With the 1994 congressional elections, the Corporation suffered a dramatic reversal of political fortune. Conservatives included the elimination of LSC in the infamous “Contract for America.” In much the same way as the Reagan Administration in the early 1980s, the leadership of the new Congress, under House Speaker Newt Gingrich (R-GA), committed itself to the elimination of LSC and ending federal funding for legal services. The House leadership sought to replace LSC with a system of limited block grants to the states that would severely restrict the kind of services for which the funds could be used. The House of Representatives adopted a budget plan that assumed that LSC’s funding would be cut by one-third for FY1996, another third in FY 1997, and completely eliminated thereafter. Opponents of legal services dubbed this funding plan “the glide path to elimination.” It seemed possible that the federal commitment to equal justice might be abandoned altogether.
Despite the efforts of the House leadership, a bipartisan majority in the Congress, led by Senator Pete Domenici (R-NM), remained committed to maintaining a federally funded legal services program. Nevertheless, key congressional decision makers, led by Congressmen Bill McCollum (R-FL) and Charles Stenholm (D-TX), determined that major “reforms” in the delivery system would be required if the program was to survive.
Grants were to be awarded through a system of competition, rather than through presumptive refunding of current recipients. Funding was to be distributed on a strict,census-based formula, eliminating any LSC discretion over funding amounts. A timekeeping system was imposed on all attorneys and paralegals working in programs.
Programs were subject to a host of new organizational and administrative requirements.
LSC funds could no longer be used to pay dues to nonprofit organizations, including the ABA and NLADA, or to sue LSC. The LSC Office of Inspector General was given new powers over local program audits, and LSC was given expanded access to recipient and client records.
More fundamentally, the Congressional majority was determined to redefine the role of federally funded legal services by refocusing legal services advocacy away from law reform,lobbying, policy advocacy, and impact litigation and toward basic representation of individual clients. Congress set out to accomplish this goal by restricting the broad range of activities that programs had engaged in since the early days of OEO, many of which had been mandated in the past. These restrictions applied to all activities that a recipient undertook, regardless of the source of the funding that was used to support the activity.
Thus, with certain limited exceptions, LSC-funded programs were prohibited from using the public funds that they received from federal, state or local governments, or the private funds they received from bar associations, charitable foundations, private donations, and any other non-LSC sources for the LSC-restricted activities.
In essence, when Congress passed the LSC appropriation riders in April 1996, it determined that federal funds should go only to those legal services programs that focused on individual representation and concentrated on clients’ day-to-day legal problems, while broader efforts to address the more general systemic problems of the client community and to ameliorate poverty should be left to those entities that did not receive LSC funds. As former LSC President John McKay recently wrote:
“Taken as a whole,the restrictions on the types of cases LSC programs are allowed to handle convey a strong Congressional message: federally funded legal services should focus on individual case representation by providing access to the justice system on a case-by-case basis.”
Congress prohibited representation of certain categories of clients, including prisoners and public housing residents who were being evicted based on drug-related charges. Only certain specified categories of aliens were permitted to be served, although later amendments lifted the restriction on providing a range of legal services to aliens who were victims of domestic violence and human trafficking. Perhaps even more damaging and insidious, Congress limited the kinds of legal work that LSC-funded programs could undertake on behalf of eligible clients, prohibiting programs from participating in class actions, welfare reform advocacy, and most affirmative lobbying and rulemaking activities. In addition, programs were prohibited from claiming or collecting attorneys’ fees (endnote 5) , cutting off a significant source of funding and limiting programs in their ability to use an effective strategic tool. These prohibitions were written to be “entity” restrictions and applied not just to LSC funded activity, but to all of a grantee’s non-LSC funds as well. Finally, Congress eliminated LSC funding for national and state support centers, the Clearinghouse Review,and other entities that had provided support, technical assistance, and training to LSC funded legal services programs.
Along with the new restrictions came a major reduction in funding. The LSC appropriation was cut by 30 percent, from $400 million for FY 1995 to $278 million for FY 1996. Final1996 statistics revealed the staggering cost of the funding cuts: the number of cases that were closed fell from 1.7 million in 1995 to 1.4 million in 1996; during the same period, the number of attorneys working in LSC-funded programs nationwide fell by 900, and 300local program offices closed.