Legal Services Corporation: Restrictions on Activities
Released: 2009-12-22T00:00:00

Introduction

The Legal Services Corporation (LSC) is a private, nonprofit, federally funded corporation that helps provide legal assistance to low-income people in civil (i.e., non-criminal) matters. The primary responsibility of the LSC is to manage and oversee the congressionally appropriated federal funds that it distributes in the form of grants to local legal services providers, which in turn give legal assistance to low-income clients in all 50 states, the District of Columbia, the U.S. territories of American Samoa, Guam, and the Virgin Islands, the Commonwealth of Puerto Rico, and Micronesia (including the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, and Palau).

The LSC does not provide legal services directly. Rather, it funds local legal services providers/programs. Legal services providers/programs may include nonprofit organizations that have as a purpose the provision of legal assistance to eligible clients, private attorneys, groups of private attorneys or law firms, state or local governments, and certain sub-state regional planning and coordination agencies. During 2008, the LSC funded 137 legal services programs in 918 offices.

Although the authorization of appropriations for the LSC expired at the end of FY1980, the LSC has operated for the past 29 years by virtue of annual appropriations laws. The LSC was funded at $390 million for FY2009 ( P.L. 111-8 ) and is currently funded at $420 million for FY2010 ( P.L. 111-117 ).

Since its inception, the legal services program has been controversial, and Congress has imposed restrictions on activities of LSC-funded legal services programs. Debate existed from the start among policymakers as to whether the LSC's role should be similar to that of its predecessor, namely, using lawsuits and other means to resolve broad underlying difficulties of the poor, or whether the focus should be more narrowly defined to addressing small, specific situations. Although there is widespread agreement that individuals who cannot afford an attorney should have their "day in court," many observers contend that federal dollars should not be used to promote broad social causes.

Debate Over Restrictions

Proponents of reducing the number of restrictions on the LSC argue that the restrictions deny those represented by LSC-funded attorneys access to basic legal tools, such as claiming court-ordered attorneys' fee awards and participating in class actions that are available to all other litigants. They contend that their adversaries grossly exaggerate their activist activities, they claim that they spend the vast majority of their time providing assistance to poor individuals who are trying to resolve family issues such as divorce and separation, custody and visitation, and domestic abuse, or housing issues such as eviction. Some LSC advocates also counter that class action suits are an efficient and effective way to represent clients who face a common problem and to resolve the legal problems of large numbers of persons in similar situations.

Opponents of reducing the number of restrictions on the LSC argue that without the restrictions LSC attorneys in far too many instances would seek the flamboyant social cause-oriented class action cases, rather than cases that address the urgent, routine, day-to-day legal needs of low-income individuals. They maintain that LSC attorneys, prior to the restrictions, were abusing their statutory directive by pursuing a liberal agenda. Some fear that hundreds of legal services attorneys would unleash a barrage of lawsuits in the nation's federal and state courts to advance a liberal political agenda if the restrictions were not in place.

The authorizing statute ( P.L. 93-355 ) of the LSC contains restrictions against lobbying, political activities, class actions except under certain conditions, and cases involving abortion, school desegregation, and draft registration or desertion from the military. Additional restrictions have been included in annual appropriations laws over the years. However, it was the 1996 appropriations law that stipulated that the restrictions were to apply to all LSC activities, not just those funded by LSC appropriations. This meant that all of the resources of a LSC-funded legal services programs, whether they came from the LSC appropriation, other federal funds, state or local appropriations, state Interest on Lawyers' Trust Account (IOLTA) programs, contracts, private donations, foundation grants or other funding sources, were subject to the same restrictions as LSC funds. Some attorneys claimed that this provision in effect enabled Congress to restrict the work of attorneys working for the poor far beyond the scope of the federal appropriation. Others referred to the restriction as the "program integrity" restriction, and claimed that the limit on the use of non-LSC funds is crucial. They asserted that because most, if not all, LSC grantees (i.e., legal services programs) receive money from private or other government sources, without the "program integrity" rule, the other restrictions would be rendered virtually meaningless because grantees could simply claim that they are using non-LSC money. Although more theoretical than practical, it is important to mention the proviso that LSC-funded legal services programs can provide some of the restricted activities if they do so through a legally and physically separate entity. Such an undertaking is viewed by most legal services programs as too expensive to contemplate.

Some commentators contend that the restrictions prevent LSC attorneys from helping many low-income persons in urgent need of assistance. The current recession, along with a variety of problems such as consumer fraud, domestic violence, and flawed housing practices, have resulted in some policymakers supporting increased funding and fewer restrictions on the LSC. During a recent hearing on the LSC, Representative Alan Mollohan, chairman of the House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies (CJS), made the following statement:

The ongoing recession is driving more and more Americans below the poverty thresholds that establish eligibility for legal aid services. This growing population of eligible clients is confronted with legal needs that are increasing in both number and complexity. Many clients face the prospect of foreclosure or foreclosure-related eviction. With job losses increasing, there are more clients needing assistance gaining access to food stamp benefits, unemployment compensation or Medicaid services. There is also substantial evidence that economic distress increases family distress, including divorce and domestic violence. All of these factors are driving up demand for legal aid services at precisely the same time that the supply of those services is dwindling. Legal aid providers across the country have been forced to make significant budget cuts due to state government deficits and diminishing charitable and private support.

The House-passed CJS Appropriations bill ( H.R. 2847 ) would increase funding for the LSC to $440 million in FY2010 (an increase of $50 million over current year funding) and would keep the current restrictions on LSC activities, except for the one relating to attorneys' fees. According to the House report on H.R. 2847 :

A general provision in Title V of the bill revises the administrative provision in order to permit grantees to pursue the recovery of attorneys' fees when recovery is permitted or required under Federal or State law. The Committee believes that this action will level the playing field between legal aid attorneys and their counterparts in the private sector and provide a potentially crucial source of additional revenue to legal aid providers in a year in which state and private funding sources are decreasing.

The Senate-passed CJS Appropriations bill ( H.R. 2847 ) would increase funding for the LSC to $400 million in FY2010 (an increase of $10 million over current year funding). The Senate-passed version of the bill would also continue existing limitations on the use of federal funds, except that it would eliminate the restrictions on the use of non-federal funds except in litigation involving abortion and cases involving prisoners. The bill will go to conference to resolve the differences between the House and Senate versions of the bill. P.L. 111-117 , the consolidated appropriations for 2010 (enacted December 16, 2009), included a provision that appropriates $420 million for the LSC for FY2010. P.L. 111-117 also continues existing limitations on the use of LSC funds (and non-LSC funds) except for the restriction on the ability of LSC-funded programs to claim and collect attorneys' fees.

By contrast, the proposed Civil Access to Justice Act of 2009, S. 718 , introduced by Senator Harkin (et al.) on March 26, 2009 (and the House companion bill H.R. 3764 , introduced by Representative Robert "Bobby" Scott (et al.) on October 8, 2009), would reauthorize the LSC for six years, increase funding to $750 million per year (for each of the fiscal years FY2010 through FY2015), remove most of the restrictions on activities performed by legal services programs that receive LSC funds, and revise the governance of the LSC. In his introduction of the bill, Senator Harkin said:

Unfortunately, as the economy continues to wane, those needing legal assistance increase. Yet, the Federal commitment to legal services and LSC is not as effective as it needs to be. LSC has not been authorized since 1981, and since 1995 Congress has slashed funding for legal services for the poor, from $415 million to $350 million in fiscal year 2008, with only a recent increase to $390 million for fiscal year 2009. Further, severe restrictions on LSC funded attorneys impede the ability of legal aid attorneys to provide the most meaningful legal representation to low-income Americans. The result is that access to justice and quality representation has become far from a reality for too many of our citizens.

On June 17, 2009, speaking in opposition of funding the LSC, Representative Hensarling stated: " ... it's a program that's been unauthorized since 1980, reported instances of waste, fraud and abuse. And should we actually be taxing taxpayers to force them to subsidize their neighbors to turn around and sue them? I don't think so." He asserted that there are other options for providing legal services to the poor, such as pro bono law firms and lawyers that work on contingent fees.

The following section provides information on when the current restrictions were first enacted. (See box on page 1 for a list of the current restrictions.)

Legislative History of Restrictions on LSC Activities

Generally speaking, Democrats and other advocates of the LSC have consistently argued that the poor should receive the same range of legal assistance through the LSC that is available to those who could afford to hire private attorneys. By contrast, Republicans generally have asserted that LSC attorneys should deal with the day-to-day needs of the poor and should be barred from dealing with controversial political issues.

The legislation authorizing the LSC was signed by President Nixon in 1974. During the Ford Administration, the LSC was reauthorized through FY1980. During the 1980s there were several attempts by the Reagan Administration to abolish the LSC. Although the George H.W. Bush Administration did not try to eliminate the LSC or drastically cut its funding, it supported more restrictions on the LSC. During the early years of the Clinton Administration the LSC reached its highest funding level of $400 million; however, funding was reduced significantly in 1996 due to pressure from a majority Republican Congress to reduce LSC funding and impose more restrictions on the types of permissible LSC activities. According to many sources, imposing restrictions on LSC activities was the compromise that enabled the LSC to continue to exist. During the George W. Bush Administration funding for the LSC gradually increased and several more restrictions on LSC activities were imposed. The Obama Administration has proposed that funding for the LSC be increased to $435 million for FY2010, and that LSC restrictions on class action suits and attorneys' fees be eliminated. P.L. 111-117 , the consolidated appropriations for 2010 (enacted December 16, 2009), included a provision that appropriates $420 million for the LSC for FY2010 (which exceeds the previous all-time high level of $400 million). P.L. 111-117 also continues existing limitations on the use of LSC funds (and non-LSC funds) except for the restriction on the ability of LSC-funded programs to claim and collect attorneys' fees.

The LSC Act and various annual appropriation laws contain restrictions on activities in which recipients of LSC funds may engage, and on types of cases in which LSC-funded legal services providers/programs may provide legal representation.

LSC Authorizing Legislation (P.L. 93-355; Enacted July 25, 1974)24

The LSC was the result of a bipartisan agreement between members of Congress who supported the predecessor OEO legal services program and those who opposed the OEO program. Supporters of the predecessor OEO program maintained that law reform through the use of litigation, lobbying, and community organization was the most effective approach to obtain social justice for poor people. However, opponents maintained that OEO legal services program efforts in cases pertaining to integration, abortion, and union organizing had generated significant controversy. P.L. 93-355 authorized an independent, national nonprofit organization to oversee provision of legal services to the nation's poor (i.e., the LSC), while simultaneously refocusing legal services advocacy toward basic representation of individual clients and away from law reform by prohibiting LSC funds to be used for lobbying, and policy advocacy.

Since its inception, Congress has imposed restrictions on the activities of LSC attorneys. The authorizing statute ( P.L. 93-355 ) contains restrictions against lobbying, political activities, class actions (except under certain conditions), and cases involving abortion, school desegregation, and draft registration or desertion from the military.

P.L. 96-68 (appropriations bill)—September 24, 1979

A provision that prohibited LSC funds from being used to assist any alien in the United States with regard to immigration, exclusion, deportation, or expulsion matters was first included in P.L. 96-68 .

P.L. 97-377 (appropriations bill)—December 21, 1982

The prohibition against using LSC funds to assist aliens was modified so that LSC funds could be used to help certain categories of resident aliens (i.e., immigrants) who were lawfully present in the United States. This modified provision was first included in P.L. 97-377 .

P.L. 104-134 (appropriations bill)—April 26, 1996

P.L. 104-134 made numerous changes to the LSC. In 1996, the LSC was still a very contentious topic of debate. The LSC had been unauthorized for many years, which resulted in controversial issues surrounding the LSC being addressed through the inclusion of a number of administrative provisions in annual appropriations acts. In 1995, the House had adopted a budget resolution that assumed that the funding for the LSC would be cut by one-third for FY1996, two-thirds for FY1997, and eliminated thereafter. Many members of Congress concluded that to prevent the elimination of the LSC they would have to accept significant budget cuts to the LSC and more restrictions on LSC activities. The political compromise that was reached preserved the LSC, but reduced its funding, changed the way in which LSC funds were distributed, imposed additional restrictions on the use of LSC funds, and also stipulated that non-LSC funds received by individual legal services programs were subject to the same restrictions as LSC funds. The compromise did not include the reauthorization of the LSC.

P.L. 104-134 included provisions that prohibited any funds received by LSC legal services providers/programs to be used for (1) efforts related to redistricting; (2) attempts to influence regulatory, legislative or adjudicative action at the federal, state, or local level; (3) grassroots lobbying; (4) attempts to influence oversight proceedings of the LSC; (5) class action suits; (5) representation of certain categories of aliens; (6) conducting advocacy training on a public policy issue or encouraging political activities, strikes, boycotts or demonstrations; (7) claiming or collecting attorneys' fees; (8) litigation related to abortion; (9) representation of federal, state, or local prisoners; (10) efforts to reform a federal or state welfare system; (11) representation of clients in eviction proceedings brought by a public housing agency if the eviction was based on drug-related activities; and (12) solicitation of clients.

P.L. 104-134 also mandated that LSC-funded providers/programs must establish priorities, and staff must agree in writing not to engage in activities outside these priorities. Moreover, P.L. 104-134 prohibited the LSC from receiving nonfederal funds, and legal services providers/programs are prohibited from receiving non-LSC funds, unless the source of funds is told in writing that these funds may not be used for any activities prohibited by the LSC Act or the appropriations law pertaining to the LSC.

P.L. 104-208 (appropriations bill)—September 30, 1996

The prohibition against using LSC funds to assist certain categories of aliens was modified to allow both LSC and non-LSC funds to be used to represent aliens who have been victims of domestic violence or child abuse. This modification was first added by P.L. 104-208 .

P.L. 105-12 (Assisted Suicide Funding Restriction Act of 1997)—April 30, 1997

A provision that prohibited LSC funds from being used for activities related to assisted suicide, euthanasia, or mercy killing was first added by P.L. 105-12 .

P.L. 105-119 (appropriations bill)—November 26, 1997

Among other things, this law incorporated previous restrictions on LSC activities by reference to P.L. 104-134 and also made some modifications to some of the 1996 restrictions. All subsequent annual appropriations bills that include LSC-related provisions incorporate the restrictions on LSC-funded activities by reference to this law ( P.L. 105-119 ) and/or P.L. 104-134 .

P.L. 111-117 (appropriations bill)—December 16, 2009

P.L. 111-117 , the consolidated appropriations for 2010, included a provision that appropriates $420 million for the LSC for FY2010. P.L. 111-117 also continues existing limitations on the use of LSC funds (and non-LSC funds) except for the restriction on the ability of LSC-funded programs to claim and collect attorneys' fees.

Conclusion

Although polls indicate majority support for the existence of, and federal funding for, the non-profit provision of legal assistance to the poor, determining the appropriate funding level of the LSC and agency/program parameters remains an issue.

According to 21 state justice commissions, restrictions placed on programs receiving LSC funds adversely affected many low-income persons. The justice commission in New Jersey asserted that the restrictions have a "negative impact," "in actual practice (causing great inefficiencies in the way applicants for service must be processed and referred) and principle (denial of essential and fundamental legal assistance to some who need it)." The Texas commission maintained that the restrictions are "major obstacles ... for achieving 'equal access' for disfavored clients and politically unpopular cases."

Some commentators contend that "access to justice" for poor people is inherently unequal when it is subject to restrictions that are not imposed on clients who can afford to pay for their attorneys. Others assert that "access to justice" for the poor is a fallacy because LSC is unable to meet the demands of the current eligible low-income population. They assert that eliminating the restrictions on LSC activities would only widen the gap of unmet need. Many in the legal services community are supporting proposals that would both increase LSC funding and eliminate some of the restrictions on LSC activities. Others opposed to providing any funding for the LSC contend that the LSC has been unauthorized since 1980 for legitimate reasons. They maintain that instead of increasing the national debt by spending $440 million on the LSC, other non-federal resources are more appropriate sources of funding for legal services programs for the poor.