosk that offers convenient, effective access to vital legal 

services. Developed by the Legal Aid Society of Orange County, in partnership with 

the courts, local government agencies, libraries and legal services organizations, ICAN! creates properly formatted pleadings, provides court tours, and educates users 

on the law and how to pursue their matter. I-CAN! software facilitates completion 

and filing of forms on complaints regarding parental obligations, domestic violence 

restraining orders, orders to show cause, earned income tax credits, fee waivers, license denial reviews; paternity petitions, small claims matters and unlawful detainers. Users can access the program for free on any computer connected to the Internet and through kiosks in courthouses, legal aid offices, community centers, women’s shelters, and libraries. It serves hard to reach groups such as rural communities and individuals with limited or no English proficiency as some modules can 

be accessed in Spanish and Vietnamese. 

IMPROVING QUALITY

LSC management and the Board’s Committee for the Provision of Legal Services 

launched a Quality Initiative in 2004 to study ways to enhance and promote the delivery of high-quality assistance by federal grantees. LSC is committed to identifying 

and subsequently spurring the development of certain core quality standards in its 

grantees. LSC will work with the American Bar Association and others to revise 

performance standards developed by the ABA’s Standing Committee on Legal Aid 

and Indigent Defendants as well as those from other professions. Consensus has already been reached on certain quality benchmarks: streamlined case management 

systems, competent staff, peer review, resource development, consistently strong client outcomes and high client satisfaction. Other standards under examination include client involvement, workforce diversity, client accessibility, strategic use of 

scarce resources, and dissemination of best practices among providers. LSC will continue to examine how our most successful programs have achieved high quality and 

what is required to maintain it. We are providing a forum for experts to discuss the 

development of these qualities and showcasing grantees whose work demonstrates 

that they have given consistent attention to quality in staff work product, client concerns, and community relations. 

It is essential that LSC have a strong presence in the national legal services community and be visible among its grantees as we assist them with their profoundly 

important mission. Our experience has shown that the more readily available we 

are to programs, the quicker they are to call us with questions and report problems. 

We have found that programs are eager to learn about ways in which they can improve performance and conform to LSC requirements. Teaching programs how to 

succeed yields far stronger outcomes for clients and lessens compliance problems. 

Recently, we increased our quality site visits to grantees. Sites were selected because they showed indications of weakness in one or more aspects of program activity or exemplified some of the best qualities found in legal services organizations. 

Although current LSC resource levels permitted fewer than a dozen trips in 2003, 

we have already realized significant rewards from the effort. LSC has been able to 

give guidance on improvements and to provide mentoring, partnership, and assistance in ways that allow grantees to deliver quality legal aid. LSC has also learned 

how strong programs achieve their success and has been able to share that information with others. 

12

3For 2002 cases, one more adjustment was made, excluding Title III Administration on Aging 

cases where collection of financial eligibility data is restricted by law. This adjustment reduced 

reported case closures by about another 35,000. 

ENSURING ACCURACY OF STATISTICS

The Office of Information Management (OIM) is responsible for collecting data reported by our grantees or affecting them. Using 2000 census data, OIM determined 

the appropriation funding amounts for grantees based on a per capita calculation 

of the number of eligible poor people in each LSC service area. OIM is also responsible for managing the Case Service Reports (CSR) grantees file annually. In 1999, 

two U.S. Government Accounting Office (GAO) reports raised questions about the 

accuracy and validity of the CSRs. Problems reported by GAO stemmed in part from 

a lack of clarity found in past LSC reporting guidelines and, more generally, from 

insufficient attention by grantees to the existing reporting and documentation requirements. 

LSC promptly took up the issue and instituted the necessary measures to correct 

the problem. LSC developed and issued to all grantees more detailed guidance on 

CSR reporting and on improving their case management systems to comply fully 

with LSC’s operational standards. Then LSC provided additional training to those 

grantees most in need of it. LSC also established a system for sampling CSR data 

so that grantees can diagnose and correct reporting problems and LSC can track 

the error rate both grantee-by-grantee and nationally. As a result, accuracy greatly 

improved from an 11 percent sample error rate for 1999 CSRs to a 4.9 percent rate 

for 2000 CSRs. We continued to improve with a 4.3 percent sample error rate for 

2002 CSRs. We expect a projected sample error rate between 4.2 and 4.3 percent 

in 2003.3 We are confident that the goal of ‘‘substantial accuracy’’ has been 

achieved. LSC will continue to pay close attention to the quality of CSR reporting 

to ensure the integrity of CSR figures, which are our strongest hard numerical indicator of services delivered, both on a national and individual program basis. 

2005 BUDGET REQUEST

For FY05, LSC requests an appropriation of $352.4 million to provide funding for 

civil legal assistance to eligible low-income persons throughout the United States. 

This represents a modest four percent increase over LSC’s FY04 appropriation and 

only partially accounts for the increased number of eligible poor clients living in 

many LSC service areas. More than 43 million low-income Americans are currently 

eligible for federally funded assistance—a record high. In addition, LSC’s funding 

over the years has been dramatically outpaced by inflationary increases at a rate 

of more than 2 to 1. Current funding, in 1980 real dollars, equals just $149.17 million. 

LSC’s FY05 budget request is structured to allow LSC to meet three key goals:

• To modestly increase the availability of legal services to eligible persons;

• To ensure legal services clients are receiving high-quality legal assistance; 

and

• To ensure that legal services programs fully comply with all legal requirements.

The FY05 request eliminates funding for the census adjustment line item that 

had been included in LSC’s budget during the previous two fiscal years. In FY03 

and FY04, as a transitional measure, extra funding was set aside to assist LSCfunded programs facing significant federal losses due to poverty population shifts. 

The census funding adjustments enabled grantees to gradually adjust to lower funding levels and gave program leaders an opportunity to reallocate scarce resources 

and devise strategies to raise additional non-federal funds. For FY05, LSC asks that 

its funding be distributed proportionally among all grantees based on per capita determinations of the eligible poor living in each service area. 

Federal funding is the single largest and most critical funding component for legal 

aid and low-income Americans seeking access to critical civil legal assistance. The 

federal investment has become even more important in recent years, which have 

seen a variety of non-federal funding sources stagnate or shrink. Many LSC-funded 

programs are forced to turn away thousands of qualified individuals with urgent 

civil legal problems. These include victims of domestic violence seeking protective 

orders, parents seeking custody arrangements to protect their children from abuse, 

elderly consumers seeking protection from fraudulent loan and collection practices, 

tenants seeking to keep their families off the streets, and veterans and seniors seeking vital government benefits. Over 3,600 legal aid attorneys throughout the country 

13

are charged with providing civil legal assistance to the more than 43 million financially eligible Americans-individuals with annual incomes of $11,638 or less, which 

is 125 percent of the federal poverty threshold. Despite the hard work and dedication of this skeletal workforce, studies show that approximately 80 percent of eligible clients do not have access to legal services when they have serious civil legal 

concerns. 

HELPING CLIENTS

LSC is best understood in terms of the clients our programs assist. They are all 

poor individuals and families who face overwhelming legal challenges. We have selected several client histories that are indicative of the range of cases that our 

grantees across the nation handle where the provision of civil legal assistance has 

made a critical difference in their lives. 

Ms. K. came to the Legal Aid Society of Orange County (LASOC) when she was 

20 years old and the mother of a young son. She and her boyfriend began dating 

when she was 17 years old, and the severe physical abuse began two weeks later. 

He beat and kicked her repeatedly, hit her in the stomach when she was pregnant, 

isolated her from her family and friends, was verbally abusive, and refused to allow 

her to go out without him. He took her to and from her job and forced her to turn 

over her paycheck to him. She finally was fired because she was so stressed on the 

job from the situation at home. Despite her best efforts to please him, Ms. K was 

beaten because she did not keep a clean enough house or prepare meals her boyfriend liked. She finally left when he told her that she would be beaten when he 

returned home from work for failing to iron his shirt. LASOC assisted her in applying for restraining orders and custody and visitation orders. The judge indicated 

that she was the textbook domestic violence victim and granted the orders as requested. 

In New York, Legal Services of New York (LSNY) represented Ms. S. who was 

widowed when her husband, the primary breadwinner of the family and an employee of the World Trade Center, was killed on September 11, 2001. Shortly after 

the tragedy, while she was still in shock and grieving her loss, a finance company 

began eviction proceedings against her despite the fact that she had paid her rent. 

She learned that a foreclosure proceeding against her landlord had resulted in the 

landlord’s loss of the house. LSNY successfully negotiated a settlement with the finance company and Ms. S. was given enough time to find another affordable place 

to live. 

When Ms. A. was in junior high school she was assaulted so viciously that she 

could no longer walk. As a young adult she lived in her own apartment but required 

twenty-four hour a day living assistance. The state decided to decrease her home 

health care hours to save costs. Since Ms. A. was dependent on the availability of 

health care and assisted living on a twenty-four hour a day basis, the potential loss 

of her home health care benefits would give the young woman little choice but to 

enter a nursing home. With the assistance of Legal Aid of Western Missouri 

(LAWMO), Ms. A. was able to retain her home health care assistance and graduated 

from college. She now plans a career as a legal service attorney. 

Ms. P acquired a ten-acre parcel of property in rural Idaho prior to her marriage. 

With the help of friends and neighbors she constructed a small home on the property. Eventually she married. Within a week of the marriage, her new husband, taking advantage of her disabilities, convinced her to sign a quitclaim deed giving him 

a one-half interest in her property. Over time he acquired complete control of their 

finances and incurred $85,000 in debt. He grew abusive and was arrested for domestic violence. Upon his release from jail he filed for divorce and asked that ‘‘their’’

land and home be sold to cover the credit card debt. Idaho Legal Aid Services represented her in a multi-day trial. The court revoked the quitclaim deed and assigned 

the vast majority of the credit card debt to Ms. P’s ex-husband. 

CONGRESS HAS CONSIDERED AND REJECTED CO-PAY

At the Committee’s request, the LSC is addressing the adaptability of a co-pay 

system for LSC-funded grantees. Although the question of charging clients a fee for 

legal assistance is not specifically addressed in the LSC Act, the legislative history 

of the Act strongly indicates that federally funded legal assistance provided pursuant to the Act is to be free of charge. Both the House and Senate reports note that 

‘‘It is in the Nation’s interest to encourage and promote the use of our institutions 

for the orderly redress of grievances . . . and that the program of providing free 

legal assistance to those unable to afford such counsel should receive continued support.’’ The House Report goes on to state that ‘‘regulations promulgated by the corVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
14

poration will assure that . . . no person or group will be charged any fee for legal 

services provided by recipients under this bill.’’

LSC has followed this very clear legislative intent, and it has been the policy of 

LSC that our grantees may not charge fees for LSC-funded legal assistance. Our clients represent the poorest of the poor and most vulnerable individuals in the country and are desperately seeking civil legal assistance to make a critical difference 

in our lives. 

Moreover, in the mid-1990s co-pay was considered and rejected by Congress. Reauthorization bills introduced in both the House and the Senate contained provisions that would have required LSC to undertake a demonstration project to study 

co-pays, and would have permitted—but not required—LSC to establish a system 

of co-pay for some or all of its programs. Neither reauthorization bill passed. However, a number of the provisions from the reauthorization bills were ultimately included in the 1996 Appropriations Act. The co-pay demonstration project was not 

included. 

The legislative history of the 1996 Appropriations Act also makes clear that Congress intended for legal services to be provided free of charge. In justifying the attorneys’ fees restriction, the House Report states, ‘‘Further, the Committee notes that 

Corporation grantees are supported by public resources to provide free legal aid to 

their clients. Therefore, the Committee believes it is inappropriate for attorneys’ fees 

to be collected for free legal aid.’’ We believe Congress was right when it indicated 

that federally funded legal services should be provided free of charge to those in our 

society most in need. (Emphasis added.) 

STATUS OF LSC REVIEW OF OIG REPORT

In response to the Committee’s request to consider current alleged infractions 

committed by California Rural Legal Assistance, LSC will report on the status of 

LSC’s review of the OIG’s and the possible sanctions that might be imposed on any 

program that has been referred to LSC by the OIG. 

On September 30, 2003, the OIG provided CRLA with a draft audit report. As is 

standard procedure, CRLA was given an opportunity to respond. On November 14, 

2003, CRLA submitted comments in response to the OIG’s report. CRLA disputed 

the OIG’s draft findings. On December 11, 2003, the OIG issued its final report. The 

OIG accepted some minor corrections from CRLA and dropped one finding. Otherwise, the OIG reiterated its previous findings. The OIG gave CRLA two months to 

provide a corrective action plan (CAP), which CRLA submitted in February of this 

year. OIG reviewed it and, on March 5, 2004, after deciding that CRLA’s proposed 

CAP inadequately addressed the problems outlined in the report, the OIG referred 

the matter to LSC’s Office of Compliance and Enforcement (OCE) through what is 

known as the A–50 referral process. 

We take our responsibilities under the A–50 process very seriously. The A–50 

process stems from a requirement in the 1996 Appropriations Act that LSC was to 

‘‘develop procedures to ensure effective follow-up that meet at a minimum the requirements of Office of Management and Budget Circular Number A–50.’’ A–50 provides for general federal agency follow up procedures for IG findings. 

Following the procedures outlined in that process, OCE, in conjunction with LSC’s 

Office of Legal Affairs and management, is currently reviewing the facts and the 

law presented in this case. We hope to conclude this review of whether or not we 

agree with the OIG’s report by May 1, 2004. We will, however, conclude our work 

on this case in as short a time frame as we reasonably can. 

There are a number of possible scenarios that could arise after LSC completes its 

review of an OIG report. If we concur with the OIG’s findings that a program violated LSC regulations, and we agree that a program’s proposed CAP will not adequately remedy the situation, we would try to work with the program to develop 

a CAP that will bring them into compliance. 

If working with the program does not bring them into compliance, we will consider the imposition of any and all sanctions necessary to promptly bring the program into compliance. LSC may suspend part or all of the grantee’s funding for up 

to thirty days; we could put the grantee on a short-term funding schedule at the 

end of the calendar year; and, if the grantee continued to engage in serious violations of congressional will as codified in LSC Act, appropriations acts and regulations, we could terminate the grantee’s LSC funding. 

Another sanction available to LSC is to cease to fund the program during the next 

competitive grant cycle. LSC always takes a grantee’s compliance history into account during the competition process. 

If after review of the OIG’s report, LSC management disagrees with the OIG’s 

conclusions, then as part of the A–50 process, an Audit Follow up Official (AFO), 

15

designated by the LSC president, tries to work out an agreement. If an agreement 

cannot be reached between the OIG and LSC management, then the AFO issues a 

decision that will be final. 

CONCLUSION

Civil legal services programs play a critical role in helping poor individuals and 

families achieve independence and self-sufficiency and in obtaining critical relief. 

Annually, the LSC cases fall into traditional poverty law categories. Grantees close 

almost 40 percent of their cases in family law each year, primarily representing custodial parents and victims of domestic abuse seeking divorces and orders of protection. More than ten percent of our closed cases involve efforts to help elderly clients 

with income maintenance issues, veterans’ benefits, disability claims, and other relief under benefits programs designed for older Americans. Almost one-quarter of 

our grantees’ litigation is devoted to housing law issues—preventing family homelessness by challenging evictions, preventing foreclosures, improving living conditions, helping with Section 8 and other federal housing subsidies or through community activities to improve neighborhoods and develop affordable housing. Our programs’ lawyers keep children in school by representing them in expulsion hearings 

and helping students with disabilities learn in effective and appropriate settings. 

LSC grantees make sure that the working poor have access to fair employment and 

the wages to which they are entitled. Our grantees also assist consumers with bankruptcy and other debt relief, including that caused by predatory lenders. 

In conclusion, we at LSC are proud of our partnership with Congress and enormously grateful for the bipartisan support we have earned over the past decade. We 

also deeply appreciate the support the Bush Administration has shown for our efforts to provide equal access to justice for low-income Americans in the most efficient and effective manner possible. The LSC Board and staff will continue in this 

collaborative effort and will build upon these important relationships in the future 

as we endeavor to give meaning to the goal of equal access to all Americans. Thank 

you.

Mr. CANNON. Thank you, Ms. Barnett. 

Mr. Padilla? 

STATEMENT OF JOSE R. PADILLA, EXECUTIVE DIRECTOR, 

CALIFORNIA RURAL LEGAL ASSISTANCE, INC. 

Mr. PADILLA. Mr. Chairman, Congressman Watt, Congressman 

Delahunt, my name is Jose Padilla. I’m the executive director of 

CRLA. I am proud to say I’ve been a legal aid lawyer with CRLA 

for more than 25 years, almost 20 of those years as its director. I 

am always honored to speak on its behalf and on behalf of the more 

than 85 committed advocates in our program, and especially on behalf of the more than half a million rural poor and farm workers 

to whom we minister legal aid, who honor us by allowing us to be 

their lawyers. 

CRLA is considered one of the more effective legal aid programs 

in the country. We are proud of that legacy of high-quality, ethical, 

and effective litigation. Congress wants to give poor access to 

courts. We bring cases to courts. Courts decide. 

Recent examples of our work: We enabled three wheelchairbound high school students to secure district-wide building modifications that brought schools in compliance with the Americans 

with Disabilities Act. These students had been unable to navigate 

their campuses, use bathrooms, or participate in academic programs that physically accessible—that were physically accessible 

only to the able-bodied. 

We obtained a fair housing discrimination case settlement 

against a predator landlord who sought out women residing at a 

local homeless shelter and offered rental discounts in return for 

sex. 

16

We secured improvement to a farm labor camp housing hundreds 

of asparagus pickers which had no functioning toilets or showers, 

with a filth-laden kitchen, and recovered months of unpaid back 

wages for some 400 workers residing there. 

I provided Congressman Watt with pictures of that labor camp 

going—pictures that show housing going from filth to decency. 

And we provided thousands of K–3 English learners access to 

Reading First grants under No Child Left Behind, enjoining the 

State Department of Education from enforcing a ban that kept 

these funds from reaching hundreds of English-learner classrooms. 

But it has been a repeated fact of our history, Congressmen, that 

effective advocacy invites controversy. So we have come to answer 

any questions that you may have about recent audits of our program. So I briefly speak to three things: the first two, compliance 

and cooperation. 

About compliance, CRLA has always realized that we will be able 

to provide diligent and effective advocacy on behalf of the most vulnerable only through administering efficiently and effectively all 

aspects of financial accounting, local office operation, and staff activities. Protection of the Federal resource is the most critical responsibility that a program director will assume. Indeed, for someone born in a rural community and raised by parents who were 

themselves migrants, this obligation to protect at all cost the Federal rural legal service dollar weighs heavier. 

About cooperation, the recent IG audit presented many more 

issues and many requests for information than any previous audit 

that we had gone through. We cooperated fully. No inquiries remained unaddressed. No pending issues remained open. When 

questions arose concerning client privacy and CRLA ethical responsibility to its clients, those were discussed, as lawyers should, and 

resolved. 

During the 30-month audit period that extended from notice to 

final report, we expended significant resources responding to the 

OIG demands. Although CRLA has no final estimate, after 16 of 

the 30 months of the audit, CRLA had expended 4,479 staff hours 

in audit-related work, at a cost of more than $113,000. 

Of course, under the LSC Act, it is the LSC board, its president, 

and management staff that make the rules and policies for LSC. 

Under the IG Act, the LSC Inspector General assures that the Federal dollar is protected by auditing for compliance with restrictions. 

The IG investigates, inspects, recommends. 

In our case, after the extensive review by the IG of hundreds of 

case files, hundreds of financial transactions, numerous staff interviews, and weeks of on-site field office visits, there was good news. 

No financial irregularities, no violation of LSC rules were found 

that required any form of penalty, nor any form of formal Federal 

intervention. 

The IG found that CRLA, Inc., and CRLA Foundation were independent entities. It found there were no improper fund transfers 

between the two. And after intensive review of CRLA’s 17200 litigation, complex cases that are brought to recover hundreds of thousands of dollars of unpaid wages, the IG found this to be a proper 

use of resource. Our clients, Congressmen, are working people, by 

and large. We do use legal resources to get wages after they’ve 

17

worked and employers think that they can get away without paying them. We do that work. That’s basic access. 

Nevertheless, the IG did make findings in the audit that raise 

questions regarding 1610. We responded in full in writing. Where 

we could, Congressmen, we agreed. We have changed policies and 

practices. Where there was fair disagreement with what LSC requires, we will be looking to LSC for clarity regarding the findings. 

About three findings, subsidy. The IG found that when tenants 

paid rents late, although we collected the rent, we didn’t charge a 

penalty; we didn’t charge interest. And when we did, Congressmen, it was about $511. It should be noted that the issue of subsidy 

amounts to $511 in an $18 million period of operation. 

A second issue about client identity. We also disagreed where the 

IG findings and recommendations conflict with the black letter of 

the law regarding client identity required to be revealed to the public. Where clients have explicitly chosen not to be plaintiffs in litigation for fear of landlord or employer retribution, the choice must 

be honored. The IG’s position appears to be inconsistent with the 

requirements of the LSC regulation, statutory language, and with 

our own ethical responsibilities. 

And, finally, Congressmen, about shared staff, we also disagree 

with the findings about shared staff and about co-counseling. We 

rigorously followed the guidelines set by LSC regarding shared 

staff. Specifically, we complied with the LSC guidance for 10 percent of our staff to be shared with an entity doing restricted work. 

In fact, Congressmen, during this period, CRLA only shared 2 percent of its staff with CRLA Foundation, and we have even offered 

to the IG that we would set upon ourselves a 5-percent standard 

even though the LSC standard would be 10 percent. 

So, finally, we disagree with the recommendation by the IG that 

we co-counsel in the future with this foundation with junior lawyers. This will create bigger supervisory and regulatory problems 

that we believe that LSC would want to avoid. 

Congressmen, our written testimony discusses all of these issues, 

and I am here to respond to these and any other questions you or 

Members of this Committee may have concerning any of that audit 

that we just finished. 

Thank you very much. 

[The prepared statement of Mr. Padilla follows:]

PREPARED STATEMENT OF JOSE R. PADILLA

I. INTRODUCTION

It is a distinct honor to submit testimony on behalf of the organization I have now 

directed for almost 20 years. This hearing presents inopportunity to make people 

aware of the work CRLA performs serving the legal needs of the poor. It is also an 

opportunity to speak on behalf of the almost 555,000 rural poor persons and more 

than 463,000 farm workers and dependents who are the client constituents of 

CRLA. Their poverty status and the challenges facing them makes evident the need 

for CRLA’s daily presence in rural communities of California. 

CRLA has a proud legacy of effective, ethical and high-quality representation on 

behalf of its rural clients, and adopts as a core value the democratic principle that 

the poor deserve legal representation as much as those economically better off. In 

recent examples, CRLA:

• enabled 3 wheel-chair-bound high-school students to secure district-wide 

building-modifications that brought schools in compliance with the Americans 

with Disabilities Act; these students had been unable to navigate their camVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
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1 CRLA Inc. was incorporated March 3, 1966, and received its first grant from the Office of 

Economic Opportunity (OEO) on May 24, 1966. 

puses, use bathrooms, or participate in academic programs physically accessible only to the able-bodied (Mitchum v. Santa Barbara School District, );

• obtained a fair housing discrimination case settlement against a predator 

landlord who sought out women residing at a local homeless shelter and offered rental discounts in return for sex (Project Sentinel [Cordero] v. Lal);

• secured improvement to a farm labor camp housing hundreds of asparagus 

pickers which had no functioning toilets or showers, a filth-laden kitchen with 

inadequate refrigeration, and unscreened, unsecured doorways and window 

openings, and recovered months of unpaid back wages for some 400 workers 

residing there (Ramirez v. JB Farm Labor Contractor);

• worked with HUD to secure a fair housing enforcement agreement with a 

rural county that made available grants and loans of up to $30,000 per family 

to enable thousands of farm worker families living in substandard trailer 

parks to move their homes or secure new homes in newly developed mobile 

home parks(Hernandez v. Riverside County);

• provided thousands of K–3 English-learners access to Reading First grants 

under No Child Left Behind; and enjoined the California Department of Education from enforcing a ban that kept these funds from reaching hundreds of 

English-learner class rooms (Pazmino v. State Board of Education).

In describing the foregoing cases, I wanted to share with the Committee the significant work that CRLA performs in the rural areas of California. More importantly, these few examples typify the egregious and shocking situations which poor 

rural persons, particularly farmworkers and mostly Latino face day in, day out. 

I recognize, however, that the invitation to testify before this Committee was not 

due to a keen interest in how a particular legal services agency discharges its responsibilities. Rather, the Committee’s invitation to testify referred to allegations of 

violations of the regulations of the Legal Services Corporation. I want to address 

those issues as follows. 

I have managed CRLA as its Executive Director for almost 20 of CRLA’s 38 years 

of service.1 During my tenure alone, CRLA has gone through five extensive Federal 

audits and a number of investigations. The recent OIG audit has been the longest 

ever, with the most extensive on-site review by an audit team—7 weeks on-site in 

four visits stretched over a 2-year period. Two audits in the 1980’s were of 2-weeks 

duration each with larger teams of 10–15 members. During my tenure—and indeed 

since the Legal Services Corporation Act was enacted in 1974. no program review, 

audit nor investigation has found any instance of material non-compliance by CRLA 

with the Act and its implementing regulations. 

Regarding that auditing history, I make two observations: First, CRLA has always realized that we will be able to provide diligent and effective advocacy on behalf of the most vulnerable rural communities only through administering efficiently 

and effectively all aspects of financial accounting, local office operation and staff activities. CRLA must run efficiently; otherwise, effective advocacy cannot follow. Second, we have always sought to protect the public dollar by creating internal oversight mechanisms that guarantee full compliance with Congress’ and the Corporation’s legal strictures. Our funds are not only public—which necessarily require protection as taxpayer money—but represent hours of daily public service, of daily legal

service, that the poor themselves pay for with both taxes and lack of representation. 

CRLA fully understands that survival of national legal services today is a bipartisan 

responsibility that has required agreement to a restricted legal practice. Protection 

of the Federal resource is the most critical responsibility that a program Director 

assumes. 

Indeed, for someone born in a rural community and raised by parents who were 

themselves migrant farm workers, this obligation to protect—at all costs—the Federal rural-legal-service dollar weighs heavier. CRLA institutionally, and I personally, take pride in knowing that our understanding of, and strict adherence to, the 

laws and regulations governing national legal services—overseeing millions of Federal funds to one of the 10 largest programs in the nation—has protected this precious rural resource for the last 30 years. 

In turning now to current substantive concerns, I begin by noting that CRLA has 

not been advised regarding the specific questions we should address before the Subcommittee. Accordingly, I take the liberty of anticipating the Subcommittee’s concerns, and will initially address two matters. First is the question of CRLA’s ‘‘cooperation’’ with LSC’s Office of the Inspector General and the process of our ‘‘acceptVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
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2Letter dated November 20, 2003, to LSC Chairperson Frank Strickland, from Hon. James 

Sensenbrenner, Chairman, Committee on the Judiciary; and Hon. Chris Cannon, Chairman, 

Subcommittee on Commercial and Administrative Law, p. 2. The issue of ‘‘office-sharing’’ was 

also mentioned there. 3These estimates were provided to both LSC and OIG by letter of October 24, 2002. 

ance’’ of certain OIG findings and recommendations. Second, is the issues regarding 

the substantive findings in the two subsequent reviews by OCE and by the OIG of 

the relationship between CRLA and a non-LSC-funded entity, the California Rural 

Legal Assistance Foundation—and our compliance with the ‘‘program integrity’’ re- quirements of LSC Regulation 1610. 

A. CRLA COOPERATION WITH THE OFFICE OF INSPECTOR GENERAL 

Both the Committee on the Judiciary and this Subcommittee have communicated 

concerns to the Legal Services Corporation (hereafter, ‘‘LSC’’) questioning whether 

LSC’s Office of Inspector General (hereafter, ‘‘OIG’’) ‘‘requests [to CRLA] for information . . . are met with resistance from the grantee.’’ 2 In fact, CRLA has provided 

the OIG with all requested information; there were discussions regarding client 

rights arising from the attorney-client relationship, but those were resolved early in 

the audit. There are NO open issues whatsoever concerning requested information. 

Throughout the course of reviews by both oversight entities—LSC’s Office of Compliance and Enforcement (hereafter, ‘‘OCE’’) and the OIG—CRLA has acted in good 

faith and in full cooperation. 

Audits occur in the midst of the dynamic of daily legal assistance and representation, and a law firm must always act fully consistent with its ethical and professional responsibilities owed its clients. The recent OIG audit presented many more 

issues and more requests for information than any previous audit. We cooperated 

fully. During the 30-month audit period that extended from June 11, 2001 through 

the issuance of the final report on December 11, 2003, CRLA expended significant 

resources responding to the OIG demands from both the on-site audit team and 

Washington headquarters to: retrieve, review hundreds of closed and open client 

files and transmit relevant documents from our 22 service-office network to our central headquarters; review and compile client and case-related data which no LSC 

nor professional requirements obliged us to assemble or report; produce and review 

financial documentation for the 2-year audited period. Although CRLA has not estimated the total resources expended for the entire audit, at least through October, 

2002 (after 16 months of the 30 months of audit), CRLA had expended 4479 staff 

hours in audit-related work, at a cost of $113,091.3

Throughout the audit, CRLA has understood that the OIG’s findings are to be in 

the form of recommendations to LSC for the latter’s final consideration and review. 

That understanding is consistent with both the Legal Services Corporation Act and 

the Inspector General Act. LSC’s Board implements the LSC Act through adopting 

regulations and periodically providing other written guidance to its grantees. The 

OIG audits recipients’ compliance with the Act, LSC’s regulations and policies, 

under OMB and other federal standards. OIG transmits its findings and recommendations to LSC in a public report, and has done so with regard to CRLA; we 

understand that report has been reviewed by the Subcommittee’s staff. The OIG has 

also requested CRLA to submit a ‘‘corrective action plan’’ corresponding to its recommendations. 

Before describing our response to the OIG’s request for the ‘‘corrective action 

plan’’, we reiterate a position we articulated earlier in our comments to the OIG: 

we believe the OIG’s extensive review has overwhelmingly confirmed the propriety 

and regularity of CRLA’s operations; we note that in no instance did OIG recommendations include imposition of any LSC penalty, as the OIG can—and does 

from time to time—recommend. 

As to the OIG’s request for a CRLA ‘‘corrective action plan’’, with respect to the 

majority of recommendations, CRLA either accepted the OIG view or had already 

eliminated or ‘‘corrected’’ the situation of concern before issuance of the final report. 

As more fully discussed below, CRLA believes some OIG recommendations are inconsistent with provisions of the LSC Act and/or LSC formal regulations and/or LSC 

policy guidances issued to recipients. In some instances we are left with the conclusion that OIG recommendations flatly and facially contradict provisions of the Act 

or LSC regulations. 

CRLA formally advised the OIG on February 9 regarding both our acceptance of 

the majority of recommendations and of those few issues where we believe their recommendations need to be reviewed by LSC. We understand our response has been 

made available to the Subcommittee and reviewed by your staff. Since February 9, 

neither the OIG nor any other unit of LSC has responded to CRLA. 

20

4Since 1982, the relationship between CRLA Inc. and CRLAF has been reviewed during 5 

Federal audits—in 1986, 1988, 1991, 2000 and 2002. 

Typically, in a situation like this, the LSC Board will determine whether CRLA 

or the OIG is correct in its view; that process has yet to be completed. It was thus 

surprising for CRLA to be asked to testify about issues that have yet to be finally 

determined. While normally CRLA would prefer to have that process before the LSC 

Board concluded, being respectful of the Committee’s invitation to testify, we provide detailed information below on the outstanding issues. 

II. REVIEW OF THE TWO 1610 AUDITS

Background. 

The OIG audit is the second of two 1610 audits conducted by the Federal government over the last 31⁄2 years. It is our understanding that both audits were initiated 

by complaints to members of Congress from the Western United Dairymen (WUD), 

a trade association in California whose mission is to look after the ‘‘general welfare 

and longevity of dairy producers.’’ Both audits asked whether Federal funds were 

being provided to the California Rural Legal Assistance Foundation 4 to, ostensibly, 

fund the Center on Race, Poverty and the Environment (CRPE). The second was 

more succinct: ‘‘whether CRLA and interrelated agencies CRPE and CRLAF have 

engaged in restricted activities with federal monies.’’

While I describe below in detail each of the audits, it is important to note at the 

outset the most telling result of these audits after the significant amount of Federal 

and recipient resources spent. Neither report mentions a word of the Center on Race 

Poverty and the Environment, the alleged relationship driving both reviews. 

A. 2000 AUDIT REQUESTED OF THE LEGAL SERVICES CORPORATION 

The first audit was requested on September 11, 2000, by Congressman William 

Thomas (R-Bakersfield) and was requested of LSC’s Office of Compliance and Enforcement (OCE) (hereafter ‘‘the LSC audit’’). That audit was undertaken over 4 

days by LSC’s OCE on October 30-November 2, 2000. Findings were issued December 18, 2000, in the name of then LSC President John McKay. For all practical purposes, LSC exonerated CRLA regarding compliance with the 1610 regulation.

‘‘A review of the totality of circumstances (the threshold of our review) 

has demonstrated that CRLA did not act in violation of the applicable 

restrictions and that CRLA maintained program integrity with the 

Foundation.’’

B. 2001 AUDIT REQUESTED OF THE OFFICE of INSPECTOR GENERAL 

The second audit requested by Congressman Calvin Dooley (D-Fresno) went to 

LSC’s Office of Inspector General (OIG). The OIG’s review began with notice to 

CRLA on June 11, 2001, and extended 30 months, ending with the December 11 

report. The OIG process included: on-site fieldwork involving four separate auditteam field visits totaling nearly seven weeks; production of hundreds of case files; 

CRLA’s transmission to Washington of thousands of pages of case and advocacy materials plus hundreds of pages of specially-prepared legal memoranda between and 

after visits and literally thousands of hours of CRLA staff time in responding to 

OIG’s document and other information requests. 

1. GENERAL FINDINGS REGARDING AUDIT OF CRLA 

Despite the extensive review of hundreds of case files, hundreds of financial transactions, numerous staff interviews and weeks of on-site field office visits, no financial irregularities, no violation of LSC rules were found that required any form of 

penalty nor any form of formal Federal intervention. The OIG found that CRLA Inc. 

and California Rural Legal Assistance Foundation were independent entities. It 

found that there were no improper fund transfers between the two. After extensive 

and intensive review of CRLA 17200 litigation—complex cases that, in large part, 

are brought to recover hundreds of thousands of dollars of unpaid wages—the OIG 

found this to be a proper use of resources. Nevertheless, the OIG did make findings 

in the audit that raised questions regarding 1610. 

The application of 1610 involves the examination of 5 broad criteria to determine 

the existence of ‘‘program integrity’’. Those are’’ (1) legally separate entity (2) transfer of program funds (3) subsidies (4) physical and financial separation and 5) certification of program integrity. After a 2-year examination, issues arose regarding 

two criteria. A summary of those findings were:

(1) Legally separate entity—CRLA and the Foundation are separate legal entities and have been separate for 24 years (since 1981). There are no overlapVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
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5This guideline is found in GUIDANCE IN APPLYING THE PROGRAM INTEGRITY 

STANDARDS, attachment to LSC Memorandum to All LSC Program Directors, Board Chairs 

re ‘‘Certification of Program Integrity’’, October 30, 1997, from John A. Tull, Director, Office of 

Program Operations.

ping board members. They have separate executive and deputy directors. They 

are headquartered in cities 90 miles apart.

(2) Transfer of program funds—CRLA transferred no LSC funds to the Foundation.

(3) Subsidies—The OIG determined that CRLA had failed to charge late rents, 

i.e., an indirect subsidy for not charging interest for late rent all of which was 

collected. The total involved in and interest on late rent payments was 

$511.00. CRLA’s policy was uniform for all tenants. No favoritism was found 

regarding any tenant. CRLA sublets space to reduce rent or mortgage obligations. The $511.00 was collected. Given that the OIG’s period of review was 

2-years of operation, amounting to nearly $18 million of expended funds, the 

indirect subsidy appears of immaterial value. 

CRLA’s experience indicates that the issue of subsidy has been treated inconsistently by OIG and LSC. In its December 2000 report, LSC found an ‘‘indirect subsidy, which was the equivalent of a short-term, interest free loan’’. It treated the 

matter in a manner consistent with a lack of materiality. LSC stated that:

‘‘. . . CRLA and the Foundation have entered into a number of agreements for the benefit of each party, and that these agreements are at 

fair market value. Nonetheless, there were minor lapses in CRLA billing.’’

On the other hand, without explanation, the OIG report of December 11, treated the 

exact same ‘‘indirect subsidy’’ with more seriousness, by using it as one of 4 key factors that lead to the 1610 violation. The OIG stated that

‘‘. . . The grantee subsidized the Foundation by routinely allowing late 

payment of rent over a long period of time. Between June 2001 and 

May 2002 the Foundation seldom paid its rent for three offices on 

time.’’

It concluded that

‘‘[b]y allowing the interest free use of these funds the grantee subsidized the Foundation activities.’’

Respectfully, presence or absence of minor penalties for late rental payments is no 

ground for a finding of any material violation of the law.

(4) Physical and financial separation—This criterion has 3 aspects: financial separation, shared space, and shared staffing.

• Financial accounting for the two organizations was found to be entirely separate.

• Regarding physical separation, CRLA was found to have complied with the 

articulated LSC criteria regarding ‘‘physical separation’’—separate signage, 

market value rent, separate entry, separate institutional identification. In one 

instance, the OIG questioned the fact that both tenants could access a shared 

lunchroom and concluded it was impermissible. But that situation, even if 

shared access to a lunchroom can be said to be a problem, has been rendered 

moot because the rental space is no longer shared.

• Shared staff arrangements are a separate sub-criteria examined in the audit. 

CRLA has separate time keeping from all other organizations it works with. 

LSC’s guidelines suggest that recipients that are as large as CRLA, should 

not allow more than 10 % of advocacy staff to be shared with an organization 

that undertakes restricted activities, and that doing so will call into question 

the organizations’ separation.5 Under the guideline, CRLA could have had up 

to 8 such shared employees before it would be questioned. During the period 

at issue, CRLA had 1 attorney and 1 paralegal—only 2%. Nonetheless, ignoring the established LSC guideline, the OIG questioned the involvement of the 

1 attorney and 1 volunteer attorney. 

(5) Certification of program integrity—Recipients are required to file a 

Board-approved annual certification of 1610 compliance. CRLA has filed these 

in all years required, to the present. 

22

6These firms included both traditional, for-profit, private law offices and other non-profit entities that provide legal representation. 

2. CO-COUNSELING: A NON-1610 CRITERION 

We begin by noting that co-counseling of litigation does not appear as a 1610 factor under the statute, regulations or LSC guidance; the OIG’s extensive evaluation 

of this practice has inserted a new program integrity factor of which neither CRLA 

nor other recipients had any prior notice. The Compliance Supplement For Audits 

of LSC Recipients (December 1998) used by LSC, the OIG and Independent recipient 

auditors for auditing programs does not identify co-counseling as a factor for assessing 1610 compliance. Recipients use this manual in preparing for LSC and OIG reviews. Nonetheless both LSC and the OIG have analyzed co-counseling in assessing 

compliance with 1610. 

Co-counseling is, of course, common in litigation and other types of legal practice, 

and is consistent with the Act and Regulations. CRLA undertakes co-counseling to 

satisfy our obligation under LSC Regulations to expend 121⁄2% of our annualized 

basic field award to involve private attorneys in delivery of legal services. (‘‘Private 

Attorney Involvement’’ or ‘‘PAI’’, 45 C.F.R., § 1614.) CRLA attempts to secure ‘‘private’’, i.e., non-LSC-funded, attorneys to co-counsel with our staff attorneys in significant litigation, but in rural California this is one of the very few effective ways 

that programs both leverage such resources and meet the LSC obligation. 

CRLA engages in extensive co-counseling with non-LSC-funded attorneys and law 

firms in order to: (1) satisfy our obligation under LSC Regulations to expend 121⁄2% 

of our annualized basic field award to involve private attorneys; (2) obtain the benefit of experienced litigators who can enable a local office staffed by limited-experience staff to undertake representation that we could not otherwise provide; (3) obtain added staffing and physical resources to pursue litigation for which we would 

not otherwise have sufficient professional and support personnel to undertake; (4) 

acquaint and train members of the private bar in specialized areas of poverty law 

with the goal of expanding the availability of private-bar representation to low-income clients including the vast number of non-LSC-eligible poor people in rural 

California. 

CRLA implements litigation co-counseling arrangements through written co-counseling agreements, generally based upon a 9-page ‘‘model’’ agreement that is tailored 

in individual cases as appropriate to the particular circumstances of the case and/

or the needs and resources of outside counsel. Upon request, we identified agreements in 42 separate cases including six in which the Foundation co-counseled, and 

made forty-one agreements available for review. In these 42 cases (including some 

cases in which we co-counseled with more than one firm), CRLA co-counseled with 

at least 26 different law firms one of which was the Foundation.6 We co-counseled 

on more than one case with at least 9 of these firms. 

CRLA implements and monitors our co-counseling relationships through a series 

of rigorous review steps including collective review and approval of detailed Litigation Assessment Plans and draft complaints by the four Directors of Litigation, Advocacy and Training in conjunction with the Deputy Director; through review and 

approval of detailed, lengthy written co-counseling agreements, and through similar 

collective review of semi-annual written reports submitted by advocacy staff for all 

significant advocacy including co-counseled litigation. 

CRLA does not differentiate among firms with whom we co-counsel in our pursuit 

of the above-described goals, practices and compliance with professional responsibility and LSC requirements. We maintain these goals, practices and compliance 

equally with the Foundation as with all other co-counsel. 

The OIG recommended that CRLA staff any cases co-counseled with the Foundation only with its most junior attorneys. Co-counseled cases are generally the largest 

and most difficult litigation with the most complex issues both substantively and 

procedurally. The Inspector General’s recommendations that only junior counsel 

participate in cases with the Foundation are completely counter-intuitive to his concern that this co-counseling results in loss of objective integrity and independence. 

Independence and CRLA institutional integrity are far more likely to be maintained 

by senior counsel who are sufficiently experienced in litigation and administration 

to confidently exercise the independent judgment that an inexperienced advocate 

simply has not acquired. 

CRLA informed the OIG in its Response of February 9, 2004 that it would 

strengthen certain aspects of its personnel policy, and would otherwise comply with 

Parts 1610 (and 1604 and 1635) through adherence to a number of policies to be 

incorporated into its CASE HANDLING AND OFFICE PROCEDURES MANUAL 

23

7The dictionary definition of a ‘‘plaintiff’’ is, unsurprisingly, consistent with the assumption 

underlying these regulations: ‘‘A person who brings an action; the party who complains or sues 

in a civil action and is so named on the record...’’ (BLACK’S LAW DITIONARY (5th ed., 

1979); ‘‘1. one who commences a personal action or lawsuit to obtain a remedy for an injury 

to his rights . . . 2. the complaining party in any litigation...’’ (WEBSTER’S THIRD NEW 

INTERNATIONAL DICTIONARY (1986).)

and/or our PERSONNEL MANUAL and/or our OPERATIONS MANUAL, as appropriate, and authorized as appropriate by Board actions. 

3. MISINTERPRETATION OF LSC REGULATION 1636: CLIENT IDENTITY 

The OIG’s Final Report directs CRLA to turn over to the employer, landlord or 

other defendant in a lawsuit of this kind the names of every individual who may 

have consulted with CRLA about their rights—even those who have not authorized 

CRLA to bring lawsuits and who are not plaintiffs in a pending or contemplated action, and even though revealing the identities of these non-plaintiff employees or 

tenants who considered and rejected the pursuit of formal legal remedies regarding 

their employment or housing is very likely to jeopardize that employment or housing, and to profoundly deter potential clients from consulting a lawyer to determine 

if they have been treated illegally in the future. The Inspector General’s position 

would effectively penalize the consultation with legal services attorneys that the 

Legal Services Corporation Act and implementing regulations are supposed to guarantee. 

The OIG’s position is inconsistent with LSC’s regulations in Part 1636, and contrary to the professional responsibilities that CRLA attorneys owe their clients and 

potential clients under state and federal law. Part 1636 requires CRLA to identify 

to adversaries and obtain written factual statements from plaintiffs that we represent in all litigation (including that brought under California’s Business & Professions Code Sections 17200 et seq.). CRLA has complied fully with those requirements. Our compliance is implemented through formal policy incorporated in our 

CASE HANDLING MANUAL and through specific confirmation in each Litigation 

Assessment Plan reviewed jointly by our Directors of Litigation, Advocacy and 

Training (as described previously, p. 8). 

The OIG found no instance in which CRLA had failed to comply with these requirements. Instead, the Final Report directed CRLA to implement procedures by 

which it would obtain statements of fact from and identify to adversaries’ clients 

who have consulted with CRLA attorneys but who have refused to become plaintiffs 

in litigation. The OIG’s position is inconsistent with Part 1636 and would require 

CRLA attorneys to violate their own professional obligations under governing law. 

Part 1636 is not ambiguous. Sub-part 1636.1 provides in relevant part that,

[t]he purpose of this rule is to ensure that, when an LSC recipient files 

a complaint in a court of law or otherwise . . . the recipient identifies 

the plaintiff it represents to the defendant and ensures that the plaintiff has a colorable claim.

Sub-part 1636.2(a) further provides,

When a recipient files a complaint in a court of law or otherwise . . . 

participates in litigation against a defendant . . . on behalf of a client 

who has authorized it to file suit in the event that the settlement negotiations are unsuccessful, it shall:

Identify each plaintiff it represents by name in any complaint it 

files . . . ; and

Prepare a dated written statement signed by each plaintiff it represents, enumerating the particular facts . . . (Emphases added) 7

Eligible persons often enter into attorney-client relationships with CRLA for assistance in investigating and evaluating their potential rights or liabilities vis a vis an 

opposing interest, or for advice and counseling in dealing with an opposing interest 

by means other than litigation. Many such persons never authorize CRLA to file 

suit on their behalf, often because they have no desire to have their concerns publicly revealed for fear of retribution. Absent publicly filed litigation in which they 

are parties, their desire for privacy is recognized and respected by federal and state 

law. As just described, Part 1636 limits recipients’ obligations to identify clients to 

their adversaries to the circumstances when those clients have specifically authorized the recipient to name them as plaintiffs in pending or anticipated litigation, 

but not when those clients are only counseled rather than named as parties to litigation. 

24

The American Bar Association’s Model Rules of Professional and LSC’s own rules 

that require recipients’ attorneys to adhere to their professional duties in serving 

their clients and potential clients, support CRLA’s position. The Statement of Findings in the LSC Act indicates that,

attorneys providing legal assistance must have full freedom to protect 

the best interests of their clients in keeping with the Code of Professional Responsibility, the Canons of Ethics, and the high standards of 

the legal profession.

(42 U.S.C., § 2996, subd. (6) .) In furtherance of this mandate, Congress expressly 

required that the Legal Services Corporation

shall not . . . interfere with any attorney in carrying out his professional responsibilities to his client as established in the Canons of Ethics and the Code of Professional Responsibility of the American Bar Association . . . or abrogate as to attorneys in programs assisted under 

this subchapter the authority of a State or other jurisdiction to enforce 

the standards of professional responsibility generally applicable to attorneys in such jurisdiction.

For these reasons, CRLA expects that upon review of this position regarding 45 

CFR1636 and the applicable professional rules, LSC will accept CRLA’s position. 

III. INVESTIGATION REQUESTED BY CONGRESSMAN JOHN DOOLITTLE: 45 CFR 1617

On January 7, 2004, Congressman John Doolittle (R-CA) filed a complaint with 

the Office of Inspector General on behalf of former California state legislator Dean 

Andal. He charged that CRLA had violated ‘‘prohibitions against desegregation and 

class action lawsuits’’. The OIG audited CRLA for 4 days, January 20–23. On March 

12, 2004, the OIG issued its findings which contend that although it was permissible for CRLA to have continued working on the case Hernandez v. Stockton Unified since 1977, CRLA violated the 1996 prohibition against participation in class 

actions because it had engaged in negotiations with the Stockton Unified School District (at its request) to bring the case to closure. 

The Inspector General correctly notes that in 1977, LSC’s Office of the General 

Counsel approved continued CRLA representation of the plaintiff class. (LSC letter 

dated May 31, 1977, from Alice Daniel, General Counsel, to Hon. M. Caldwell Butler, U.S. House of Representatives.). That letter recognized, in part, that CRLA’s 

participation was to negotiate stating: ‘‘Negotiations with respect to the court’s findings and conclusions of law are now in progress’’. 

The Hernandez litigation was filed in 1970 and resulted in a judgment in 1974 

finding the district guilty of de jure segregation of Latino and African American students. The court granted a traditional desegregation remedy to the petitioner parents, including busing and an implementation plan approved in 1977 that established phased integration in District schools. In 1991 the judgment was amended 

by further order to eliminate busing and substitute remedial funding for those 

schools in poor neighborhoods that had earlier suffered the imposition of segregation. All this activity preceded Congress’ 1996 adoption of the class-action prohibition; all was appropriate LSC-funded activity, and indeed, constituted recipient’s 

Private Attorney Involvement activity through co-counseling. 

In 2002, the District approached CRLA and petitioners requesting that CRLA and 

co-counsel facilitate final resolution of the case. CRLA’s presence during the 2002–

2003 meetings between the defendant District and petitioner’s counsel was requested by the District and expected by the court which had overseen this case for 

years. The parties assumed that a negotiated agreement was far more efficient and 

less costly than litigating the issue before the court which would be more time consuming. Agreement was reached in early 2003 providing for the termination of the 

consent decree (because its purpose had been met) and a 2-year transition thereafter 

during which the schools that had received state desegregation funds would receive 

a reduced percentage of those funds until they would be split evenly with lowachieving schools or as the district otherwise saw fit. CRLA’s role in these meetings 

and negotiations subsequent to the 1996 class-action prohibition did not represent 

either a new case nor new intervention in an existing case but rather undertaking 

our ethical duties to existing clients arising from the long-standing, still-open lawsuit. 

CRLA’s role during those meetings and negotiations was beneficial to the parties’

abilities to resolve and finally settle this three-plus-decades old litigation, and thus 

was in the public’s interest and in the interest of its client community. Although 

reasonable minds could differ, CRLA understood that its presence during the negoVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00028 Fmt 6633 Sfmt 6621 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
25

8 In a February 24, 2003 letter to the District’s counsel prepared before the present OIG investigation, we confirmed that CRLA was making no claim for past or present attorney fees or costs 

and reiterated that although we had at one time been counsel, Mr. Roos ‘‘of META is the sole 

counsel for the Petitioners and has full authority to settle the case . . . or otherwise represent 

the Petitioners.’’ Shortly thereafter, still prior to the present investigation, Mr. Roos submitted 

a declaration executed March 3, 2003, to the court also asserting that he was ‘‘the sole attorney 

of record, as CRLA is barred by federal law from participating in class actions...’’ 9The case was appealed by a group of intervenors who seek to deny the court the 2-year transitional jurisdiction the court sought to maintain by its June, 2003, order. CRLA is no longer 

receiving any judicial or party notices or any other notices related to the appeal.

tiations did not constitute participation in ‘‘adversarial proceedings’’ as that term is 

used in the statute and regulations. CRLA went on record with the court and the 

opposing party about the nature of the prohibition,8 and neither was concerned that 

CRLA was acting outside the scope of permitted activity. The client community was 

similarly informed. 

SUMMARY

• But for the district court’s request that CRLA assist in bringing the case to 

closure, the case would have continued as a virtually ‘‘inactive’’ case under 

the existing consent decree; the current class action regulation allows recipients to ‘‘remain informed about, or to explain, clarify, educate or advise others 

about the terms of an order granting relief’’.

• CRLA, petitioners, defendants and the Court expressed the belief that the 

presence of CRLA, who had been counsel in the case since its inception in 

1970, would be beneficial to putting to bed this over-3-decades-old case. The 

availability of CRLA’s knowledge served their—and the public’s—interests. In 

sum, CRLA believes that its role in the proceedings at issue was not ‘‘adversarial’’ and was desired by the parties and the court, benefited the public interest in enabling the parties and the court to finally resolve lengthy litigation, and was undertaken in the good-faith belief that we were complying 

with the spirit and language of the class-action and desegregation prohibition.

• The court dismissed the primary case on June 18, 2003, at which time CRLA 

ceased to be a part of the case in any capacity.9 CRLA closed its case file in 

the Hernandez matter effective December 31, 2003. 

• CRLA filed its withdrawal with the Stockton Superior Court for the County 

of San Joaquin on March 26, 2004. 

CONCLUSION

CRLA has been privileged for some 38 years to provide the rural poor of California with full access to the state’s civil courts and, thereby, to provide some semblance of justice to those not accustomed to such civil representation. This is what 

CRLA believes to be the simple mission of the Legal Services Corporation Act of 

1974. In meeting this purpose, CRLA has carefully and rigorously adhered to the 

law, regulations and guidelines set by Congress and LSC. CRLA will continue to do 

so.

Mr. CANNON. Thank you, Mr. Padilla. 

Ms. Charn? 

STATEMENT OF JEANNE CHARN, DIRECTOR, BELLOW-SACHS 

ACCESS TO LEGAL SERVICES PROJECT, HARVARD LAW 

SCHOOL 

Ms. CHARN. Chairman Cannon, Mr. Watt, Mr. Delahunt, and 

Members of the Committee, it’s a pleasure to speak to you today 

about the work that we’ve undertaken over the years at Harvard 

Law School. For 25 years, I’ve directed the major civil clinic at Harvard Law School, now known as the Hale and Dorr Legal Services 

Center. It’s our belief that our students, as we introduce them to 

the practical aspects and skill dimensions of lawyering, will learn 

best in a fully operational law office. 

The center has a staff at any time of about 20 attorneys, fellows, 

and paralegals, and we’re very pleased that part of our students’

26

education, our students often have opportunities to work for the 

finest Government, private, and other law firms. We think it’s also 

very important that students from Harvard Law School have some 

understanding of the needs of low-income people and how the law 

and the justice system works for those who have little and who otherwise could not afford the services of the fine lawyers that most 

of these students will become. 

Our office is in Boston. It’s not on campus in Cambridge. It 

serves a quite racially and income-diverse area. It serves the lowest-income areas of the city of Boston. 

In addition to our student education mission, we have a mission 

of providing the highest quality service and functioning as a laboratory to experiment with cost- and quality-effective approaches to 

delivering services to low- and moderate-income people. 

Over time, we came to make a decision to serve moderate- as 

well as low-income people. This year, in Boston, the area median 

income is $82,000, in excess of $82,000. We are a high-cost-of-living 

area, and many individuals above the poverty line share the same 

problems. They need assistance in domestic matters, around credit 

problems, around threatened foreclosure of their homes, as very 

low income people do. So we serve a population that goes up to 

about three times the poverty rate. 

We do—much of the work that we do is similar to work that an 

LSC office might do. We represent tenants. We represent people on 

benefits issues. We represent people on family issues. We had a 

practice going back 15 years that focuses on families impacted by 

HIV and AIDS, one of the first programs in the country to do so. 

But particularly since the time that we were fortunate enough to 

form a partnership, really, with a major Boston corporate firm, 

Hale and Dorr offered money to purchase a permanent home for 

the center but, more important, began to volunteer large numbers 

of hours to assist with our learning and service program. 

We decided that it would be useful to see if we might provide assistance to small businesses, particularly minority business owners 

in previously disinvested areas, to people seeking to make purchase 

of a home, to not-for-profits, and to other institutions and entities 

that form the basic fabric of a low-income community and who may 

generate jobs and resources that benefit large numbers of low-income communities. 

We began to do this, and Hale and Dorr assisted us by providing 

a lot of the expertise in business and other matters that are typically not present in a legal aid office. 

We are predominantly funded by Harvard Law School, and generously funded by Harvard Law School, and the school is very 

proud of the amount of service that our office provides. We close 

between 700 and 900 full representation cases a year, and we advise and assist in more limited ways as many as a thousand clients 

each year. 

We have always sought and obtained statutory fees where appropriate in our ordinary service cases. Our mission is not particularly 

law reform or statutory change. Our mission is direct service to individuals around the everyday problems that people face. 

As part of our experimentation, particularly when we began representing small businesses and other entities, we introduced a coVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00030 Fmt 6633 Sfmt 6601 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
27

payment system in that part of our practice. When we found that 

it was working and that it was accepted by clients, we expanded 

it to other areas of our practice. The reasons we did it were largely 

those mentioned by the Chair in his opening remarks. We thought 

we might gain income. We thought that it might empower clients 

to feel more entitled to diligent and high-quality service; that it 

might help them in deciding if there was a small or modest co-payment if they really wanted to take on legal action in an area. And 

we wanted our students to understand that there is a business dimension to law practice. 

We have no co-payment in emergencies. Clients who are in needbased benefit programs do not make co-payment, and many clients 

at or below poverty do not make clients. The vast majority of clients who participate in the co-payment system or whom we ask to 

make co-payments are above the poverty line. 

We do know that we’ve been effective in increasing resources 

available to the office, that our students have learned about business practice, and that clients have been accepting of this project. 

We have not studied, but we intend to within the next year and 

a half, the extent to which the co-payment system is received and 

perceived by clients in ways that we had hoped. 

My last comment would be that, in addition to running this 

teaching, learning, and service center in the Jamaica Plain area of 

Boston, we are—I’m also involved with an ongoing policy study on 

ways of making legal services more widely available. This has been 

my life’s work for my career, making legal services available, and 

I remain hopeful as I approach 60 that at some point in this country legal services will be widely and freely available, not only to the 

very poor but to all those low-income and working people above the 

poverty line who also are in desperate need of services and who 

cannot afford quality service at the market. And in such a system, 

I think it is most reasonable and appropriate that, as we—particularly as we move up the income scale, that clients make a contribution to cost of service. 

Thank you so much for your attention. 

[The prepared statement of Ms. Charn follows:]

PREPARED STATEMENT OF JEANNE CHARN

Good afternoon, and thank you for the privilege of speaking to the Subcommittee 

on Commercial and Administrative Law. I have been asked to provide information 

on aspects of the client service program of the Hale and Dorr Legal Services Center 

of Harvard Law School, particularly information on client co-payments that we have 

instituted for some of the services that we provide. I begin with some background 

on the Hale and Dorr Legal Services Center of Harvard Law School and conclude 

with a brief mention of the Bellow-Sacks Access to Civil Legal Services Project, both 

of which provide important context for our experiment with client co-payments. 

I. THE HALE AND DORR LEGAL SERVICES CENTER OF HARVARD LAW SCHOOL

The Hale and Dorr Center, (the Center), was founded by my late husband Gary 

Bellow and me in 1979. At that time, the office was known as the Legal Services 

Institute. Until 1982, the program was a legal services practice center in which 

twenty-four third year law students spent the entire year in courses and casework 

preparing for careers in LSC legal services programs around the country. Eight of 

the twenty-four students were from Harvard Law School but up to sixteen students 

were from Northeastern University Law School in Boston and from other law 

schools in the country. The Legal Services Corporation, through a partnership between Harvard Law School and Greater Boston Legal Services, was the primary 

funder of the program. 

28

1 Boston is a very high cost of living area. In 2004, the area median income for a family of 

four is $82,600. Housing subsidy programs consider 80% of area median as low income and 50% 

of area median income as very low income. 2The quality assurance program is described in more detail in Jeanne Charn, Quality Assurance at the Provider Level: Integrating Law Office Approaches with Funder Needs, available at 

www.lsc.gov; and Jeanne Charn and Randi Youells, A Question of Quality, LSC EQUAL JUSTICE

MAGAZINE, Winter 2004

Beginning in 1982, Harvard Law School became the primary sponsor and funder 

of the Center, though we have always retained a tie to Boston area legal services 

providers. The goals of the Center since 1982 have been:

• To introduce students to law practice—Our experience suggests that students 

learn best in a realistic setting. Under the supervision of experienced lawyers, 

students represent clients and, in companion courses, discuss and analyze the 

judgments, ethics, responsibilities, tasks and relationships of law practice. We 

have developed the concept of a ‘‘Teaching Law Office’’ similar to a teaching 

hospital in the medical profession.

• To provide high quality service to clients—The teaching and learning methods 

that best meet our students needs also produce a great deal of service to clients who cannot afford to pay for good quality legal assistance. Harvard Law 

School and its clinical program is very proud of the contribution we make to 

meeting the every day legal needs of thousands of Boston households and individuals. On an annual basis, the Center typically provides extended representation to over 700 clients and brief service and advice to as many more.

• To be a laboratory for experimenting with approaches to delivery of high quality legal services—The Center deliberately experiments with ways of providing 

excellent and cost-effective service to as many clients as possible. We are committed to documenting, validating and reporting on the results of these efforts. Our service experiments have included: (i) extensive use of telephone 

advice beginning in the mid 1980s; (ii) development of regular clinics where 

staff and students assist clients appearing pro se—we have conducted a pro 

se divorce clinic for twenty years; (iii) in the late 1980s, offering legal services 

to individuals and families affected by AIDS and HIV; (iv) early in the 1980s, 

focusing on service to victims of domestic violence in our family practice and 

collaborating with shelters and other social service providers as the seriousness of this problem came to be more widely recognized and understood; (v) 

collaboration with area medical providers to offer preventive law services and 

benefits check ups to low-income patients on site in clinics and hospitals; (vi) 

expansion of assistance to individuals and households up to four times the 

poverty level because these clients legal needs are similar to those of the very 

poor; 1 (vii) providing service to first time home-buyers, community not-for 

profits, affordable housing developers, and small businesses; (viii) development of a comprehensive quality assurance program that, among other 

things, tracks outcomes for all clients, sets annual performance goals for advocates and practice units, and evaluates every advocate and practice unit in 

terms of these annual goals; 2 and (ix) development of a system of client copayments for some areas of service, which I describe below. 

In 1992, Hale and Dorr, LLP a major Boston law firm, donated funds to provide 

a permanent home for the Center. Perhaps more important than the generous gift 

of funds for a building, Hale and Dorr began a partnership with the Center in which 

firm lawyers volunteer thousands of hours to serve clients and mentor students. For 

the past five years, Hale and Dorr has assigned a senior partner half time, year 

round to supervise students and to practice with staff at the Center. The first ‘‘partner in residence’’ retired this spring and a second partner has now joined us. The 

Center and the Hale and Dorr firm recently celebrated the tenth anniversary of our 

collaboration and we are developing a strategic plan for joint work in the coming 

years. 

The Center now has twenty or more lawyers, fellows and paralegals and as many 

as seventy students practicing and learning together each semester. During the 

summer we accept volunteer students. For the summer 2004, we received over a 

hundred applications from students in many law schools, volunteering for fewer 

than fifty internships. The demand for our summer program has grown as past 

summer interns have spread the word about the quality of service and learning at 

the Center. 

29

II. CO-PAYMENTS FOR CLIENT SERVICE

As the brief description of the Center’s history and program indicates, while we 

share with LSC and its grantees a commitment to providing high quality service to 

households and individuals in their every day legal problems, we serve a broader 

clientele and we offer service in areas that are not typical of LSC grantees. 

Law school support for the Center’s annual operating program in fiscal 2004–2005 

(Harvard’s fiscal year runs from July 1 through June 30) is projected to be approxi- mately $1,995,000. For the same period, the Center projects earnings from statutory 

attorney’s fees, client reimbursement of costs of service (e.g. filing fees, depositions, experts) and income from client co-payments to be between $135,000–$140,000. We 

project to spend between $45,000 and $50,000 in out of pocket case related expenses. These figures are consistent with year-end projections for 2003–2004. 

We have always sought attorney fees where authorized by statute and, in the 

past, this was our main source of service generated income. We began a co-payment 

system in the mid-1990s, when we began to offer service to entities (not for profits 

and small businesses) and first time home buyers. As we found clients accepting of 

the co-payment concept in these areas of practice, we expanded to other areas. We 

do not charge co-payments to clients whose only income is need based benefits or 

to clients below the poverty line unless our representation produces funds from 

which the co-payment could be made, for example, settlement of a claim or receipt 

of back benefits due to an approved application. We do seek reimbursement of out 

of pocket costs of representation from clients of all income levels, with provision for 

waiver in cases of hardship. In many instances, for very low-income clients, costs 

of representation may be waived by courts or paid for under statues, so the Center 

does not incur out of pocket costs. 

We do not charge co-payments in emergency matters, such as clients who need 

immediate assistance in obtaining domestic violence restraining orders, because we 

do not want to impose even the smallest impediment to access for clients in crisis. 

Also, there are no co-payments for any client for preliminary consultations related 

to whether or not we will be able to provide advice or assistance beyond any limited 

advice that may be offered in a first meeting. 

As we have institutionalized the co-payment system, we are finding that while attorneys fees claimed under statutes has in the past accounted for most of the service 

generated income to the Center, we are now approaching about a third of ordinary 

service generated income from client co-payments mostly in the range of $100 to 

$300. We occasionally are awarded and paid a single large fee, which would skew 

ratios significantly towards statutory fees, but excluding the occasional larger fee, 

we are beginning to see a regular flow from co-payments for the services that we 

routinely provide. 

We decided to experiment with a system of client co-payments for a number of 

reasons. First, we hoped to increase resources to serve more clients. Second we 

hoped that clients who made even a small payment for service would have a greater 

sense of entitlement to diligent, responsive service. Third, we thought that it was 

possible that a small co-payment would play some role in helping clients decide if 

they really wanted to pursue legal action. Fourth, we wanted our students to have 

a realistic experience of dealing with the business aspects of law practice. 

The increase in resources is measurable, and we see our students learning how 

to discuss fees and costs with clients. We have found most clients accepting of a 

modest co-payment system, but we have not systematically surveyed or tested our 

goals in terms of client perception and attitudes. We hope to do this within the next 

two years, and will have better information at that time. We plan to continue the 

system we have in place, modifying it based on experience, and to conduct a careful 

and full review by the end of academic 2005–2006. 

Any system of co-payments requires strong fiscal systems and fiscal controls, and 

attention to safety issues in terms of funds on hand, even for very short times, in 

the office. Fortunately, Harvard Law School is our fiscal agent, with well-established systems and controls, and we have not had any safety incidents. 

III. THE BELLOW-SACKS ACCESS TO CIVIL LEGAL SERVICES PROJECT

In 1999, a number of the faculty at Harvard Law School, including my late husband, met to plan a project that would look broadly at ways of greatly expanding 

access to civil legal assistance for low and moderate-income people. Twenty years 

of experience at the Hale and Dorr Center suggested approaches that might work 

on a larger scale. When my husband died in the spring of 2000, his classmates from 

the Class of 1960 along with others who admired his life-long dedication to improving access to justice, generously donated funds to support a policy research project, 

which I was asked to direct. The Bellow-Sacks Project is entirely supported by HarVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00033 Fmt 6633 Sfmt 6621 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
30

vard Law School and its alumni who share a dedication to making access to justice 

available to all whom the market cannot serve. The Project has no bias towards any 

existing or future system or stakeholder. We have invited, and been fortunate to 

have the participation of leadership from the Legal Services Corporation at a number of Bellow-Sacks sponsored events in the past three years. 

We expect to have a preliminary report and findings by next fall. One important 

area of study has been the much larger government supported and led legal services 

programs in other countries. These programs serve moderate as well as very lowincome clients through private bar involvement as well as staffed offices. Most involve client contributions to the cost of service at higher levels of income eligibility. 

In this sense, our client co-payment experiment should be understood not only as 

part of the program at the Hale and Dorr Center, but also as informing the possible 

contours of a larger and more comprehensive U. S. legal aid program that, drawing 

on present LSC efforts, will be well managed, cost-effective, and highly valued by 

the much larger number of clients it serves.

Mr. CANNON. Thank you, Ms. Charn. 

We appreciate all of your testimony, and may I just ask you, Ms. 

Charn, to follow up on what you were just saying, do you think 

there’s a place for co-payment then in the Legal Services Corporation system? 

Ms. CHARN. There may be. I would say in our case, we focused 

on other areas before we moved to co-payments. We were very interested in having a very high quality and efficient program that 

was both diligent, turned over cases, did it in a way that was client 

centered and met their needs; and that only when we were satisfied that we were making good progress on that front did we try 

any experiment with co-payments. And we were cautious as we 

went forward with it. 

There are clients in our office who would be similar to Legal 

Services-eligible clients who are involved in the co-payment system 

primarily when our representation produces for them resources out 

of which a modest co-payment might be made. 

There are many clients who are Legal Services eligible where we 

haven’t yet implemented this program, and we always have hardship exceptions. But I think we’ll know more when we critically 

study what the client view is. 

One wants to be careful not to create barriers, but I do think 

there may be gains of the sort that you mentioned around client 

ownership and sense of pride and dignity that could be involved 

with such a system. We’d like to test that out and get some more 

information on it. 

Mr. CANNON. Great. Thank you very much. 

Mr. Padilla, in the case of the office manager in your Oceanside 

office, this individual’s working as a full-time employee for CRLA, 

in addition, as the head of the office and in a supervisory role. I 

assume that this individual had direct oversight from one of your 

DLATs as well as yourself. Generally speaking, how much interaction do you have with the foundation? And considering your 

views on the importance of immigration issues, were you not aware 

that this employee was holding a director position within the foundation dealing with these specific issues? 

Mr. PADILLA. Congressman, I’m aware of—oh, I’m sorry. It says ‘‘talk.’’ In our Oceanside office, I think you’re referring to an employee 

that left CRLA 3, 4 years ago. And the issue there arose in the context of the LSC guidelines. It was about shared staff. And when the 

IG came to us, they came in asking about a number of shared staff. 

31

And at the end of all of that, even though we could have had seven 

or eight, we had two. One of those two, according to the IG, was 

a volunteer attorney. And you’re making reference to a volunteer 

attorney that, as far as we understand the regulation, is not covered by the 1610 regulation. 

So the 1610 regulation covers part-time attorneys when folks go 

part-time, but it also does not cover full-time employees. The director of that office, who I am sort of fully aware of the work and the 

litigation, the IG brought the information to my attention. We reviewed that. As a matter of fact, they served me with a number of 

newspaper articles involving this particular attorney. But when it 

came down to it, we told the IG that this person on their own volunteer time could—could do what they could do. We cannot regulate what our employees do on volunteer time. 

And so it just happened that in that particular regulation which 

you were asking about is that person is not a shared staff person 

because shared staff persons are persons who are working parttime with you and working part-time with another entity. So with 

respect to the Oceanside office, that’s—I’m assuming that that’s 

what you were referring to, and so that employee in particular was 

working full-time with us. 

Mr. CANNON. In a case like that, when you have an employee 

who is working for you and being paid by you but is volunteering 

outside, do you allow the utilization of LSC resources or CRLA resources in fulfilling those volunteer activities? 

Mr. PADILLA. Well, no, Congressman, we don’t. We’re very, very 

clear with staff that when staff is doing any kind of work, actually 

both with—work that would be considered prohibited with entities 

that are doing restricted work, or when they’re doing work with 

any nonprofit, we clearly, clearly tell our staff that they must follow the rules about respecting the resource, the CRLA resource. 

Whether that is paid by LSC funds, whether it’s paid by State 

funds, whether it’s paid by private foundations, all of that resource 

belongs to CRLA. 

So to the extent that they may be working with another entity, 

we clearly explain what the rules are, what our expectations are 

with respect to even reimbursement. We’re told that to the extent 

that resources may be used, for example, something as minimal as 

Xeroxing, we tell folks you have to reimburse programs when 

you’re using that kind—our program when you’re using that kind 

of resource. 

So, Congressman, we’re very clear about those rules. We are responsible for setting those bright lines for our attorneys and our 

advocates, and so we make sure that when they’re working with 

those entities that they’re protecting our resource, because we’re 

the ones that employ them. 

Mr. CANNON. Thank you, Mr. Padilla. 

My time has expired, but, Ms. Barnett, I’d appreciate if you’d 

think about that answer because I’d like to come back to that on 

the second round. 

And at this point, I’d recognize the Ranking Member for 5 minutes. 

Mr. WATT. Two rounds, Mr. Chairman? 

32

Mr. CANNON. Yes. Would you—the gentleman from Massachusetts is recognized if you have someplace else you need to be. 

Mr. DELAHUNT. I thank the Chair. I will wait to speak to the copayment issue later. I still really can’t understand why Mr. Padilla 

is here. 

I’m almost embarrassed that you’re here, Mr. Padilla. Here we 

are discussing a discrete issue in a State, in California, the details 

of which I don’t know. I presume there’s some political overtones 

to it. I’m just reading some pieces from the Modesto Bee and something about the dairyman and class action suits. And here we are 

in front of a congressional Subcommittee? 

It’s my understanding—and you can correct me. Maybe you can 

respond to this, Ms. Barnett. I understand there is a review being 

done by LSC. 

Ms. BARNETT. Yes, Congressman. On March——

Mr. DELAHUNT. That’s all I needed was the ‘‘yes.’’ Now, let me 

ask you this: Has the review been concluded yet? 

Ms. BARNETT. No, it has not. It is currently——

Mr. DELAHUNT. Thank you. That’s all I need. 

And here we are in a Subcommittee in the United States Congress talking about something about shared office space, concerns, 

I guess, have been expressed by Members of Congress as to whether CRLA—I’m even learning the acronyms in this short period of 

time—is somehow involved in a class action suit. I would hope and 

think that we could wait until the administrative review had been 

concluded before we have an oversight hearing. 

I’ve got a lot of ideas for oversight hearings. And if the Chair and 

the Chair of the full Committee would want a long laundry list, I 

think at least from my world view, that are far more important and 

significant and would be ripe, if you will, to use the legal term, 

would be ripe for oversight. 

But having said that, I will yield back the rest of my time. Mr. 

Padilla, I’m not even going to ask you any questions. I will yield 

back the rest of my time and wait for the second round, which 

hopefully will come soon, Mr. Chairman. 

Mr. CANNON. I thank the gentleman. Let me just point out that 

we hope this system will work well and the oversight process and 

the inquiries will result in people who may not be as supportive as 

LSC as we would like them to be become more supportive of the 

agency. 

Mr. DELAHUNT. Let me, if I can, Mr. Chairman, I want to state 

on the record, I am aware of your support, you know, for LSC and 

your concern for equal access to the justice system, because if we’re 

going to have a justice system, we better have equal access because 

we’ll lose the confidence of the American people in not just our justice system but our democracy. And I understand the purpose, your 

intention here, but at the same time—and I know sometimes it’s 

incumbent upon those of us who serve in this body to do certain 

tasks. And I presume we’re attempting to do that with a larger 

goal in sight. But here we are, we’re talking about a specific case. 

Mr. CANNON. There are a number of issues that have been raised 

that I want to touch on. 

Mr. DELAHUNT. Sure. 

33

Mr. CANNON. Because it seems to me that if we establish a 

record of where we’re going, we’ve taken LSC, I think, as a body 

from a highly controversial, very angry issue to one that there is 

a great deal of support for. I think it’s good to be clear about where 

we’re headed, and, you know, Mr. Padilla is actually a pretty tough 

guy, been around for a long time, and——

Mr. DELAHUNT. I could tell he’s a tough guy. 

Mr. CANNON. We’ve had discussions about this. I don’t think that 

anyone is objecting to where we’re going on this. And we would like 

to see where LSC is headed, be clear so that we don’t have some 

of the objections we’ve had in the past. And, frankly, I think the 

world is much better served today by the—what is almost close to 

unanimity in Congress over this agency. So——

Mr. DELAHUNT. I guess my point, Mr. Chairman, is that when 

viewed in the larger context of our responsibilities, for us to be conducting this inquiry, A, is premature, without having the administrative oversight function that we’ve invested into LSC concluded. 

Well, you know, maybe I should exercise some restraint and conclude my remarks with that, Mr. Chairman. 

Mr. CANNON. I thank the gentleman. 

The Ranking Member is recognized for 5 minutes. 

Mr. WATT. Thank you, Mr. Chairman. I would say, now that I 

see this in brighter context, probably except for the procedural separation of powers issue on which we differ with the Administration, 

it’s probably a blessing that we didn’t fly an Assistant U.S. Attorney all the way across the country to deal with this. And I’d have 

to say it is a shame that Mr. Padilla had to fly all the way across 

the country and lose a whole day’s work. 

So, in a sense, there is a blessing that goes with the Department 

of Justice saying we’re not going to let this person come over here 

and——

Mr. CANNON. I’d thank the minority not to give them excuses. 

[Laughter.] 

Mr. WATT. Well, I clarify that I’m upset about the process issue, 

but I think the result has turned out to be all right. 

Ms. Charn, your clinic is called Bellow-Sacks? 

Ms. CHARN. That’s the policy project that’s looking at availability 

of legal services. We’re called the Hale and Dorr——

Mr. WATT. Oh, Hale and Dorr. 

Ms. CHARN.—Legal Services Center. 

Mr. WATT. Legal Services Center, okay. And you all serve clients 

that are Legal Services eligible and clients that are not Legal Services eligible? 

Ms. CHARN. Yes, that’s correct. 

Mr. WATT. Okay. And about what part of your resources are devoted to Legal Services-eligible clients versus non-Legal-Service-eligible clients? 

Ms. CHARN. The majority of our clients are Legal Services eligible or close to it. But we serve a substantial number. It might be 

a third or more. I would have to check our data for certain, but 

there are a sizable number of people who are above. Probably the 

vast majority of clients are within 200 percent of poverty, but a few 

are more. 

34

When we’re focusing on something like predatory lending, and 

we’ve got a client who maybe household income is $40,000 and $20,000 and another that is $15,000 or $18,000 and they all have 

the same problem, then we’ll want to—we’ll want to represent all 

of those people because it often is more effective that way. 

Mr. WATT. I’m actually less concerned about getting into the 

issue of the co-pay here than I am understanding how you have 

been able to comply with this split services requirement. There are 

a number of legal services organizations that get resources from 

places other than the U.S. Government. And we have said to them, 

You can’t mix those resources and services with the services that 

you are providing for—I actually think it’s a ridiculous policy myself, but I’m wondering how your organization has been able to deal 

with that dichotomy, getting private resources—getting resources 

from Harvard and, I presume, other funding sources in addition to 

the Legal Services resources that you get. 

Ms. CHARN. Let me say that the vast majority of our resources—

our budget will be about two hundred—$2,300,000 next year. Close 

to $2 million of that will come from Harvard Law School. We 

have—so we are substantially funded by the law school, and most 

of the Legal Services-eligible clients that we serve are served on 

law school money. So that’s the main answer. We don’t—we don’t 

separate them. 

We do have——

Mr. WATT. So your clients—your lawyers are serving Legal Service-eligible clients and—— Ms. CHARN. Yes. 

Mr. WATT.—non-Legal-Service-eligible clients in the same context? You haven’t had any kind of problems and nobody’s raised a 

question about it? 

Ms. CHARN. Well, we have a small grant that is in a—not us, but 

a separate corporation that serves—it’s evolved historically because 

originally we were actually an LSC-funded program way back in 

the 1970’s. 

Mr. WATT. Perhaps I should quit asking questions about this. I 

really am not trying to create—— Ms. CHARN. I understand. 

Mr. WATT.—create problems for you. I’m just trying to figure out 

how—what the distinction is. 

Ms. CHARN. There’s—we have a separate corporation. It’s not 

subject to co-payments or any of these things. 

Mr. WATT. Sharing the same space, though, and the same lawyers? 

Ms. CHARN. No, not the same lawyers. It has its own staff. 

Mr. WATT. So no sharing of lawyers’ time on any of these cases 

that you’re working on jointly? 

Ms. CHARN. No. They would be—they would be separate. They 

have—they do work that’s only—that is particular to that unit. 

And it’s not the same work that the rest of the office would do. And 

it may change over time, but that’s a very small part of our program. The vast majority of our service, that’s mainly advice assistance and screening. And then most of the full representation work, 

the vast majority is done on law school money. And the reason that 

we have room to experiment is that money is not restricted in any 

35

way. We are service oriented, we’ve seen value in mixed income 

service. 

Mr. WATT. Ms. Charn, I hope I have not created a problem—— Ms. CHARN. I don’t think you have. 

Mr. WATT. I hope I haven’t created an investigation here by asking you these series of questions. 

Ms. CHARN. Mr. Padilla will help me. [Laughter.] 

Mr. WATT. But if I have, I apologize. That was not my intent, I 

assure you. 

Ms. CHARN. I don’t think you have. 

Mr. WATT. I think my time is up on this round. I’ll yield back 

to the Chair. 

Ms. CHARN. Thank you very much, Congressman Watt. 

Mr. CANNON. I thank the gentleman. 

We have a series of questions. I’m going to send questions, if the 

panelists are comfortable answering those in writing, that may be 

good. I’d like to just follow up on one comment, and then I’m not 

sure anybody else wants to have a second round. 

But, Mr. Padilla, you talked about $511, which is this amount 

that was—I think you called it ‘‘immaterial’’ in an $18 million 

funding. And I understand that you’ve also solved that problem 

now by having a contract that doesn’t allow for the carry of rent, 

which has come sporadically, apparently. 

Would you talk just a little bit about that in this context? You 

solved the problem. It seems to me that the perception of interrelationship even at a nominal cost, even at a de minimis cost, has 

its problems. By fixing that, have you—are you suggesting or would 

you suggest to this panel that you have—you recognize these problems, small as they may be, as larger in the context of the perception that they create and, therefore, you are committed in the future to help avoid the perception of using LSC resources to fund 

these foundations? 

Mr. PADILLA. Yes, Congressman. We have—— Mr. CANNON. That will do. [Laughter.] 

Just kidding. Please go ahead. 

Mr. PADILLA. Go ahead? 

Mr. CANNON. I’m sorry. We’re just joking here about it. But I 

would really actually appreciate your response to that point. 

Mr. PADILLA. Well, Congressman, as we mentioned before, surprisingly enough, when I look at these investigations and audits, 

it’s one of those few times when a director—when a director can 

actually get a feedback with respect how he or she will follow 

guidelines, follow regulations. And so to the extent that we go 

through an extensive audit, we take those findings seriously. Five 

hundred and eleven dollars, I wish I could say, Congressman, that 

it was zero. But, Congressman, the nature of the $511 is this: 

Clearly, it seems to me that what the public does not want to see, 

Congress does not want to see, are programs that in some way or 

another turn over direct resource over to entities doing restricted 

work. The perception of anybody doing that would create more 

problems than we already have. 

But I distinguish that from an indirect subsidy. In this case, for 

us, we were following the guidelines that were being set by LSC. 

LSC in its 1610 talked about this. It talked about telling programs, 

36

when you are working with another entity and sharing space, there 

are certain things that you must do. You must have agreements 

where you collect market rent. We had those. They ask—you have 

to have separate signage. If there are suites, it must be clear to the 

public that there is Legal Aid and there is the entity doing restricted work. And so we followed those rules. 

Mr. CANNON. Let me just interject. You had one group where you 

had two separate entrances that came to the same group of desks. 

Are you saying that, given this audit, you’re now looking at that 

and will take corrective action there as well? 

Mr. PADILLA. We’ve already changed that, Congressman. As a 

matter of fact, there are no longer—no longer any such relationships with the CRLA Foundation. There is no—there are no shared 

suites. There are no longer any of those kinds of agreements that 

we’ve entered into. That’s happened in the last year. At the time 

that the IG came in, the IG was looking at three such relationships. And all I am saying is that when they came back and you 

read the report, what they had a problem with was the issue of 

subsidy, that is, the $511 in late rent that we didn’t charge. In 

other words——

Mr. CANNON. That was actually interest, was it not? 

Mr. PADILLA. It was interest. 

Mr. CANNON. Interest, was that—which was part of the contract? 

Mr. PADILLA. The late rent came—the late rent was there. It was 

paid in lump sum. We collected it. And then the issue was: Well, 

why didn’t you charge interest on that, because you are floating an 

interest-free loan? And so what we’ve now done is, as we enter new 

contracts with other nonprofits, we are now putting into our agreements that we will charge late rent in case they pay their late rent. 

Mr. CANNON. So essentially you have a commercial agreement 

with penalties or interest that—with your—with these groups that 

you rent space to? 

Mr. PADILLA. Yes, Congressman. And I do have to add that for 

a legal aid like us, that we are actually purchasing buildings in 

some communities. We also have leases where we pay high rents. 

Periodically, we will have space, and in order for us to try to make 

our space work, we rent to nonprofits. 

And so you’re totally correct that now we’re being asked to treat 

even those relationships very commercially, and now we’ve—we 

now understand the rule. I don’t think that LSC—maybe they will 

disagree with that rule about treating nonprofits in a commercial 

manner. But we understand it, and now all of our agreements that 

we’re entering into—and as a matter of fact—well, with all those 

agreements, that’s exactly what we have. We are now looking at 

these as being defined by commercial agreements, just like any 

other landlord-tenant relationship. 

Mr. CANNON. I thank the gentleman. Let me just say that there’s 

been some joking by the panel here. I don’t mean to suggest that 

this issue is taken lightly by any of us at all. It has clearly been 

an intense issue historically. We appreciate your comments, especially Mr. Padilla, about how you’ve made adjustments after getting the guidelines from the IG. I encourage the LSC to continue 

to be clear about guidelines or clarify guidelines, and in your invesVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00040 Fmt 6633 Sfmt 6601 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
37

tigations look at these things, because clarity saves all of us a lot 

of difficulty. 

That said, would anyone else like to participate in a second 

round? The gentleman from Massachusetts is recognized for 5 minutes. 

Mr. DELAHUNT. Thank you, Mr. Chairman. 

Can I ask you how much was the interest, Mr. Padilla? I didn’t 

mean to come back to you, but I want to get my arms around this. 

Mr. PADILLA. The interest that we—— Mr. DELAHUNT. The interest on the late payment. 

Mr. PADILLA. $511. 

Mr. DELAHUNT. Can you repeat that again, please? 

Mr. PADILLA. It’s $511, Congressman. 

Mr. DELAHUNT. Fine. And how much did your round-trip ticket 

cost here? 

Mr. PADILLA. It cost about $1,200 and change. 

Mr. DELAHUNT. Thank you. 

Let me go to Ms. Charn for a moment. I understand your concept 

of the co-payment system. I understand there was a proposal before 

the Massachusetts Legislature which would have incorporated that 

into their Legal Services, and that it was resoundly rejected. Am 

I accurate in that? 

Ms. CHARN. I believe so, yes. 

Mr. DELAHUNT. Okay. And you indicated, your words were ‘‘Maybe it should be implicated into the LSC system.’’ And I guess 

that condition of that would be a completion of a critical study, 

which I thought I heard that you were undergoing or had under 

way. 

Ms. CHARN. We plan to look carefully at our own experience and 

to get some independent and systematic evaluation of client—client 

response to it. 

What I really——

Mr. DELAHUNT. If I can, I don’t want to—— Ms. CHARN. Sure. 

Mr. DELAHUNT.—delay you, and I know Mr. Padilla has got to 

get on that plane because we don’t want to have him stay overnight again and continue to add on that. In any event—and I don’t 

mean to be rude, Ms. Charn. I really want to compliment the program at Harvard. I’m familiar with it. Maybe you’re unaware, but 

I served for 21 years as the elected district attorney in the greater 

Boston area, and we utilized many of the clinical programs in the 

metropolitan Boston area. 

Ms. CHARN. I am aware of that. 

Mr. DELAHUNT. And Harvard was good. It was good. BC was just 

a little bit better as far as the criminal—— [Laughter.] 

—clinical program. But at the same time, I think you really do 

serve and do provide a wonderful experience for law students. 

I don’t think you need to teach them about the business dimension, however, because most Harvard Law School graduates, at 

least when they finish, receive their J.D. degree, they seem to be 

doing pretty well upon their graduation. 

But, seriously—and we’ll await the conclusion of that study that 

you alluded to earlier. But, you know, I think—and I’m glad to 

hear that you’re servicing the moderate-income community because 

38

a growing—a concern of mine is really access to the civil justice 

system. For the middle class today, it’s almost impossible, particularly when you’re dealing, you know, with a claim against a— against a corporation. I’m not talking a small business but against 

a corporation. You do not have the resources. And I think that is 

a niche area that really has to be addressed. 

And it’s my understanding, too, that one of the restrictions that 

Congress passed, I think it was in 1996, is that no longer is LSC 

prohibited to be involved in class actions. And I wonder if it’s time 

to really, as far as legal clinical programs—and, again, we have 

many of them in the Boston area—to consider a consortium of 

those programs to examine a need, a vacuum, if you will, and as 

it particularly relates to LSC and the restrictions that are placed 

on it. Many of those restrictions I happen to think are unreasonable, but the law is the law and we respect the law. 

But we need some lawyers today who service that low- to moderate-income that really do need the kind of resources that the law 

schools can supply, and particularly those areas that could very 

well address a significant social need that oftentimes is brought 

about through the mechanism of a class action suit. Best example, 

the Firestone case, for example. I really think that would be a very 

exciting opportunity for a consortium of law schools to come together with a program to train future lawyers in terms of how to 

meet that particular—how to meet—not just how to meet that particular need, but to give them an experience that has become very 

rare as opposed to the direct aid that’s provided by LSC. 

I don’t know. Maybe I’m not being clear enough in terms of what 

I’m suggesting, but take, for example, the restriction on LSC dealing with class action suits and the need for particularly certain segments of our community who do not have the wherewithal, could 

never envision what a class action suits really means when there 

is an obvious problem to be addressed. For the law schools to support that kind of effort in clinical programs, because there is a vacuum, there is an opening—and, again, too often today, you know, 

our Government is not protecting those who really need to be protected the most, those that are the vulnerable. And we have to rely 

on lawyers. We have to rely on the courts. We have to rely on access to the system. 

Any comments? 

Ms. CHARN. Well, I do share the regret that there are restrictions 

on remedies that can be pursued. I accept that they’re there, and 

I think it’s important that until and unless they’re changed, there 

absolutely should be compliance. I think class action is a remedy. 

In some cases, it’s appropriate. I don’t think it’s the be-all and endall of what people need. I think that lots of people also need direct 

service, and we’ve been very concerned about those just above poverty who share exactly the same kinds of problems, are victims of 

the same sorts of situations. And I don’t think—I think there can 

be cause for resentment when the very poor, albeit in small numbers, are eligible for things that middle-income and people who are 

working hard but couldn’t begin to afford decent legal services don’t 

have access. So we’ve been concerned about that. 

On the subject of restrictions, I think one that has some real 

practical effect is that the prohibition from seeking attorneys’ fees 

39

in ordinary cases where it’s authorized by local law and statute, 

that can be an important source of income, and it does bring in 

more income to our program than any part of the co-payments. And 

we are not—we are not looking at high-profile cases because we 

want our students to have some direct, hands-on experience, and 

you’re not going to give a second-year law student any lead role. 

They’ll do research, but they know how to do research. They don’t 

know how to sit in a room with a client, bargain across the table, 

or make a 2-minute argument in a busy court as opposed to a 

lengthy argument in a high-level court. 

So we’ve looked at that part of the need, and I do think at a 

practical level, the inability of programs to be able to access attorneys’ fees where it’s authorized by local law is something that could 

provide resources, would be a benefit, and it was on that base that 

we built a co-payment system. 

Mr. DELAHUNT. I would encourage you, Ms. Charn, to incorporate 

that particular issue in terms of the study that you referred to earlier. I think it would be very beneficial to have. 

Ms. CHARN. Thank you, Congressman. 

Mr. CANNON. The gentleman yields back. 

I think the Ranking Member would like to take another round, 

and I will defer to him in just a moment. 

Let me point out, Ms. Charn, that your point that people on the 

lower end get angry because some people get a benefit and they 

don’t is very well taken, and it’s one of the key issues that I think 

we need to focus on to keep LSC a healthy organization. 

I just want to make a point, Mr. Padilla. My round-trip ticket is 

about—is less than $300. We need to get you a Government fare 

somehow in this process. [Laughter.] 

And, of course, as we reduce the cost of your being here, the 

enormity of the cost of compliance or dealing with this audit is 

great. My understanding is that it cost somewhere way north of 

$113,000 to deal with this audit. I think—I don’t know that anybody is going to complain about that. I think it’s very important 

that we have clarity about the rules. Other people in other places 

will see how clear the rules have become and avoid problems there. 

And so we appreciate your—the time and effort you have put into 

this and what it does for the health of the whole organization. 

With that, the Chair yields 5 minutes to the gentleman. 

Mr. WATT. Thank you, Mr. Chairman. Just let me clarify, 

though, this is not another round. This is my second bite at the 

apple, as you and Mr. Delahunt have already had your second——

Mr. CANNON. I would just appreciate it if you didn’t take as big 

a bite as each of us took. We went way over the red light. 

Mr. WATT. I’m just going to take long enough to try to dig myself 

out of this hole that I dug for myself in the first round of questions, 

and I want to do it this way: 

First of all, I want to say how much I agree with the last comment Ms. Charn made about attorneys’ fees. I think that’s one of 

the more ridiculous rules that we have imposed upon Legal Services Corporation. 

Number two, in my continuing effort to get myself out of the hole 

with Ms. Charn, I want her to deliver to my good friend and former 

classmate, Duncan Kennedy, my highest regards and tell him I’ll 

40

be up there for the convention. I’m looking forward to him hosting 

me there. 

Ms. CHARN. Professor Kennedy came and practiced with us at 

the center, and I hope I won’t be disclosing too much in saying that 

he never passed the bar. We had to have him as a paralegal. But 

he was very effective. 

Mr. WATT. Oh, is that right? 

Ms. CHARN. Very, very effective. 

Mr. WATT. Well, he never was much attention—paid much attention to those kinds of details. His thought processes—and I was in 

the same class with him. We always thought we’re always on a different plane than the proletariat lawyers who were having trouble 

understanding the simple concept. He had taken it to another concept. So it didn’t surprise me that he ended up being a professor 

and I ended up being a country lawyer and politician. So give him 

my best regards. He’s a great friend of mine, and I respect him 

highly—even though he hadn’t passed the bar, it sounds like. 

Ms. CHARN. He didn’t take—he would have passed it. Let me be 

clear. 

Mr. WATT. Finally, I want to clarify, I guess, your program, the 

Hale and Dorr Legal Services Center, does or does not receive LSC 

support? 

Ms. CHARN. A separate entity, a separate corporation receives 

LSC support. Historically, we had a strong affiliation with the 

LSC-funded programs in the area. After the Gingrich congress, 

that changed, for a variety of local reasons. But—— Mr. WATT. The Gingrich congress is a concept I do not understand. 

Ms. CHARN. I mean the Contract With America, the restrictions 

that came in——

Mr. WATT. That was in 1995–96? 

Ms. CHARN. Yes. 

Mr. WATT. I have never acceded to the notion that that was his 

Congress or anybody else’s. 

Mr. CANNON. It did become mainstream America. 

Mr. WATT. It was—this Congress is always the American people’s 

Congress, and—— Ms. CHARN. Well put. 

Mr. WATT.—this is the people’s House 

Ms. CHARN. Well put. 

Mr. WATT. But I understand you’re talking about 1995–96. 

Ms. CHARN. Yes. 

Mr. WATT. Okay. All right. Keep going. 

Ms. CHARN. So I would say that, in fact, what our program does 

is, aside from that continuing small grant to a separate corporation, in fact, Harvard Law School is providing its own resources 

that are making available substantial services to LSC clients. 

Mr. WATT. Okay. So with respect to that program, you can 

charge a co-pay or whatever you want. I mean, you don’t need Congress’——

Ms. CHARN. That’s right. 

Mr. WATT. Okay. And in the LSC-funded program, you are not 

charging a co-pay—— Ms. CHARN. Certainly not. 

41

Mr. WATT.—because that’s prohibited—— Ms. CHARN. That’s prohibited. 

Mr. WATT.—by the rules. 

Ms. CHARN. Exactly right. 

Mr. WATT. All right. What I’m trying—the bottom line I’m trying 

to get to on this co-pay issue is I assume and hope you’re not suggesting that because in a separately funded mechanism where you 

do services for Legal Services-eligible clients and non-Legal-Services-eligible clients, you have a co-pay system that you would impose that same co-pay system in every Legal Services Corporationfunded program throughout America. That’s not what you’re suggesting, is it? 

Ms. CHARN. No, I don’t——

Mr. WATT. Okay. All right. I just——

Ms. CHARN. It’s not for me to suggest—we have some experience 

with it. In the future, as we evolve, I don’t think it’s unthinkable, 

but I have no—I’m not making any suggestion that that would be 

a priority of any kind for this legal—and I trust Chairman Strickland and the new president. That is really a matter of policy for 

the Congress and them. I simply report on an experience, and it’s 

our role——

Mr. WATT. And actually, in your experience—I take back what I 

said in my opening statement—you have the right to experiment 

in your program because you’re not received Federal funds. 

Ms. CHARN. That’s correct. 

Mr. WATT. In that part of your program, which is why I wanted 

to go back and clear this up. I didn’t want to start another investigation. There are two separate programs here. 

Ms. CHARN. Yes. 

Mr. WATT. And one is Legal Services funded and one is not. So 

I just wanted to be clear on that. 

I think I have dug myself out of the hole. I probably put myself 

back in it by mentioning Duncan Kennedy. 

Ms. CHARN. Not at all. 

Mr. WATT. But he’ll understand that I was trying to get myself 

out of the hole. 

With that, I’ll yield back. 

Mr. CANNON. The Chair was aware that these are separate programs, I might just point out. 

Mr. WATT. Okay. 

Mr. CANNON. And I had no intention of pursuing it beyond that. 

We thank the panel very much. We appreciate the Members of 

the Committee who have been here today asking questions, watching over me, making sure we stayed on the straight and narrow. 

Let me just say in closing that this is an important issue. It’s 

been an issue that America has reacted to in many different ways. 

I think, Ms. Charn, your statement about the concern by people 

who can’t get access to legal services is a very serious one. I appreciate the way you are dealing with it, and we’re going to take a 

careful look in the future at a program that might mitigate that 

along the lines of what you’ve done with Hale and Dorr and with 

Harvard, and we appreciate that. 

Mr. Padilla, we appreciate your having come in and come across 

the country. It’s not a day, let me point out. It’s actually 3 days. 

42

You know, the Federal Government calls travel across the country 

a day’s work, so we appreciate that. 

And, Ms. Barnett, we appreciate your being here and your participation. 

It seems to me Mr. Padilla would like to make another comment. 

Mr. WATT. And I need to make a unanimous consent request. 

Mr. CANNON. Okay. Why don’t we go to the unanimous consent 

request and we’ll let—— Mr. WATT. All right. Mr. Chairman, I ask unanimous consent 

that we have submitted for the record letters of support for the 

California Rural Legal Assistance, Inc., as if they needed that, from 

Members of the Congressional Hispanic Caucus, Brennan Center 

for Justice at NYU School of Law, Mexican American Legal Defense and Educational Fund, League of United Latin American 

Citizens, Farm Worker Justice Fund, Inc., California Catholic Conference, Mexican American Bar Association, twelve law professors, 

and the National Council of La Raza. 

Mr. CANNON. Thank you. Without objection, so ordered. 

[The ‘‘letters of support’’ are inserted in the Appendix.] 

Mr. CANNON. Mr. Padilla, do you want to make a final comment? 

Mr. PADILLA. Yes. Chairman, just putting my whole issue aside, 

I just felt the need to make one statement about thanking you for 

your leadership. As you well know, CRLA spends a significant 

amount of time representing working people. And to the extent 

that you as a Congressman has taken leadership in the ag jobs bill 

and taken leadership in the DREAM Act, I have to say on behalf 

of the clients that we serve in California, people who sometimes the 

only sustenance that they can get—they need the sustenance of 

food, but they also need sustenance like faith and hope. And to the 

extent that you have taken the leadership in that area with those 

two pieces of legislation, I have to thank you on behalf of our client 

community, because I know you’ve taken a position on a very volatile issue. But it’s an issue that’s so critical to the people that we 

serve on a daily basis. And I just wanted to make that comment 

because this is probably the last time that I will ever be able to 

thank you so publicly because of the stance you’ve taken. 

Mr. CANNON. Well, I hope we could meet privately because I intend to get to California, but I thank you very much. And as we 

talked yesterday, let me just say, and as I said earlier in the hearing, we have problems in America. We need to solve those on many 

fronts. But opening up the path for people to move from lower income to higher income, meaning getting education available to 

them, having access to other resources, those things are vitally important, not to me, not to you, but to all Americans. It’s important 

that all Americans have—all other Americans have all the opportunities that this great country provides. 

I would ask unanimous consent to insert the IG report in this 

matter in the record. Without objection, so ordered. 

[The ‘‘IG report’’ is inserted in the Appendix.] 

Mr. WATT. I would ask unanimous consent to insert in the record 

the exhibits that Mr. Padilla—— Mr. CANNON. Without objection, so ordered. 

Mr. WATT.—testified about with reference to the labor camp at 

Haute, California. 

43

Mr. CANNON. Without objection, so ordered. 

[The material referred to is inserted in the Appendix.] 

Mr. CANNON. And on this kindly note, let us adjourn the hearing. 

[Whereupon, at 2:24 p.m., the Subcommittee was adjourned.] 

(45)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

LETTER SUBMITTED BY MEMBERS OF THE CONGRESSIONAL HISPANIC CAUCUS


CHC1.eps
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CHC2.eps
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CHC3.eps
48


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49

LETTER SUBMITTED BY THE BRENNAN CENTER FOR JUSTICE

AT NEW YORK UNIVERSITY SCHOOL OF LAW


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LETTER SUBMITTED BY THE MEXICAN AMERICAN LEGAL DEFENSE AND

EDUCATION FUND (MALDEF)


MALDEF1.eps
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LETTER SUBMITTED BY THE LEAGUE OF UNITED LATIN AMERICAN CITIZENS


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LETTER SUBMITTED BY THE FARMWORKER JUSTICE FUND, INC.


Farm1.eps
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LETTER SUBMITTED BY THE CALIFORNIA CATHOLIC CONFERENCE


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LETTER SUBMITTED BY THE MEXICAN AMERICAN BAR ASSOCIATION


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LETTER SUBMITTED BY 12 LAW PROFESSORS


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LETTER SUBMITTED BY THE NATIONAL HISPANIC LEADERSHIP AGENDA


NHLA1.eps
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REPORT OF LEONARD J. KOCZUR, ACTING INSPECTOR GENERAL,

LEGAL SERVICES CORPORATION


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PHOTOGRAPHS SUBMITTED BY CALIFORNIA RURAL LEGAL ASSISTANCE INC.


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SUPPLEMENTAL PREPARED STATEMENT OF JEANNE CHARN, DIRECTOR, HALE AND

DORR LEGAL SERVICES CENTER, AND DIRECTOR, BELLOW-SACHS ACCESS TO LEGAL

SERVICES PROJECT, HARVARD LAW SCHOOL

The following information is offered as a supplement to the written remarks and 

oral testimony presented to the Subcommittee on Commercial and Administrative 

Law of the House Judiciary Committee on Wednesday, March 31, 2004.

On the topic of experiments at the Hale and Dorr Legal Services Center with client co-payments, I emphasize that we serve clients above 125% of poverty. Some 

of these clients are fledgling entrepreneurs, not for profits and other clients not typically served by LSC funded legal services providers. These clients may have incomes 

above poverty, but they cannot afford decent legal services at market rates. Most 

of the Center’s clients who have incomes above 125% of poverty have legal problems 

that are the same as most of our clients who are below 125% of poverty—they have 

job related issues, or they are seeking unemployment compensation; they seek disability assistance because they are ill or injured and cannot work; they seek assistance with child support, protection from domestic violence or assistance with divorce; they are homeowners threatened with foreclosure or tenants with unsafe or 

unhealthy apartments who may also be facing eviction. Housing costs in Boston are 

high so many people above the lowest income levels have difficulty finding and retaining decent affordable housing. With rental housing costs in lower income Boston 

neighborhoods reaching eight hundred to as much as one thousand dollars per 

month or more, we serve many clients who are ‘‘shelter poor,’’ that is their incomes 

may be above poverty but they have no discretionary money and could not possibly 

afford lawyer assistance. 

For tenants, we claim attorney’s fees pursuant to state statutes and rules. All income from representation of tenants is pursuant to these statutes and rules. When 

we represent clients who have been victimized by predatory lending, we similarly 

seek attorney’s fees and costs of litigation pursuant to local and federal statutes. 

Under 45 CFR Part 1642, LSC funded programs are not permitted to seek these 

fees. As indicated in my testimony on March 31, 2004, I would urge the Subcommittee to consider easing the current restrictions that prevent LSC grantees 

from seeking fees under existing statutes and rules, whether local or federal. These 

fee-shifting statutes are intended to encourage compliance and deter rule breaking. 

Permitting LSC grantees to seek such fees would have no impact on the present 

substantive restrictions that Congress has enacted, but would be consistent with the 

intent of the fee shifting statutes and would produce income to programs that would 

support increased service. 

While existing regulations do not permit LSC grantees to seek attorney’s fees pursuant to statute or rule, I would point out that section 1642.6 of 45 CFR Part 1642 

permits LSC grantees to seek reimbursement of out of pocket costs from 

‘‘. . . damages or statutory benefits...’’ that result from the representation. LSC 

might encourage programs that may not be doing so already to regularly seek reimbursement of out of pocket costs when representation produces funds from which 

such costs could be paid. 

At the Hale and Dorr Center, we seek such cost recoveries from all clients whether above or below 125% of poverty. The clients who are represented with the Private 

Attorney Involvement (PAI) funds pursuant to an annual contract with Boston’s Volunteer Lawyer Project (VLP) are never charged co-payments because VLP has only 

LSC funds. However, we do seek co payments from clients below 125% of poverty 

whom we represent with non-LSC funds. We seek co-payments from these very lowincome clients only when our representation produces resources from which the copayment can be made, for example, back benefit awards in disability or unemployment compensation matters. In these areas, most co-payment charges are for clients 

in the income range of 200% of poverty or lower. 

Finally, a note on the PAI funds received by a separate not for profit entity 

housed at the Hale and Dorr Center in Jamaica Plain from the LSC grantee, The 

Volunteer Lawyer’s Project. While these funds must be used to serve clients consistent with LSC regulations and the LSC statute, participating in a PAI program 

funded by an LSC grantee such as the VLP does not restrict other funds of the private attorney. We have gone further and segregated the PAI funds in a separate 

not for profit entity that contracts annually with the VLP. Pursuant to contract, 

VLP requires the not for profit to serve a specific number of LSC eligible clients 

each year. 

In conclusion, I want to express my thanks to the Committee for its interest in 

the service delivery experiments of the Hale and Dorr Center and the broader work 

of the Bellow-Sacks Access to Civil Legal Services Project. The knowledge, thoughtVerDate 0ct 09 2002 10:08 Sep 08, 2004 Jkt 089266 PO 00000 Frm 00143 Fmt 6601 Sfmt 6621 G:\WORK\COMM\033104\92831.000 HJUD1 PsN: DOUGA
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fulness and obvious commitment of the Subcommittee Chair and members to making high quality legal services broadly available was heartening and of great importance to the future of our legal system.

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RESPONSE TO POST-HEARING QUESTIONS FROM HELAINE M. BARNETT, PRESIDENT, 

LEGAL SERVICES CORPORATION


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RESPONSE TO POST-HEARING QUESTIONS FROM JOSE R. PADILLA,

EXECUTIVE DIRECTOR, CALIFORNIA RURAL LEGAL ASSISTANCE, INC.


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RESPONSE TO POST-HEARING QUESTIONS FROM JEANNE CHARN, DIRECTOR, HALE AND

DORR LEGAL SERVICES CENTER, AND DIRECTOR, BELLOW-SACHS ACCESS TO LEGAL

SERVICES PROJECT, HARVARD LAW SCHOOL


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