The Legal Services Corporation: Distribution of Funding

The Legal Services Corporation: Distribution of Funding

Order Code RL32451
CRS Report for Congress
Received through the CRS Web
The Legal Services Corporation:
Distribution of Funding
July 6, 2004
-name redacted-
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

The Legal Services Corporation: Distribution of Funding
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 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 that in turn provide civil legal assistance to low-income clients in
the United States, the District of Columbia, and five U.S. territories.
Since April 1996 (pursuant to P.L. 104-134), LSC grantees (i.e., local legal
services agencies/providers) have been selected on a competitive basis. In FY2004,
the LSC distributed $316.6 million of its $335.3 million appropriation in the form of
grants to 143 local legal services programs; remaining funds were allocated for
management and administration ($13.2 million); information technology ($2.9
million); and the Office of the Inspector General ($2.6 million).
LSC funding accounts for about half of all funding in the U.S. for civil legal
services for the poor. In 2004, there were approximately 43 million persons who
were potentially eligible for LSC-funded services (using the 125% of poverty
definition). According to several surveys, about 80% of persons eligible do not have
access to civil legal services funded by the LSC when they need them (based on
geographic boundaries, service areas, funding, local priorities, etc.). This report will
not be updated.

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Prohibitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Competitive Bidding Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Current Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Grantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Reconfiguration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Funding for FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
List of Figures
Figure 1. LSC FY2004 Appropriation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
List of Tables
Table 1. LSC Appropriations History, Selected Years . . . . . . . . . . . . . . . . . . . . . 6
Table 2. Legal Services Corporation Funding, by Jurisdiction, FY2004 . . . . . . . 8

The Legal Services Corporation:
Distribution of Funding
Background
The Legal Services Corporation (LSC) is a private nonprofit organization
created and funded by Congress to provide legal assistance to low-income people in
civil matters. The LSC is governed by a bipartisan 11-member board of directors,
nominated by the President and confirmed by the Senate (no more than six members
of the board may be of the same political party). Authorizing legislation for the
Legal Services Corporation (LSC) was enacted in 1974 (P.L. 93-355).1 In 1977,
Congress extended the Legal Services Corporation Act through FY1980 (P.L. 95-
222). Although Congress has not reauthorized the LSC statute since FY1980, it has
continued to fund the LSC every year and has included legislative language affecting
LSC activities in annual appropriations laws.
Prohibitions
Since its inception, the legal services program has been controversial, and
Congress has imposed restrictions on the activities of local attorneys. The
authorizing statute (P.L. 93-355, enacted July 25, 1974) 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 (P.L. 108-199, enacted January 23, 2004), 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
1 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.

CRS-2
prisoners; participate in efforts to reform a federal or state welfare system;2 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.
Competitive Bidding Process
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 civil legal assistance to low-income
clients in every county in the United States, the District of Columbia, as well as in
the five U.S. territories of American Samoa, Guam, Puerto Rico, the Virgin Islands,
and Micronesia. Since April 1996 (pursuant to P.L. 104-134), LSC grantees (i.e.,
legal services agencies/providers) have been selected on a competitive basis.3
Under this competitive process, legal services providers in every jurisdiction bid
to become the LSC grantee for a designated service area. The number of service
areas in each state varies greatly. In California there are currently 33 services areas;
whereas, Delaware has two service areas and the District of Columbia and most of
the territories have one service area (the exception is Puerto Rico which has three
service areas). As noted in the section below entitled Reconfiguration, state planners
and the LSC continue to evaluate the LSC grant structure and thus the number of
service areas in any given state (including the District of Columbia) or territory is
subject to change.
2 On Feb. 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.
3 This system supplanted the previous system of presumptive refunding for LSC grantees.
The LSC is prohibited from granting any preference to current or previous grantees of LSC
funds (Section 503(e) of P.L. 104-134, enacted Apr. 26, 1996).

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During the competition process, the LSC evaluates applications according to
established quality standards and awards grants to those providers judged best
qualified to provide high-quality legal services in accordance with applicable legal
requirements. Federal regulations (Title 45 C.F.R. Part 1634) stipulate the
procedures to be followed in awarding LSC grants. Grants are made for one to three
years. Multi-year awardees must submit reports and grant renewal forms as part of
the annual grant renewal process. In FY2004, of the 212 service areas that received
LSC grants, 18 had new service providers (data are based on a comparison of LSC
grant awards in FY2000 and FY2004).
Current Funding
In FY2004, the LSC distributed $316.6 million of its $335.3 million
appropriation in the form of grants to 143 local legal services programs; remaining
funds were allocated for management and administration ($13.2 million);
information technology ($2.9 million); and the Office of the Inspector General ($2.6
million). LSC funding accounts for about half of all funding in the U.S. for civil
legal services for the poor (see discussion of non-LSC funding below). In FY2004,
approximately 43 million persons were potentially eligible for LSC-funded assistance
(using the 125% of poverty definition).
Grantees
The LSC does not provide legal services directly. Rather, it funds local legal
services providers, which are referred to by the LSC as “grantees.” Grantees may
include non-profit 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. Each local legal services program is headed by its own board
of directors, of whom about 60% are lawyers admitted to a state bar 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.4 Local programs establish their own eligibility
criteria, which may not exceed 125% of the federal poverty guidelines. These local
programs provide legal assistance to individuals based on locally determined
priorities that meet local community conditions and needs. Local programs hire staff,
contract with local attorneys, and develop pro bono programs for the direct delivery
of legal assistance to eligible clients.
Although the LSC is the main source of funds for legal services to the poor in
most states, it is not the only source of funding. Local legal services programs
generally supplement their LSC grants with additional funds from state and local
governments, IOLTA (Interest on Lawyer Trust Accounts) programs, other federal
4 The Private Attorney Involvement (PAI) funds have been primarily used to promote pro
bono service, with joint sponsorship between a local bar association and a LSC grantee. As
a result, about 130,000 private attorneys are now registered as volunteer attorneys in LSC-
funded pro bono programs. Currently, there are about 350 PAI programs.

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programs (such as the Title XX Social Services Block Grant), bar associations,
United Way and other charitable organizations, foundations and corporations, and
individual donors. They further leverage federal funds by involving private attorneys
in the delivery of legal services for the poor, mostly through volunteer pro bono
work. According to the LSC FY2005 budget request, LSC funding makes up about
half of all funding for the national civil legal services system for the poor.
Reconfiguration
Beginning in July 1995, in anticipation of funding cutbacks, the LSC started
formulating a plan to provide states with an array of strategies by which the legal
services programs in the state could stretch federal dollars. The LSC’s “State
Planning Initiative” was formally introduced in 1998. According to a LSC Special
Report to Congress:
Until the implementation of the State Planning Initiative, determining service
areas in a given state was more a product of geographic and historical
happenstance than a reasoned judgment about the precise configuration that
would yield the best legal services system for the greatest number of clients....
With fewer resources to expend and a growing client base to serve, LSC has
embraced service area reconfiguration as one important way to “insure that
grants and contracts are made so as to provide the most economical and effective
delivery of legal assistance to persons in both urban and rural areas.”5
The number of grantees receiving LSC funding decreased from 325 in 1995 to
262 in 1998, to 207 in 2001, to 170 in 2002, to 161 in 2003, to 143 in 2004. The
reduction in the number of local programs is due to both cutbacks in funding and a
LSC-initiated reconfiguration of the LSC program in which states were urged to
merge, reorganize, and consolidate local programs into a more efficient regional and
statewide delivery system of legal services to the poor.
In congressional testimony, the LSC chairman and the LSC president stated that
the State Planning Initiative directed:
all LSC programs to develop comprehensive plans to coordinate and integrate
their work in seven areas: expanding client access and efficiency; utilizing
technology to expand access and enhance services; promoting client self-help
and preventative legal education and advice; coordinating legal work and
training; collaborating with the private bar and other community stakeholders;
expanding grantees’ resource development efforts; and configuring LSC service
areas in a more efficient and effective manner to enhance client services and
reduce barriers to assistance.6
5 Legal Services Corporation, A Special Report to Congress. State Planning and
Reconfiguration. Sept. 2001, pp. 2-3, 10.
6 Testimony in U.S. Congress, House Appropriations Subcommittee on Commerce, Justice,
State, the Judiciary and Related Agencies, Submitted by LSC Chairman, Frank B. Strickland
and LSC President, Helaine M. Barnett, Apr. 1, 2004. p. 8, at [http://www.lsc.gov/pressr/
pr_t_040104.htm]. (Hereafter cited as, Testimony by LSC Chairman, and President.)

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According to the 2001 LSC Special Report to Congress, the LSC has used its
competitive bidding process to ensure that grantees improve and expand legal
services to clients in their respective states. Many policymakers and program
analysts agree that even with reduced financing grantees have managed to lessen
geographic disparities for clients living in remote or underserved areas while
simultaneously making the entire legal delivery system for the poor more efficient
by merging small legal services programs with larger programs, by providing
selfrepresented, pro se, litigants with accurate and easily understood legal
information, by promoting the use of video-conferencing by courts to enable
witnesses with transportation challenges to testify, and by using technology to
improve case management and intake systems. In FY2004, 143 grantees were
serving 212 service areas.
Even though LSC grantees are becoming more efficient in stretching reduced
funding, the ratio of attorneys to clients has diminished substantially. When the LSC
was established in 1974, its foremost goal was to provide all low-income persons
with at least “minimum access” to legal services. This was defined as the equivalent
of one legal services attorney for every 5,000 poor persons. The goal of minimum
access was achieved in FY1980 and FY1981. Currently in most states, there is only
one legal services attorney for every 11,500 poor persons.
Clients
Legal services provided through LSC funds are available only in civil matters
to individuals with incomes less than 125% of the federal poverty guidelines. The
LSC places primary emphasis on the provision of routine legal services and the
majority of LSC-funded activities involve routine legal problems of low-income
people. Legal services cases deal with a variety of issues including family related
issues (divorce, separation, child custody, support, adoption, spousal abuse, child
abuse or neglect); housing issues (evictions, foreclosures); welfare or other income
maintenance program issues (access to health care, benefit claims); consumer and
finance issues (debt collection); and individual rights (employment, health, juvenile,
and education). Most cases are resolved outside the courtroom (e.g., via legal advice,
referrals, telephone calls by attorneys) which is a very cost-effective approach to
settling legal matters.
According to testimony before the House Appropriations Committee on April
1, 2004, by the LSC chairman and the LSC president:
LSC clients represent the diversity of this country, encompassing all races, ethnic
groups, and ages. They include the working poor, veterans, family farmers,
people with disabilities, and victims of natural disasters. About three-quarters
of LSC’s client population are women, many with young children. Almost 11%
are elderly. About one-quarter is African-American, about 20% is Hispanic, and
approximately 2% are Native American and another 2% are Asian or Pacific
Islander in origin.7
7 Testimony by LSC Chairman, President, p. 6

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LSC grantees close about 1 million cases annually (935,793 cases were closed
in 2003) in addition to handling another 4 million legal service “matters” (such as
helping self-represented (i.e., pro se) litigants obtain the information they need to
pursue their lawsuit, disseminating legal services materials in communities, referring
clients to appropriate services, providing mediation assistance, etc.). In 2004, there
were approximately 43 million persons who were potentially eligible for LSC-funded
services (using the 125% of poverty definition). Data from the LSC suggest that only
about 20% of persons eligible for LSC-funded services actually had access to those
services when they needed them (based on geographic boundaries, service areas,
funding, local priorities, etc.).
Funding for FY2004
Table 1 shows LSC appropriations for selected years from FY1976 (first full
year of program operations) to FY2004. Recent funding for the LSC has leveled off,
but current funding still remains below the LSC’s highest level of $400 million in
FY1994 and FY1995. (For more information on LSC appropriations, see CRS
Report 95-178, Legal Services Corporation: Basic Facts and Current Status.)
Table 1. LSC Appropriations History, Selected Years
FY
$
FY
$
FY
$
FY
$
1976
92
1990
317
1995
400
2000
304
1980
300
1991
328
1996
278
2001
329
1984
275
1992
350
1997
283
2002
329
1988
306
1993
357
1998
283
2003
337
1989
309
1994
400
1999
300
2004
335
The LSC was appropriated $335.3 million for FY2004, after a 0.59%
governmentwide across-the-board rescission and a 0.465% rescission of funding for
the Commerce, Justice, State, Judiciary, and Related Agencies appropriation (which
includes the LSC). The LSC appropriation included $316.6 million for grants to
local legal services providers to provide legal assistance to clients; of this amount,
$314.1 million was based on the statutory requirement that LSC grants be distributed
on a per capita basis with regard to poor persons (in the U.S. and territories)8 and an
8 The LSC is required (P.L. 104-134, Section 501) to use the most recent decennial U.S.
census data when it distributes federal funds appropriated for the purpose of providing civil
legal assistance to the poor. The LSC grants for FY2003 were the first to be based on the
2000 census data. The 2000 U.S. census reported a 5.75% increase in America’s overall
poverty population from 1990 to 2000. Since LSC distributes basic field grants on a per
capita basis, grantees with client poverty populations that increased by less than 5.75% lost
funding.

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additional $2.5 million was distributed to the 10 states9 that faced the largest losses
resulting from a reallocation of funds based on decennial census (2000) information.
As Table 2 shows in FY2004, the LSC distributed $316.604 million of its
$335.300 million appropriation in the form of grants to 143 local legal services
programs which operated in more than 900 neighborhood offices. The remainder of
the LSC’s FY2004 appropriation was allocated for management and administration
($13.160 million); information technology ($2.945 million); and the Office of the
Inspector General ($2.573 million).10 As shown in Chart 1, the LSC spends less than
4% of its appropriation on management and administration; 1% on information and
technology, 1% on the Office of Inspector General, and the remaining 94% on local
legal services programs.
Table 2 also shows LSC spending per poor person in each of the states, the
District of Columbia, and the territories for FY2004. The variation occurs because
some jurisdictions lost funding because their poverty populations increased by less
than the nationwide increase during the period from 1990-2000; some jurisdictions
gained funding because their poverty populations increased by more than the
nationwide increase during the period from 1990-2000; some states were given
additional funding to offset losses due to census-based LSC funding adjustments
resulting from the change in poverty population during the period 1990-2000; and the
poverty counts are derived differently for Alaska, Hawaii, the Republic of Palau, the
Federated States of Micronesia, the Republic of the Marshall Islands, and the United
States Virgin Islands. Table 2 indicates that the average amount of LSC funding per
poor person nationwide was $8.78 in FY2004;11 the comparable figure in FY1994
was $12.60. If adjusted for inflation (in 2004 dollars based on the Consumer Price
Index for all urban consumers), the decline in LSC spending per poor person over the
period 1994-2004 is more pronounced, from $16.08 in 1994 to $8.78 in 2004.
9 In 2004, the 10 states that received additional funds based on a redistribution of the poverty
population during the period 1990-2000 were Michigan, Ohio, Louisiana, Mississippi,
Illinois, Kentucky, Wisconsin, Minnesota, Pennsylvania, and Iowa.
10 The LSC currently employs 94 full-time staff . In addition, the LSC’s Inspector General’s
Office currently employs 17 full-time staff.
11 The reader should note that this per capita figure may be somewhat overstated because
some states received additional funding based on the redistribution of the poverty
population. The LSC FY2005 budget request indicates that LSC funding per poor person
amounted to $8.54 in FY2004.

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Table 2. Legal Services Corporation Funding, by Jurisdiction,
FY2004
Poverty
LSC
Number
population
FY2004
spending per
of LSC
State
(census 2000)
LSC funding
poor person
programs
Alabama
698,097
$5,912,796
$8.47
1
Alaska
80,405
1,177,305
14.64
1
Arizona
698,669
8,897,131
12.73
3
Arkansas
411,777
3,487,656
8.47
2
California
4,706,130
40,670,572
8.64
11
Colorado
388,952
3,382,463
8.70
1
Connecticut
259,514
2,197,135
8.47
1
Delaware
69,901
592,046
8.47
1
District of Columbia
109,500
927,440
8.47
1
Florida
1,952,629
16,538,310
8.47
7
Georgia
1,033,793
8,755,982
8.47
2
Hawaii
150,439
1,484,394
9.87
2
Idaho
148,732
1,319,344
8.87
1
Illinois
1,291,958
11,092,289
8.59
3
Indiana
559,484
4,738,699
8.47
1
Iowa
258,008
2,295,672
8.90
1
Kansas
257,829
2,183,752
8.47
1
Kentucky
621,096
5,415,021
8.72
4
Louisiana
851,113
7,482,608
8.79
4
Maine
135,501
1,255,443
9.27
1
Maryland
438,676
3,715,484
8.47
1
Massachusetts
573,421
4,841,505
8.44
6
Michigan
1,021,605
9,192,342
9.00
6
Minnesota
380,476
3,570,944
9.39
6
Mississippi
548,079
4,910,808
8.96
2
Missouri
637,891
5,402,787
8.47
4
Montana
128,355
1,233,254
9.61
1
Nebraska
161,269
1,396,243
8.66
1
Nevada
205,685
1,864,130
9.06
1
New Hampshire
78,530
656,025
8.35
1
New Jersey
699,668
5,926,023
8.47
6
New Mexico
328,933
3,233,218
9.83
1
New York
2,692,202
22,802,319
8.47
7
North Carolina
958,667
8,319,963
8.68
1
North Dakota
73,457
869,359
11.83
1
Ohio
1,170,698
10,284,385
8.78
6
Oklahoma
491,235
4,912,027
10.00
2
Oregon
388,740
3,461,941
8.91
3
Pennsylvania
1,304,117
11,045,569
8.47
8
Rhode Island
120,548
1,019,395
8.46
1
South Carolina
547,869
4,640,323
8.47
1
South Dakota
95,900
1,669,084
17.40
2
Tennessee
746,789
6,325,128
8.47
4
Texas
3,117,609
26,434,138
8.48
3
Utah
206,328
1,823,046
8.84
1
Vermont
55,506
462,704
8.34
1

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Poverty
LSC
Number
population
FY2004
spending per
of LSC
State
(census 2000)
LSC funding
poor person
programs
Virginia
656,641
5,561,596
8.47
6
Washington
612,370
$5,448,046
8.90
1
West Virginia
315,794
2,674,702
8.47
1
Wisconsin
451,538
4,103,878
9.09
2
Wyoming
54,777
622,625
11.37
1
American Samoa
35,574
301,304
8.47
1
Guam
34,792
294,680
8.47
1
Micronesia
178,317
1,510,302
8.47
1
Puerto Rico
1,818,687
15,973,072
8.78
2
Virgin Islands
34,931
295,858
8.47
1
States and D.C.
33,168,398
$291,138,948
8.78
135
States, DC, and
Territories
36,049,201
$316,604,265
$8.78
143
Source: Compilation of state and territory data from the LSC website [http://www.lsc.gov/
fundprog.htm]
Figure 1. LSC FY2004 Appropriation
Information Technology
1%
Management and
Office of Inspector General
Administration
1%
4%
Basic Field Programs
94%
Source: Table prepared by the Congressional Research Service based on data from — U.S. Congress,
House Departments of Commerce, Justice, and State, The Judiciary, and Related Agencies
Appropriations for 2005, Hearings before a Subcommittee of the House Committee on Appropriations,
Part 4. Legal Services Corporation. U.S. Government Printing Office, 2004, p. 871.

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