Order Code 95-178 EPW
Updated June 21, 2002
CRS Report for Congress
Received through the CRS Web
Legal Services Corporation:
Basic Facts and Current Status
Carmen Solomon-Fears
Domestic Social Policy Division
Summary
The Legal Services Corporation (LSC) is a private nonprofit, federally funded
corporation that helps provide legal assistance to low-income people in civil matters.
The authorization of appropriations for the Corporation expired at the end of FY1980,
although the LSC has operated for the past 22 years under annual appropriations laws.
H.R. 2500, the FY2002 appropriations bill for the Departments of Commerce, Justice,
State, the Judiciary, and Related Agencies was signed into law (P.L. 107-77) by
President Bush on November 28, 2001. It included $329.3 million for the LSC, this was
the amount requested by the Bush Administration. On July 18, 2001, the House passed
H.R. 2500, which included $329.3 million for the LSC for FY2002. On September 13,
2001, the Senate passed H.R. 2500 (with an amendment) which included $329.3 million
for the LSC. The conference report on H.R. 2500, which included $329.3 million for
the LSC, was passed by the House on November 14, 2001, and by the Senate on
November 15, 2001. Current funding still remains below the Corporation’s highest
level of $400 million in FY1994 and FY1995. For FY2003, the Bush Administration
has requested the current level funding of $329.3 million for the LSC. This short report
provides background information and tracks relevant legislation and appropriations
measures. This report is continually updated.
Legislative History
The federal government has administered a program of legal services for the poor
since 1966. Originally, the program was administered through the Office of Economic
Opportunity, a now-defunct agency that had spearheaded the War on Poverty in the mid-
1960s. In 1971, President Nixon proposed establishment of a separate corporation to
deliver legal services to insulate the program from political pressure. Authorizing
legislation was enacted in 1974, and the LSC came into existence the following year. In
1977, Congress extended the Legal Services Corporation Act through FY1980.
Congress has not succeeded in reauthorizing the LSC statute since the authorization
of appropriations expired after FY1980. No attempt has been made to reauthorize the
LSC since the 104th Congress which considered conflicting proposals that either would
Congressional Research Service ˜ The Library of Congress

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have abolished and replaced the LSC with a block grant to states, or would have
reauthorized the LSC in its current form. None of the proposals were enacted.
Nonetheless, Congress has continued to fund the LSC every year and has included
legislative language affecting LSC activities in annual appropriations laws.
Funding History
When the Corporation was first established, its initial goal was to provide all low-
income people with at least “minimum access” to legal services, defined as the equivalent
of two legal services attorneys for every 10,000 poor people. This goal was briefly
achieved in FY1980, but not maintained due to inflation and subsequent budget cuts. For
example, in FY1995, the LSC estimated an appropriation of $848 million would have
been needed to achieve minimum access. However, Congress appropriated $415 million
for FY1995 and subsequently rescinded $15 million of that amount.
Funds for the Corporation are included in the annual appropriation for the
Departments of State, Justice, Commerce, Judiciary and related agencies. The table
below shows LSC appropriations for selected years between FY1976 (the first full year
of program operations) and FY2002. Efforts to reduce funding for the Corporation began
in FY1996 and have now begun to reverse.
LSC Appropriations History
($ in millions)
FY
$
FY
$
FY
$
1976
92
1991
328
1997
283
1980
300
1992
350
1998
283
1984
275
1993
357
1999
300
1988
306
1994
400
2000
304
1989
309
1995
400
2001
329
1990
317
1996
278
2002
329
FY1996. In FY1996, Congress funded the LSC at $278 million, for a reduction of
almost 31% from the previous year. In its FY1996 budget resolution, the House assumed
a 3-year phase-out of the LSC, recommending appropriations of $278 million in FY1996,
$141 million in FY1997, and elimination by FY1998. The House Budget Committee
stated in its report (H.Rept. 104-120), “Too often, ... lawyers funded through federal LSC
grants have focused on political causes and class action lawsuits rather than helping poor
Americans solve their legal problems. ... A phase out of federal funding for the LSC will
not eliminate free legal aid to the poor. State and local governments, bar associations, and
other organizations already provide substantial legal aid to the poor.” The $278 million
appropriation for the LSC in FY1996 provided funding for basic field programs and
audits, the LSC inspector general, and administration and management. However,
funding was eliminated entirely for supplemental legal assistance programs, including
Native American and migrant farmworker support, national and state support centers,
regional training centers, and other national activities.
FY2001. For FY2001, the Clinton Administration again requested $340 million for
the LSC. The Clinton Administration had requested $340 million every year since
FY1997, in an effort to partially restore recent cutbacks in funding. The proposal would
have continued all existing restrictions on LSC-funded activities.

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For FY2001, the House Appropriations Committee recommended a total of $141
million for the LSC (H.R. 4690). On June 26, 2000, the House approved H.R. 4690
which includes $275 million for the LSC. For FY2001, the Senate Appropriations
Committee recommended a total of $300 million for the LSC. The Senate, however, did
not vote on its version of the bill. Instead, it approved the version approved by the
conference committee, which was agreed to on October 26, 2000. The conference report
on H.R. 4942 (H.Rept. 106-1005) provided $330 million for LSC for FY2001. The $330
million appropriation for LSC includes $310 million for basic field programs and
independent audits, $10.8 million for management and administration, $2.2 million for
the inspector general, and $7 million for client self-help and information technology.
Both the House and the Senate approved the conference committee recommendation for
LSC. H.R. 4942, signed by President Clinton on December 21, 2000 as P.L. 106-553,
includes $330 million for LSC. The reader should note that P.L. 106-554 mandated a
0.22 percent government-wide rescission of discretionary budget authority for FY2001
for almost all government agencies. Thus, the $330 million appropriation for LSC for
FY2001 has been reduced to $329.3 million.
FY2002. For FY2002, the Bush Administration requested $329.3 million for the
LSC. The proposal included all restrictions on LSC-funded activities that were currently
in effect. The Administration’s FY2002 request for LSC ($329.3 million) is the same as
the amount that was obligated for the program for FY2001.
For FY2002, the House Appropriations Committee recommended a total of $329.3
million for LSC. This amount is the same as the FY2001 appropriation (after accounting
for the 0.22% government-wide rescission) and President Bush’s FY2002 budget request
for the program. The House Committee’s recommendation for LSC included $310
million for basic field programs, $12.4 million for management and administration, $4.4
million for client self-help and information technology, and $2.5 million for the inspector
general. The House Committee’s recommendation also included existing provisions
restricting the activities of LSC grantees. In carrying out LSC’s vision of an effective and
efficient statewide system of delivering legal services to the poor, grantees have been
merging and reconfiguring their legal services programs to better use every federal dollar
allocated to them. The House Committee report (H.Rept. 107-139) indicated concern
about the LSC overruling, without appeal, certain configurations implemented by grantees
via the state planning process. The House Committee report directed the LSC to review
the state planning process and the concerns raised and report back to the Committee by
September 4, 2001, with a proposal (including input from the stakeholders) that outlines
the reconfiguration standards and the process for states to appeal LSC’s decisions. On
July 18, 2001, the House passed H.R. 2500, which included $329.3 million for the LSC.
For FY2002, the Senate Appropriations Committee recommended a total of $329.3
million for the LSC. This is identical to the FY2001 appropriation for LSC (after the
rescission) and the Bush Administration’s FY2002 budget request for the LSC. The
Senate bill’s LSC program allocations are identical to those in the House bill. The Senate
Committee’s recommendation also included existing program prohibitions. On
September 13, 2001, the Senate passed H.R. 2500, which included $329.3 million for the
LSC.
The Conference Committee report on H.R. 2500 included $329.3 million for LSC
for FY2002. This is identical to the FY2001 appropriation for LSC (after the rescission)

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and the Bush Administration’s FY2002 budget request for LSC. The Conference
Committee report’s recommendation for LSC includes $310 million for basic field
programs, $12.4 million for management and administration, $4.4 million for client self-
help and information technology, and $2.5 million for the inspector general. The
Conference Committee report also included existing provisions restricting the activities
of LSC grantees. The Conference report (H.Rept. 107-278) was passed by the House on
November 14, 2001, and by the Senate on November 15, 2001. H.R. 2500 was signed
into law (P.L. 107-77) by President Bush on November 28, 2001.
FY2003. For FY2003, the Bush Administration again requested $329.3 million for
the LSC, however, the amounts for a couple of the components vary. The FY2003 budget
request includes $310 million for basic field programs, $13.3 million for management and
administration (rather than $12.4 million as currently appropriated), $3.4 million for client
self-help and information technology (rather than $4.4 million as currently appropriated),
and $2.6 million for the inspector general (rather than $2.5 million as currently
appropriated). The FY2003 budget request also would continue all restrictions on LSC-
funded activities currently in effect. The Administration’s FY2003 request for LSC
($329.3 million) is the same as the amount currently obligated for the program for
FY2002. Historically, the Corporation’s highest level of funding was $400 million in
FY1994 and FY1995.
Current Activities
During 2001, the LSC funded 207 local programs, which operated through
approximately 900 neighborhood law offices, employing about 3,600 attorneys and 1,400
paralegals. These numbers are reduced from 1994, when 320 local programs operated
more than 1,200 neighborhood law offices and employed 4,500 attorneys. Each local
program is governed by its own board of directors, of which a majority are attorneys and
one-third are eligible clients. Each local program must spend an amount equal to at least
12.5% of its basic field grant to encourage participation by private attorneys in the
delivery of legal services to low-income clients. Local programs establish their own
eligibility criteria, which may not exceed 125% of the federal poverty guidelines. The
LSC is governed by an 11-member board of directors, appointed by the President and
confirmed by the Senate, of which no more than six members may be of the same political
party.
During 2000, legal services attorneys closed about one million cases. Family issues
such as child support, divorce, and separation are currently the substance of about 38%
of cases handled by field offices. Housing issues, including assistance in cases of
eviction, comprise about 23% of cases, and income maintenance issues, including
assistance to individuals in claiming benefits, represent another 13% of cases. Other
cases involve consumer finance, employment, health, and education-related issues. Most
of the cases handled by the LSC in 2000 were resolved through advice and referral. Only
10% of cases were resolved in court, primarily because they involved family law issues
(e.g., protective orders, child custody, child support, etc.) in which court action was
required by state law.

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Restrictions on Activities
Since its inception, the legal services program has been controversial, and Congress
has imposed restrictions on the activities of local attorneys. The authorizing statute
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
appropriations laws each year, including the funding measure for FY2002.
Under the current appropriations law, LSC grantees may not: engage in partisan
litigation related to redistricting; attempt to influence regulatory, legislative or
adjudicative action at the federal, state or local level; attempt to influence oversight
proceedings of the LSC; initiate or participate in any class action suit; represent certain
categories of aliens, except that nonfederal funds may be used to represent aliens who
have been victims of domestic violence or child abuse; conduct advocacy training on a
public policy issue or encourage political activities, strikes, or demonstrations; claim or
collect attorneys’ fees; engage in litigation related to abortion; represent federal, state or
local prisoners; participate in efforts to reform a federal or state welfare system;1 represent
clients in eviction proceedings if they have been evicted from public housing because of
drug-related activities; or solicit clients. In addition, LSC grantees may not file
complaints or engage in litigation against a defendant unless each plaintiff is specifically
identified, and a statement of facts is prepared, signed by the plaintiffs, kept on file by the
grantee, and made available to any federal auditor or monitor. LSC grantees must
establish priorities, and staff must agree in writing not to engage in activities outside these
priorities.
Grantees also are required to maintain time-keeping records and account for any
nonfederal funds received. Federal law prohibits LSC from receiving nonfederal funds,
and grantees 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. However, grantees may use non-LSC funds to comment
on proposed regulations or respond to written requests for information or testimony from
federal, state, or local agencies or legislative bodies, as long as the information is
provided only to the requesting agency and the request is not solicited by the LSC grantee.
Non-LSC Funding for Legal Services
In 1999, non-LSC resources supporting legal services activities totaled
approximately $308 million, up from $263 million in 1998. The sources of these funds
1 On February 28, 2001, the Supreme Court held in the case of Legal Services Corporation v.
Velazquez, 121 S. Ct. 1043 (2001), that an LSC funding restriction related to welfare reform
violates the First Amendment (i.e., freedom of speech) rights of LSC grantees and their clients
and is thereby unconstitutional. The Supreme Court agreed with the Second Circuit Court’s
ruling that, by prohibiting LSC-funded attorneys from litigating cases that challenge existing
welfare statutes or regulations, Congress had improperly prohibited lawyers from presenting
certain arguments to the courts, which had the effect of distorting the legal system and altering
the traditional role of lawyers as advocates for their clients.

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included Interest on Lawyers’ Trust Accounts (IOLTAs),2 state and local grants,
foundation and other private sector grants, and other federal programs including the Social
Services Block Grant under Title XX of the Social Security Act and Community
Development Block Grants. In addition, in 2000, 100,000 private lawyers accepted
referrals to provide legal services to the poor, primarily through LSC-funded pro bono
programs.
2 On June 15, 1998, the Supreme Court issued a decision that may affect the extent to which
IOLTA funds will be available for legal services in the future. These funds represent interest
earned on sums that are deposited by legal clients with attorneys for short periods of time. A
substantial amount of these funds (roughly $164 million in 1999) are used to help fund legal
services programs. In Phillips v. Washington Legal Foundation, 524 US 156, 118 SCt 1925
(1998), the Supreme Court ruled that these funds are the private property of clients, and returned
the case to the lower court to determine whether the state (i.e., Texas) was required to
compensate the clients for “taking” these funds. On January 28th, 2000, United States District
Court dismissed the case, finding that there was no taking of client property without just
compensation. The plaintiff’s appeal of that ruling to the Fifth Circuit Court of Appeals was
argued on February 6, 2001. On October 15, 2001 the U.S. Court of Appeals for the Fifth Circuit
reversed the January 2000 District court decision, finding that the Texas IOLTA program violated
the Fifth Amendment of the United States Constitution. It found that, as administered in Texas,
the IOLTA program amounted to a per se taking of client property and entitled the appellants
(Washington Legal Foundation) to declaratory relief. The United States Court of Appeals for the
Fifth Circuit (5th Circuit, No. 00-50139) found that the Texas IOLTA program amounted to an
unconstitutional per se taking of client property that entitled the plaintiffs to injunctive relief
without a state determination of whether just compensation was due. A similar case brought by
the same plaintiff, Washington Legal Foundation v Legal Foundation of Washington, 236 F.3d
1097 (9th Cir. 2001), has proceeded through the Washington State federal District Court and the
Ninth Circuit Court of Appeals. Nonetheless, IOLTA programs nationwide remain fully
operational.

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