Order Code 95-178 EPW
Updated May 19, 2003
CRS Report for Congress
Received through the CRS Web
Legal Services Corporation:
Basic Facts and Current Status
Carmen Solomon-Fears
Specialist in Social Legislation
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.
Although the authorization of appropriations for the Corporation expired at the end of
FY1980, the LSC has operated for the past 23 years under annual appropriations laws.
P.L. 108-7, consolidated appropriations for FY2003, among other things increased the
LSC funding by $9.5 million to $338.8 million for FY2003. Current funding still
remains below the Corporation’s highest level of $400 million in FY1994 and FY1995.
For FY2004, the Bush Administration again requested $329.3 million for the LSC. This
is $9.5 million less than the $338.8 million that was appropriated for the LSC for
FY2003 to offset decennial Census funding reallocations. The $338.8 million LSC
appropriation for FY2003 is subject to the 0.65% across-the-board rescission, which
brings the LSC appropriation down to $336.6 million. 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 (P.L. 93-355), and the LSC came into existence the
following year. In 1977, Congress extended the Legal Services Corporation Act through
FY1980 (P.L. 95-222). 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 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.
Congressional Research Service ˜ The Library of Congress

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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.1 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 $15 million of that amount. Funds for the
Corporation are included in the annual appropriation for the Departments of State, Justice,
Commerce, Judiciary and related agencies. The table below shows LSC appropriations
for selected years between FY1976 (first full year of program operations) and FY2003.
Efforts to reduce funding for the LSC began in FY1996 and have now begun to reverse.
LSC Appropriations History
($ in millions)
FY
$
FY
$
FY
$
FY
$
1976
92
1991
328
1997
283
2003
337
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. For 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 entirely eliminated funding for
supplemental legal assistance programs, including Native American and migrant farm
worker support, national and state support centers, regional training centers, and other
national activities.
FY1997-FY2000. Between FY1996 and FY2001, LSC funding was gradually
increased. For FY1997, Congress funded the LSC at $283 million (P.L. 104-208). For
FY1998, Congress again funded the LSC at $283 million (P.L. 105-119). For FY1999,
Congress funded the LSC at $300 million (P.L. 105-277). For FY2000, Congress funded
the LSC at $305 million, but also included a provision in the legislation that mandated a
0.38% government-wide rescission of discretionary budget authority for FY2000. The
funding for the LSC was thereby decreased to $304 million (P.L. 106-113).
1 According to the LSC, in 2003, there is only one legal services attorney for every 11,500 poor
people.

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FY2001. For FY2001, the Clinton Administration requested $340 million for the
LSC. The Clinton Administration had requested $340 million every year since FY1997,
in an effort to partially restore the 1996 cutback in funding. The proposal would have
continued all existing restrictions on LSC-funded activities. 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 included $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 included
$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, included $330 million for LSC. The reader
should note that P.L. 106-554 mandated a 0.22% government-wide rescission of
discretionary budget authority for FY2001 for almost all government agencies. Thus, the
$330 million appropriation for LSC for FY2001 was 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) was 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 was 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 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 outlined 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 $329.3 million
for LSC. This was identical to the FY2001 appropriation for LSC (after the rescission)
and the Bush Administration’s FY2002 budget request for LSC. The Senate bill’s LSC
program allocations were 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 LSC.

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The Conference Committee report on H.R. 2500 included $329.3 million for LSC
for FY2002. This was identical to the FY2001 appropriation for LSC (after the
rescission) and the Bush Administration’s FY2002 budget request for LSC. The
Conference Committee report’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
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 requested $329.3 million for LSC.
On July 18, 2002, the Senate Appropriations Committee recommended a total of
$329.4 million for the LSC for FY2003 (S. 2778; see S.Rept. 107-218). This is $97,000
above the FY2002 appropriation for LSC and the Bush Administration’s FY2003 budget
request for the LSC (it included funds for a 4.1% pay adjustment). The FY2003 Senate
Committee budget request included $310 million for basic field programs, $13.3 million
for management and administration, $3.4 million for client self-help and information
technology, and $2.6 million for the inspector general. The Senate Appropriations
Committee FY2003 budget request also continued all restrictions on LSC-funded
activities currently in effect.
The House did not introduce a bill for CJS appropriations (which includes
appropriations for the LSC) for FY2003. H.J.Res. 18 (P.L. 108-5), the eighth continuing
resolution for FY2003 appropriations, passed by both the House and Senate on February
5, 2003, among other things, continued funding of the LSC at the FY2002 level through
February 20, 2003. H.J.Res. 2, which was amended and agreed to (S.Amdt.1) by the
Senate on January 23, is an omnibus appropriations bill that, among other things, would
have increased LSC funding by $19 million to $348.4 million in FY2003 to ensure that
no service area receives less LSC funding for FY2003 than the area received for FY2002
as a result of the change in state poverty populations (based on 2000 Census data). On
February 13 before H.J.Res.18 expired both the House and Senate passed the conference
report on H.J.Res.2. P.L. 108-7 (signed into law on February 20, 2003) increased the
LSC funding by $9.5 million to $338.8 million for FY2003 to offset decennial Census
funding reallocations. It also continued all restrictions on LSC-funded activities currently
in effect. P.L. 108-7 mandated a 0.65% across-the-board rescission, thus the FY2003
appropriation for the LSC is $336.6 million.
FY2004. For FY2004, the Bush Administration requested $329.3 million for the
LSC. This is $9.5 million less than the $338.8 million that was appropriated for the LSC
for FY2003 to offset decennial Census funding reallocations. Historically, the
Corporation’s highest level of funding was $400 million in FY1994 and FY1995.
Current Activities
Pursuant to its 1998 State Planning Initiative, the LSC has sought to streamline its
delivery system. During 2002, the LSC funded 161 local programs, which operated

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through approximately 900 neighborhood law offices (serving every county in the nation
and the U.S. territories), 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
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. 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 2002, legal services attorneys closed almost one million cases (976,519).
Family issues such as child support, divorce, and separation were the substance of about
39% of cases handled by field offices. Housing issues, including assistance in cases of
eviction, comprised about 24% of cases, and income maintenance issues, including
assistance to individuals in claiming benefits, represented another 13% of cases. Other
cases involved consumer finance, employment, health, and education-related issues. Most
of the cases handled by LSC in 2002 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.
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 FY2003. 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;2 represent clients in eviction
2 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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proceedings if they have been evicted from public housing because of drug-related
activities; or solicit clients. Also, 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 2001, non-LSC resources supporting legal services totaled approximately $337
million, up from $263 million in 1998. The sources of these funds included Interest on
Lawyers’ Trust Accounts (IOLTAs),3 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 via LSC-funded pro bono programs.
3 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. In
2001, $65 million in IOLTA funds was 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, U.S. 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 (5th Circuit, No. 00-50139) 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, in Texas, the IOLTA program amounted to a per
se taking of client property and entitled the appellants (Washington Legal Foundation) to
declaratory relief. 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.