legislature, any local council, or any similar
governing body,
except that this paragraph does not preclude funds
made available to a recipient from being used in con-
nection with—
‘‘(i) any communication made in response
to any Federal, State, or local agency or elected
official,
‘‘(ii) any communication to a Federal,
State, or local elected or agency official pertain-
ing to the authorization or appropriation of
funds or any other measure affecting the au-
thority, functions, or funding of the recipient or
the Corporation or pertaining to oversight
measures directly affecting the recipient if the
project director (or project director’s designee)
has expressly determined that the legislative
body involved is considering such authorization,
appropriation, or other measure or is conduct-
ing oversight of the recipient or the Corpora-
tion, or
‘‘(iii) any communication on behalf of an
eligible client in the course of representation of
that client before a legislative body, if the
project director or designee of the recipient has
expressly approved such representation in ac-
cordance with policy established by the govern-
ing or policy body of the recipient and such
project director or designee has determined, be-
fore approving the undertaking of such rep-
resentation, that—
‘‘(I) the client seeks representation to
protect the client’s existing legal rights or
interests or is in need of relief which can
be provided by the legislative body in-
volved, and
‘‘(II) documentation specifically au-
thorizing such representation has been se-
cured from the eligible client by a recipi-
ent,
but nothing in this paragraph shall be construed to
permit the use of such funds to engage in commu-
nication which is intended or designed to encourage
the general public to support or oppose legislation
pending before the Congress or State or local legisla-
tive bodies or any decision by a Federal, State, or
local agency or to solicit a client, in violation of pro-
fessional responsibilities, for the purpose of making
possible any activity permitted by this paragraph;’’.
SEC. 6. ENFORCEMENT.
(a) ENFORCEMENT.—Subparagraph (A) of section
1006(b)(1) (42 U.S.C. 2996e(b)(1)) is amended to read
as follows:
‘‘(A)(i) The Corporation shall have the authority to
ensure the compliance of recipients and their respective
employees with this title. The Corporation may issue rules,
regulations, guidelines, and instructions to interpret the
provisions of this title, but may not impose, by regulation
or otherwise, restrictions or limitations on types of cases
or forms of representation of clients unless such restric-
tions or limitations are explicitly authorized by this title
or other applicable law, and may not impose, by regulation
or otherwise, restrictions or requirements on such recipi-
ents that are inconsistent with this title and other applica-
ble law.
‘‘(ii) If the Corporation receives information that a
recipient has violated this title or the rules, regulations,
guidelines, instructions, grant conditions, or assurances is-
sued under this title, the Corporation shall commence an
investigation, resolve the allegations without further inves-
tigation, or reject the complaint as groundless. Except in
cases where it is alleged that a recipient or an employee
of a recipient has violated criminal law, the Corporation
shall notify the recipient of the allegations and the Cor-
poration’s planned action. Such notification shall include
a description of the factual allegations, a copy of any writ-
ten materials submitted by the person making the allega-
tions, and a designation of the provisions of this title or
the rules, regulations, guidelines, instructions, grant con-
ditions, or assurances issued under this title that are al-
leged to have been violated. If the Corporation has deter-
mined that an investigation is warranted, the Corporation
shall provide the recipient a reasonable opportunity to re-
spond in writing to the allegations before commencing a
formal investigation. The Corporation shall complete such
investigation in a timely manner and shall inform the re-
cipient of the final determination with respect to such in-
vestigation. Unless required by law, the Corporation shall
not make the findings of its investigation public until a
final report is issued or unless such disclosure is made
with the consent of such recipient. If, at the conclusion
of the investigation, the Corporation determines that it
will take action under paragraph (5) of this subsection,
it shall notify the recipient of its right to request a hear-
ing.’’.
(b) REGULATIONS FOR ENFORCEMENT.—Paragraph
(5) of section 1006(b) (42 U.S.C. 2996e(b)) is amended
to read as follows:
‘‘(5)(A) The Board shall issue regulations to provide
for the enforcement of this title. Such regulations may in-
clude, among available remedies, provisions for the imme-
diate suspension of financial assistance under this title,
suspension or termination of an employee of the Corpora-
tion or of any employee of a recipient by such recipient,
the reduction or termination of such financial assistance,
and denial of an application for refunding. Any such em-
ployee may be terminated only after consideration of other
remedial measures and only after the employee has been
afforded reasonable notice and opportunity for a timely,
full, and fair hearing. When requested, such hearing shall
be conducted by an independent hearing examiner. Unless
the Corporation seeks to deny an application for refunding
under subparagraph (B), the Corporation may suspend,
reduce, or terminate financial assistance under this title
or deny an application for refunding under this title
only—
‘‘(i) when there has been a substantial failure
to comply with the provisions of—
‘‘(I) this title,
‘‘(II) rules, regulations, guidelines, or in-
structions issued under this title, or
‘‘(III) other laws,
which failure continues after notice and an oppor-
tunity to correct such failure has been provided to
the recipient, or
‘‘(ii) when independent evaluations demonstrate
that a recipient has consistently failed to use its re-
sources to provide economical and effective legal as-
sistance of high quality as measured by generally ac-
cepted professional standards which failure contin-
ues after notice and an opportunity to correct such
failure has been provided to such recipient.
‘‘(B) The Corporation may deny an application for
refunding of a recipient when, based on independent eval-
uation, the Corporation has identified an applicant for fi-
nancial assistance under this title that is better able to
provide high quality, economical, and effective legal assist-
ance. Such evaluation shall be based on criteria developed
pursuant to section 1007(d)(5).
‘‘(C) Financial assistance under this title may not be
terminated or suspended, an application for refunding
under this title may not be denied, and the annual level
of financial assistance under this title may not be reduced
by more than 5 percent or $20,000, whichever is less, un-
less the recipient has been afforded reasonable notice, an
adequate opportunity to respond to the allegations con-
cerning failures and, if requested by the recipient, a timely
and fair hearing before an independent hearing examiner
pursuant to regulations issued by the Corporation. Such
regulations shall provide for commencement of the hearing
‘‘(A) take into account that each recipient has
both the right and the responsibility to manage its
day-to-day operations and to assure that its employ-
ees comply with all applicable law and deliver high
quality legal assistance in an effective and economi-
cal manner,
‘‘(B) protect the personal privacy of eligible cli-
ents,
‘‘(C) be consistent with the rules of ethics and
professional responsibility that are applicable in the
jurisdiction where a recipient delivers legal assist-
ance, and
‘‘(D) protect matters and documents that are
personal or private and related to an individual em-
ployee from examination by the Corporation except
to the extent that such records can be expected to
contain information directly pertinent and necessary
to an audit or to an investigation of—
‘‘(i) a likely pattern of discrimination,
‘‘(ii) lack of compliance with the law, the
provisions of this title, or the rules, regulations,
guidelines, or instructions issued by the Cor-
poration, or
‘‘(iii) or poor performance by a recipient,
which is indicated by other external evidence.
‘‘(4) The Corporation shall ensure that the monitor-
ing process is fair and conducted in a manner that does
not cause more than a necessary disruption to the provi-
sion of legal services provided by the recipient being mon-
itored and provides—
‘‘(A) sufficient notice before monitoring is con-
ducted,
‘‘(B) flexibility to negotiate with the Corpora-
tion when disagreements arise over the timing and
conduct of monitoring,
‘‘(C) reasonable opportunity to respond and
comment on draft reports on monitoring,
‘‘(D) protection from disclosure to third parties
of the results of monitoring and the contents of any
draft reports on monitoring before a final report on
the monitoring is issued, and
‘‘(E) protection from disclosure to third parties
of any documents obtained during monitoring except
to the extent necessary to carry out the monitoring,
consistent with the laws and the rules of ethics and
professional responsibility applicable to the jurisdic-
tion where such documents are maintained, except
that the Corporation shall at all times have the au-
thority to make evidence of criminal conduct avail-
able to the appropriate legal authority.
The Corporation shall ensure that the monitoring process
is reasonably related to the purposes which the monitoring
is intended to accomplish.
‘‘(5) The Corporation, in cooperation with recipients
and other appropriate groups, shall develop comprehensive
criteria for use in evaluating the capability and perform-
ance of recipients, including the assessment of—
‘‘(A) the extent to which any such recipient pro-
vides a comprehensive range of legal assistance to el-
igible clients, including, in the case of support enti-
ties, a comprehensive range of appropriate support
services;
‘‘(B) the extent that any such recipient has suc-
ceeded in providing effective, economical, and high
quality legal services to eligible clients and is able to
use and develop additional resources, including pro
bono services from the private bar; and
‘‘(C) the ability of any such recipient to deter-
mine and address the most pressing legal problems
and needs of eligible clients.
‘‘(6) Notwithstanding the preceding provisions of this
subsection, the Inspector General of the Corporation shall
not, in carrying out the Inspector General’s functions, be
subject to any restriction that—
‘‘(A) is contained in the standards and proce-
dures adopted by the Corporation under this sub-
section; and
‘‘(B) limits access by the Corporation to docu-
ments or other information.’’.
SEC. 8. CLASS ACTIONS.
Section 1006(d)(5) (42 U.S.C. 2996e(d)(5)) is
amended—
(1) by striking ‘‘No’’ and inserting ‘‘(A) Subject
to subparagraph (B), no’’; and
(2) by adding at the end the following:
‘‘(B) No recipient or employee of any such recipient
may bring a class action suit against the Federal Govern-
ment or any State or local government unless—
‘‘(i) the project director of the recipient has ex-
pressly approved the filing of such an action in ac-
cordance with policies established by the governing
or policy body of the recipient;
‘‘(ii) the class relief which is the subject of such
an action would significantly benefit individuals who
are eligible for legal assistance under this title; and
‘‘(iii) before filing such an action, the project
director of the recipient determines that the govern-
ment entity is not likely to change the policy or
practice in question, that the policy or practice will
continue to adversely affect eligible clients, that the
recipient has given notice of its intention to seek
class relief, and that responsible efforts to resolve
without litigation the adverse effects of the policy or
practice have not been successful or would be ad-
verse to the interest of the clients.’’.
SEC. 9. NEGOTIATION REQUIREMENT.
Section 1007(a) (42 U.S.C. 2996f(a)) is amended—
(1) in paragraph (9) by striking ‘‘and’’ after
the semicolon; and by striking the period at the end
of paragraph (10) and inserting ‘‘; and’’; and
(2) by adding at the end the following:
‘‘(11) require recipients to adopt policies, con-
sistent with the rules of ethics and professional re-
sponsibility that apply in the jurisdiction in which
legal assistance is to be provided, which encourage
employees of the recipients to attempt to negotiate
settlements and to use alternative dispute resolution
mechanisms, where appropriate and available, before
filing suit, except that nothing in this paragraph
shall be construed to permit the Corporation—
‘‘(A) to require policies which restrict rep-
resentation of clients to matters where the cli-
ents agree to such negotiation or use of alter-
native dispute resolution mechanisms; or
‘‘(B) to preclude an attorney from filing
suit where the attorney’s professional respon-
sibility to the client requires that litigation be
commenced without notice to or negotiations
with the opposing parties.’’.
SEC. 10. RESTRICTIONS ON USE OF FUNDS FOR LEGAL AS-
SISTANCE TO ALIENS.
Section 1007 (42 U.S.C. 2996f) is amended by add-
ing at the end the following:
‘‘(i) No funds appropriated to the Corporation may
be used to provide legal assistance for or on behalf of any
alien unless the alien is present in the United States and
is—
‘‘(1) an alien lawfully admitted for permanent
residence as defined in section 101(a)(20) of the Im-
migration 
and 
Nationality 
Act 
(8 
U.S.C.
1101(a)(20)), including aliens who acquire the sta-
tus of lawful permanent resident aliens under the
provisions of section 216 or 245A of that Act (8
U.S.C. 1186a, 1255a);
‘‘(2) an alien who is either married to a United
States citizen or is a parent or an unmarried child
under 21 years of age of such citizen and who has
filed an application to adjust status to lawful perma-
nent resident under the Immigration and Nationality
Act, and such application has not been finally adju-
dicated;
‘‘(3)(A) an alien who is lawfully present in the
United States pursuant to an admission under sec-
tion 207 of the Immigration and Nationality Act (8
U.S.C. 1157), who has been granted suspension of
deportation under section 244 of the Immigration
and Nationality Act, or who has been granted asy-
lum by the Attorney General under such Act; or
‘‘(B) an alien who is lawfully present in the
United States as a result of being granted condi-
tional entry pursuant to section 203(a)(7) of the Im-
migration and Nationality Act before April 1, 1980,
because of persecution or fear of persecution on ac-
count of race, religion, or political opinion or be-
cause of being uprooted by catastrophic natural ca-
lamity;
‘‘(4) an alien who is lawfully present in the
United States as a result of the Attorney General’s
withholding of deportation pursuant to section
243(h) of the Immigration and Nationality Act (8
U.S.C. 1253(h));
‘‘(5) an alien who is authorized to work in the
United States by the Immigration and Naturaliza-
tion Service;
‘‘(6) an alien who has been provided a record
of permanent residence under section 249 of the Im-
migration and Nationality Act;
‘‘(7) an alien who is an eligible immigrant (as
defined in section 301(b)(1) of the Immigration Act
of 1990), was physically present in the United
States on May 5, 1988, and is seeking admission as
an immediate relative under the Immigration and
Nationality Act or under section 203(a)(2) of such
Act (including under section 112 of the Immigration
Act of 1990) or is seeking (or is being provided)
benefits under section 301(a) of the Immigration
Act of 1990; or
‘‘(8) an alien who is eligible for medical assist-
ance under title XIX of the Social Security Act, if
the legal assistance to be provided is needed in order
to help obtain such medical assistance.’’.
SEC. 11. GOVERNING BODIES OF RECIPIENTS.
Subsection (c) of section 1007 (42 U.S.C. 2996f) is
amended to read as follows:
‘‘(c)(1) In making grants or entering into contracts
for legal assistance, the Corporation shall ensure that—
‘‘(A) any recipient (other than a recipient de-
fined in section 1002(6)(B)) which has as one of its
purposes the provision of legal assistance to eligible
clients is governed by a body—
‘‘(i) the majority of which is comprised of
attorneys who are appointed by the governing
bodies of State, county, or local bar associations
the memberships of which together represent a
majority of the attorneys practicing law in the
locality or localities in which the recipient is to
provide legal assistance or, in the case of pro-
grams providing service in more than one State,
in the State or locality in which the principal
office of the recipient is located;
‘‘(ii) at least 60 percent of which consists
of attorneys who are members of the bar of a
State in which the legal assistance is to be pro-
vided; and
‘‘(iii) at least one-third of which consists of
persons who are, when selected, eligible clients
who may also be representatives of associations
or organizations of eligible clients; and
‘‘(B) any other recipient is governed by a body
that meets the requirements of subparagraph (A) or
has established a policy body, whose membership is
selected consistent with such requirements, to estab-
lish policy with respect to the administration of any
grant or contract under this title.
Any attorney serving on a governing body or policy body
of a recipient described in this paragraph may not, while
so serving, receive compensation from the recipient on
whose board the attorney sits. Subparagraph (A)(i) shall
not be construed to prevent the governing body of a bar
association from appointing members of the governing or
policy bodies of more than one recipient.
‘‘(2) The Corporation—
‘‘(A) shall, upon application, grant waivers of
the requirements of clauses (i) and (ii) of paragraph
(1)(A) for a legal services program, supported under
section 222(a)(3) of the Economic Opportunity Act
of 1964, which on the date of the enactment of this
title has a majority of persons who are not attorneys
on its policymaking board;
‘‘(B) may grant, pursuant to regulations issued
by the Corporation, a waiver of the requirements of
clauses (i) and (ii) of paragraph (1)(A) for recipients
which, because of the nature or size of the popu-
lation, legal community, or area they serve, are un-
able to comply with such requirements; and
‘‘(C) may, upon application, grant waivers of
clause (iii) of paragraph (1)(A) for a recipient which
the Corporation has determined does not have as a
primary purpose the provision of legal assistance to
clients eligible for assistance under this title.
As a condition for a grant of a waiver under subparagraph
(C), the Corporation may require the recipient to establish
a policy body whose membership is selected consistent with
the requirements of subparagraph (A) of paragraph (1)
with respect to the administration of any grant or contract
under this title.
‘‘(3) Consistent with the provisions of this title, the
rules, regulations, guidelines, and instructions issued
under this title, and any other laws, each recipient, pursu-
ant to the direction and control of its governing or policy
body, and not the Corporation, shall determine all broad
policies concerning its provision of legal assistance and
other activities of the recipient, including—
‘‘(A) financial eligibility criteria of clients rep-
resented, consistent with the guidelines established
pursuant to section 1007(a)(2)(B);
‘‘(B) the services that the recipient will make
available;
‘‘(C) the policies that will govern the fiscal, ad-
ministrative, and representational activities of the
recipient in compliance with the provisions of this
title and regulations issued under this title, other
applicable law, or requirements imposed by grantors
of resources to the recipient;
‘‘(D) subject to the prohibitions and require-
ments contained in this title, the priorities of the re-
cipient for the use of all available resources, includ-
ing the policies regarding the types of cases or mat-
ters attorneys, paralegal staff, and other staff may
undertake using such resources; and
‘‘(E) subject to regulations on private attorney
involvement promulgated by the Corporation under
section 1008(e), significant policy decisions concern-
ing the use of staff attorneys and other available
and appropriate staff and nonstaff resources, includ-
ing private attorneys and others, to provide legal as-
sistance to eligible clients and to carry out activities
relating to the delivery of legal assistance.
‘‘(4) The governing or policy body of a recipient
shall—
‘‘(A) not interfere with the lawyer-client rela-
tionship in the representation of specific clients by
the recipient;
‘‘(B) comply with the legal and ethical require-
ments on conflicts of interest that apply in the juris-
diction where the recipient is located;
SEC. 12. PROFESSIONAL RESPONSIBILITIES.
(a) RESPONSIBILITIES
OF
THE CORPORATION.—
Paragraph (3) of section 1006(b) (42 U.S.C. 2996e(b))
is amended to read as follows:
‘‘(3) The Corporation shall not, under any provision
of this title, interfere with any attorney in carrying out
the attorney’s ethical or professional responsibilities to a
client as established in the rules of ethics and professional
responsibility that apply in the jurisdiction where the legal
assistance is provided or abrogate as to attorneys in pro-
grams assisted under this title the authority of a State
or other jurisdiction to enforce the standards of profes-
sional responsibility generally applicable to attorneys in
such jurisdiction.’’.
(b) GRANTS AND CONTRACTS.—Paragraph (10) of
section 1007(a) (42 U.S.C. 2996f(a)) is amended to read
as follows:
‘‘(10) ensure that all attorneys employed by re-
cipients supported, in whole or in part, by the Cor-
poration, while engaged in legal assistance activities,
refrain from the persistent incitement of litigation
and any other activity prohibited by the rules of eth-
ics or professional responsibility that apply in the ju-
risdiction where the legal assistance is provided, and
ensure that such attorneys refrain from personal
representation for a private fee from the client in
any cases in which they were involved while engaged
in such legal assistance activities; and’’.
(c) ACCESS
TO RECORDS.—Section 1009(d) (42
U.S.C. 2996h(d)) is amended by inserting before the pe-
riod at the end the following: ‘‘or protected from disclosure
by the laws or the rules of ethics or professional respon-
sibility that apply in the jurisdiction where such reports
or records are maintained’’.
SEC. 13. SOLICITATION.
Section 1007 (42 U.S.C. 2996f) (as amended by sec-
tion 10) is amended by adding at the end the following:
‘‘(j) A recipient and any employee of any such recipi-
ent shall not solicit professional employment from a pro-
spective client if—
‘‘(1) the prospective client has made known to
the recipient or employee of such recipient a desire
not to be solicited by the recipient or employee of
such recipient;
‘‘(2) the solicitation involves coercion, duress, or
harassment; or
‘‘(3) the solicitation is made in order to urge
the client to initiate litigation without a proper fac-
tual basis for the complaint.’’.
SEC. 14. CERTAIN EVICTION PROCEEDINGS.
Section 1007 (42 U.S.C. 2996f) (as amended by sec-
tion 13) is amended by adding at the end the following:
‘‘(k)(1) No funds made available by the Corporation
may be used for initiating the defense of a person in a
proceeding to evict that person from a public housing
project if the person has been convicted of the illegal sale
or distribution of a controlled substance and if the eviction
proceeding is brought by a public housing agency because
the illegal drug activity of that person threatens the health
or safety of other tenants residing in the public housing
project or employees of the public housing agency.
‘‘(2) As used in this subsection—
‘‘(A) the term ‘controlled substance’ has the
meaning given that term in section 102 of the Con-
trolled Substances Act (21 U.S.C. 802); and
‘‘(B) the terms ‘public housing project’ and
‘public housing agency’ have the meanings given
those terms in section 3 of the United States Hous-
ing Act of 1937 (42 U.S.C. 1437a).’’.
SEC. 15. PROCEDURAL SAFEGUARDS FOR LITIGATION.
Section 1007 (42 U.S.C. 2996f) (as amended by sec-
tion 14) is amended by adding at the end the following:
‘‘(l) Except when necessary to respond to an emer-
gency situation, no recipient or employee of such recipient
may with respect to a claim or controversy engage in
precomplaint settlement negotiations, file a complaint, or
otherwise pursue litigation against a defendant unless a
written retainer agreement which enumerates the particu-
lar facts on which the claim or controversy is initially
based has been signed by the plaintiff (including named
plaintiffs in a class action). Such retainer agreement shall
be executed when representation commences or as soon
thereafter as is practicable. Such retainer agreement—
‘‘(1) shall be kept on file by the recipient in a
manner that prevents disclosure of information pro-
tected by the attorney-client privilege or by the rules
of ethics or professional responsibility that apply in
the jurisdiction in which the legal assistance is pro-
vided; and
‘‘(2) shall be made available—
‘‘(A) to any Federal department or agency
that is auditing the activities of the Corporation
or of any such recipient; and
‘‘(B) to any auditor receiving Federal
funds to conduct such auditing, including any
auditor or monitor of the Corporation.
Other parties shall have access to such agreement only
through the applicable rules of discovery after litigation
has begun. The recipient is not required to execute a writ-
ten retainer agreement under this subsection when the
only service to be provided is a brief service, advice, or
consultation that does not obligate the recipient to provide
additional service or undertake continued representation.
Unless authorized by a court of competent jurisdiction, no
recipient or employee of such recipient may file a com-
plaint or petition in a court until all plaintiffs known to
plaintiff’s counsel at the time have been specifically identi-
fied in the complaint or petition.’’.
SEC. 16. COMPETITION STUDY.
Section 1007 (42 U.S.C. 2996f) (as amended by sec-
tion 15) is amended by adding at the end the following:
‘‘(m)(1) The Corporation shall study the feasibility
of a system of competition in the delivery of legal assist-
ance and related activities under subsections (a)(1) and
(a)(3) of section 1006 and shall report its conclusions to
the Congress not later than 3 years after the date of the
enactment of the Legal Services Reauthorization Act of
1994. Such study shall be conducted in conjunction with
an advisory committee which includes project directors, at-
torneys providing legal assistance, the organized bar, and
eligible clients, who are selected by appropriate represent-
atives of these groups.
‘‘(2) The study under paragraph (1) shall examine
how a system of competition would—
‘‘(A) ensure access to, and the continued provi-
sion of, high-quality, economical, and effective legal
services;
‘‘(B) take into account—
‘‘(i) the ongoing ethical and professional
responsibilities of recipients and their attorneys
for existing cases;
‘‘(ii) the potential for disruption in the de-
livery of services to clients, including pro bono
services or the loss or reduction of funding or
other resources from sources other than the
Corporation if an existing recipient were re-
placed;
‘‘(iii) whether competition would harm the
ability of existing recipients to recruit and re-
tain qualified staff; and
‘‘(iv) whether the Corporation could re-
quire a new recipient, as a condition of a com-
petitive grant, to assume collective bargaining
agreements or to hire non-management or other
staff from the previous provider in order to
minimize the loss of experienced staff.
‘‘(3) If the Corporation decides to adopt a competitive
model for the award of some or all grants for the delivery
of legal assistance to eligible clients, it may do so only
in accordance with regulations promulgated pursuant to
section 1008(e) and the other requirements of this title.’’.
SEC. 17. FEE-GENERATING CASE PROVISIONS.
Subsection (b)(1) of section 1007 (42 U.S.C.
2996f(b)(1)) is amended by striking ‘‘(which guidelines’’
and all that follows through the end of the paragraph and
inserting the following: ‘‘, except that—
‘‘(A) such guidelines shall not preclude the
provision of legal assistance in cases in which a
client seeks only statutory benefits and appro-
priate private representation is not available
and the recipient does not seek or accept any
fee that is deducted directly from the individual
client’s recovery; and
‘‘(B) the Corporation may not—
‘‘(i) prevent recipients from seeking,
receiving, or retaining attorneys’ fees
awarded or approved by a court or admin-
istrative body or included in a settlement
in any matter that may be appropriately
undertaken under the guidelines promul-
gated under this paragraph, or
‘‘(ii) offset attorneys’ fees against
grant amounts or take into account the
amount of any such attorneys’ fees in es-
tablishing funding levels, fund balances, or
distributing funds appropriated under this
title;’’.
SEC. 18. MISCELLANEOUS RESTRICTIONS.
(a) RESTRICTED ACTIVITIES.—Section 1007(b)(6)
(42 U.S.C. 2996f(b)(6)) is amended to read as follows:
‘‘(6) to support or conduct training programs
for the purpose of advocating particular public poli-
cies or encouraging political activities, labor or
antilabor activities, boycotts, picketing, strikes, or
demonstrations, except that this subsection shall not
be construed to prohibit the training of attorneys or
paralegal personnel necessary to prepare them to
provide adequate legal assistance to eligible clients,
to advise any eligible client as to the nature of the
legislative process, or to inform any eligible client of
the client’s rights under any statute, order, or regu-
lation;’’.
(b) RECOMMENDATIONS
REGARDING
HIRING
OF
STAFF ATTORNEYS.—Paragraph (8) of section 1007(a)
(42 U.S.C. 2996f(a)) is repealed and paragraphs (9), (10),
and (11) are redesignated as paragraphs (8), (9) and (10),
respectively.
(c) LABOR LAW VIOLATIONS.—Section 1006 (42
U.S.C. 2996e) is amended by adding at the end the follow-
ing:
‘‘(g) No recipient may engage in activity that, with
respect to the recipient, is determined to be a violation
of applicable labor laws by the National Labor Relations
Board or a court or other State or local agency.’’.
(d) RECIPIENT
DEFINED.—Section 1002(6) (42
U.S.C. 2996a(6)) is amended to read as follows:
‘‘(6) ‘recipient’ means—
‘‘(A) any grantee, contractor, or recipient
of financial assistance described in subpara-
graph (A) of section 1006(a)(1); or
‘‘(B) any subrecipient, subgrantee, or sub-
contractor of any recipient described in sub-
paragraph (A) or any grantee or contractor re-
ceiving funds from the Corporation under sub-
paragraph (B) of section 1006(a)(1) or under
section 1006(a)(3), but only with respect to the
provision of legal assistance to eligible clients
that are supported with funds provided under
this title;’’.
(e) LIMITATION
ON
USE
AMENDMENT.—Section
1007(b) (42 U.S.C. 2996f(b)) is amended by inserting
‘‘and’’ at the end of paragraph (7) and by striking para-
graphs (9) and (10).
SEC. 19. RECORDKEEPING AND NONCORPORATION FUNDS.
(a) NON-CORPORATION FUNDS.—Subsection (c) of
section 1010 (42 U.S.C. 2996i) is amended to read as fol-
lows:
‘‘(c)(1) Funds received by a recipient from sources
other than the Corporation shall be accounted for and re-
ported as receipts and disbursements separate and distinct
from Corporation funds, pursuant to generally accepted
accounting principles. A recipient shall maintain a system
of recordkeeping which discloses the activities supported
by Corporation and non-Corporation funds and allocates
costs appropriately to such activities. The recipient shall
adopt procedures providing for the design and implemen-
tation of such a recordkeeping system. The specific record-
keeping system to be employed shall be determined by the
recipient in a manner that meets the requirements estab-
lished by the Office of Management and Budget and pub-
lished as Circular A-122 (Cost Principles for Nonprofit
Organizations).
‘‘(2) Private funds received by a recipient or other
grantee or contractor of the Corporation for the provision
of legal assistance shall not be used to engage in activities
prohibited by paragraph (2), (3), (4), (6), or (7) of section
1007(b) or by section 1007(k). This subsection shall not
be construed to prevent recipients or other grantees or
contractors of the Corporation from receiving tribal funds
(including foundation funds benefiting Indians or Indian
Tribes) and expending them in accordance with the pur-
poses for which they are provided or to prevent contracting
or making other arrangements with private attorneys, pri-
vate law firms, or other State or local entities of attorneys
or with legal aid societies having separate public defender
programs for the provision of legal assistance to eligible
clients under this title.’’.
(b) ANNUAL FINANCIAL AUDIT.—Paragraph (1) of
section 1009(c) (42 U.S.C. 2996h(c)) is amended to read
as follows:
‘‘(1) The Corporation shall require each recipient to
provide for an annual financial audit but the Corporation
may not select the auditor employed for such audit by such
recipient. The Corporation may conduct its own financial
audits of recipients and may use funds appropriated to
the Corporation to retain independent auditors to conduct
financial audits of any recipient. The report of each audit
shall be maintained for a period of at least 5 years at the
principal office of the Corporation.’’.
SEC. 20. EVASION.
The Legal Services Corporation Act (as amended by
section 6(d)(4)) is amended by inserting after section
1013 the following new section:
‘‘EVASION
‘‘SEC. 1014. The use of ‘alternative corporations’ to
avoid or otherwise evade the provisions of this title or the
Legal Services Reauthorization Act of 1994 is prohibited.
The term ‘alternative corporation’ means any corporation,
law firm, business association, group, entity, or enterprise
which, through control over workload or interlocking
boards of directors, has a single identity of interest with
a recipient. Any recipient which shares employees with any
other corporation, law firm, business association, group,
entity, or enterprise shall specify with particularity the use
of any funds by such employees in accordance with the
recordkeeping requirements established under section
1010(c).’’.
SEC. 21. ATTORNEYS’ FEES PROVISIONS.
Subsection (f) of section 1006 (42 U.S.C. 2996e) is
amended to read as follows:
‘‘(f) If any court finds, based on substantial evidence,
that a recipient commenced an action for the purpose of
harassment or retaliation or maliciously abused legal proc-
ess, or that the plaintiff’s action was frivolous or without
foundation and not warranted by existing law or by a non-
frivolous argument for the extension, modification, or re-
versal of existing law or the establishment of new law, the
court may award reasonable costs and attorneys’ fees in-
curred by the defendant in defending the action. Any such
costs and fees shall be paid directly by the Corporation.
The Corporation may recover the amount of any costs and
fees paid by the Corporation from the recipient against
whom the award was made by offsetting that amount
against future grant awards made by the Corporation to
such recipient. Unless otherwise agreed by the Corporation
and the recipient the Corporation, in any one grant year,
may not deduct more than 5 percent of a grant for pur-
poses of recoupment of such costs and fees.’’.
SEC. 22. CORPORATION BOARD COMPOSITION AND CON-
TROL OVER POLICY.
(a) TERM OF OFFICE.—Subsection (b) of section
1004 (42 U.S.C. 2996c) is amended to read as follows:
‘‘(b) The term of office of each member of the Board
shall be 3 years, except that a member of the Board shall
continue to serve after the end of the member’s term of
office until the successor to such member has been ap-
pointed and qualified. The term of each member shall be
computed from the date of termination of the preceding
term. Any member appointed to fill a vacancy arising as
a result of a prior member’s resignation, death, or removal
pursuant to subsection (e) occurring before the expiration
of the term for which such member’s predecessor was ap-
pointed shall be appointed for the remainder of such term.
No member shall be reappointed to more than 2 consecu-
tive terms immediately following such member’s initial
term unless the initial term served by that member was
less than one year in duration.’’.
(b) CHAIRMAN.—Subsection (d) of section 1004 (42
U.S.C. 2996c) is amended to read as follows:
‘‘(d) The Board shall annually elect a chairman from
among its voting members.’’.
(c) PROCEDURE.—Section 1006 (42 U.S.C. 2996e),
as amended by section 18(c), is amended by adding at the
end the following:
‘‘(h) All rules, regulations, guidelines, instructions,
and grant conditions under this title, and all policies or
changes in policy directly affecting recipients shall be
adopted by the Board after notice and comment. For pur-
poses of this subsection, policies or changes in policies in-
clude increasing or decreasing funding to, imposing new
terms and conditions on, or making changes in, the classes
of recipients which provide and support the delivery of
legal assistance. This subsection shall not preclude the
staff of the Corporation from imposing, without notice and
comment, specific conditions on a grant or contract to an
individual recipient which are not applicable to other such
recipients if the conditions relate specifically to a prior de-
termination that the recipient has not complied with the
provisions of this title or the rules, regulations, guidelines,
or instructions issued under this title or has failed to pro-
vide high quality, effective, and economical legal assist-
ance.’’.
(d) COMPENSATION
OF OFFICERS
AND EMPLOY-
EES.—Section 1005(d) (42 U.S.C. 2996(d)) is amended
by striking ‘‘level V’’ and inserting ‘‘level III’’.
SEC. 23. REPROGRAMMING PROVISIONS.
Section 1008 (42 U.S.C. 2996g) is amended by add-
ing at the end the following:
‘‘(f) The Corporation may not promulgate rules, reg-
ulations, guidelines, or instructions under this title unless
the Corporation has so notified the Committee on Appro-
priations and the Committee on the Judiciary of the
House of Representatives and the Committee on Appro-
priations and the Committee on Labor and Human Re-
sources of the Senate at least 15 days before final publica-
tion of the rules, regulations, guidelines, or instructions,
and has given such committees an opportunity to comment
on such rules, regulations, guidelines, or instructions.’’.
SEC. 24. GRANTS.
(a) 12-MONTH GRANTS REQUIRED.—Section 1010
(42 U.S.C. 2996i) is amended by adding to the end the
following:
‘‘(e) All grants and contracts made pursuant to sec-
tions 1006(a)(1) and (3) for calendar years 1995, 1996,
1997, 1998, and 1999 shall be made for a period of at
least 12 months, except for any grant to a new program
commencing operations after the beginning of the applica-
ble calendar year.’’.
(b) AUTHORITY FOR GRANTS TO STATES AND LOCAL
GOVERNMENTS
REPEALED.—Section 1006(a)(1) (42
U.S.C. 2996e(a)(1)) is amended to read as follows:
‘‘(1)(A) to provide financial assistance to quali-
fied programs furnishing legal assistance to eligible
clients and to make grants and contracts with indi-
viduals, partnerships, firms, corporations, and non-
profit organizations for the purposes of providing
legal assistance to eligible clients under this title,
and (B) to make such other grants and contracts as
are necessary to carry out the purposes and provi-
sions of this title;’’.
SEC. 25. ESTABLISHMENT OF LOCAL PRIORITIES.
Section 1007(a) (42 U.S.C. 2996f(a)) is amended—
(1) in paragraph (2)(C)(i) by striking ‘‘goals es-
tablished by the Corporation’’ and inserting ‘‘the
principles of section 1001 of this title and any goals
established by this title’’; and
(2) by adding after paragraph (10) (as redesig-
nated by section 18(b) of this Act) the following:
‘‘The procedures adopted pursuant to paragraph (2)(C)(i)
shall require the governing or policy bodies of recipients
to review annually the priorities that are adopted in ac-
cordance with such procedures, and periodically analyze
the legal needs of clients in the area served by each such
recipient to take into account new or changing cir-
cumstances of such clients. As part of such analysis, each
such recipient shall seek comments and information from
clients, the organized bar, and program staff and from
other parties with relevant information concerning client
needs.’’.
SEC. 26. STAFF ATTORNEYS.
Paragraph (7) of section 1002 (42 U.S.C. 2996a) is
amended to read as follows:
‘‘(7) ‘staff attorney’ means an attorney who—
‘‘(A) is employed by a recipient that pro-
vides legal assistance to eligible clients under
this title; and
‘‘(B) a significant part of such attorney’s
annual professional salary is derived from the
proceeds of a grant or contract from the Cor-
poration to such recipient; and’’.
SEC. 27. STUDIES.
(a) STUDY ON LEGAL ASSISTANCE TO OLDER AMER-
ICANS.—Section 1007 (42 U.S.C. 2996f) (as amended by
section 16) is amended by adding at the end the following:
‘‘(n) The Corporation shall conduct a study to deter-
mine the extent and effectiveness of legal assistance pro-
vided by recipients to older Americans. The Corporation
shall submit to the Congress, not later than 6 months
after the date of the enactment of the Legal Services Re-
authorization Act of 1994, a report on the study, together
with any recommendations that the Corporation has on
ways to improve the provision of such legal assistance to
older Americans.’’.
(b) STUDY ON RECRUITMENT AND RETENTION.—
Section 1007 (42 U.S.C. 2996f) (as amended by sub-
section (a)) is amended by adding at the end the following:
‘‘(o) Within 6 months after the date of the enactment
of the Legal Services Reauthorization Act of 1994, the
Corporation shall undertake a study of factors that affect
the recruitment and retention by recipients of legal serv-
ices attorneys and other personnel, including loan forgive-
ness programs and the need for and availability of retire-
ment benefits. The Corporation shall submit to the Con-
gress a report on such study, together with recommenda-
tions on how to improve recruitment of a highly qualified
and diverse workforce and increase retention of experi-
enced personnel. Such study shall be conducted with an
advisory committee which includes project directors, attor-
neys and paralegals providing legal assistance and eligible
clients, all of whom shall be selected by appropriate rep-
resentatives of such groups.’’.
(c) OTHER STUDIES.—Section 1007 (42 U.S.C.
2996f) is amended—
(1) by striking subsections (g) and (h), and
(2) by redesignating subsections (i) through (o)
as subsections (g) through (m), respectively.
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