Order Code 95-178 EPW
Updated July 24, 2003
CRS Report for Congress
Received through the CRS Web
Legal Services Corporation:
Basic Facts and Current Status
Specialist in Social Legislation
Domestic Social Policy Division
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, increased LSC funding 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 was subject to the
0.65% across-the-board rescission, which brings the LSC FY2003 appropriation down
to $336.6 million. On July 16, 2003, the House Appropriations Committee
recommended a total of $338.8 million for the LSC (H.R. 2799, See H.Rept. 108-221).
On July 23, 2003, the House passed H.R. 2799 which included $338.8 million for the
LSC for FY2004. This report which is continually updated provides background
information and tracks relevant legislation and appropriations measures.
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 mid1960s. 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. Neither of the proposals was enacted.
Congressional Research Service ˜ The Library of Congress
Nonetheless, Congress has continued to fund the LSC every year and has included
legislative language affecting LSC activities in annual appropriations laws.
When the Corporation was first established, its initial goal was to provide all lowincome 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 $15 million of that amount. (Currently there is
one legal services attorney for every 11,500 poor people.) Funds for the Corporation are
included in the annual appropriation for the Departments of State, Justice, Commerce,
Judiciary and related agencies. The table below shows LSC appropriations for selected
years from FY1976 (first full year of program operations) to FY2003. Efforts to reduce
funding for the LSC began in FY1996 and have now begun to reverse.
LSC Appropriations History
($ in millions)
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).
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 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.
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. It also continued all existing
restrictions on LSC-funded activities.
The House did not introduce a bill for CJS appropriations 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 existing
restrictions on LSC-funded activities. 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 $7.3 million less than the $336.6 million (after the rescission) 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. The FY2004 budget request for the LSC includes $310 million for basic field
programs and required independent audits, $14.5 million for management and
administration, $2.2 million for client self-help and information technology, and $2.6
million for the inspector general. The budget request for the LSC also includes existing
provisions restricting the activities of LSC grantees.
On July 16, 2003, the House Appropriations Committee recommended a total of
$338.8 million for the LSC for FY2004 (H.R. 2799, See H.Rept. 108-221). This is $2.2
million above the FY2003 appropriation for LSC (the same amount as the original
FY2003 appropriation before the 0.65% rescission); and $9.5 million above the Bush
Administration’s FY2004 budget request for the LSC. The House Committee
recommendation for the LSC includes $319.5 million for basic field programs and
required independent audits, $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. It also includes existing provisions restricting the activities of LSC grantees. On
July 23, 2003, the House passed H.R. 2799 which includes $338.8 million for the LSC.
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 in
every county in the nation and the U.S. territories) employing about 3,600 attorneys.
These numbers are reduced from 1994, when 320 local programs employed about 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 976,519 cases. 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. 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 clients in
eviction proceedings if the eviction was based on drug-related activities; represent
federal, state or local prisoners; participate in efforts to reform a federal or state welfare
system;1 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.
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. Grantees are
required to maintain time-keeping records and account for any nonfederal funds received.
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),2 state and local grants, foundation and other private
sector grants, and other federal programs including the Social Services Block Grant 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
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.
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.