Private: Court Removes Burdens on Legal Aid for the Poor

by Josh Kobrin, Sr. Editor-at-Large
Back in 1996 Newt Gingrich proposed, and Congress made law, a piece of legislation that changed the way poverty law offices operate. Angered by the fact that government-funded legal services programs often sued the government, the Gingrich Congress created a statute that prohibited poverty law offices from using federal money to bring certain suits. Furthermore, the legislation made it practically impossible for these organizations to use private money for the same purposes.
While a statute preventing legal services organizations from biting the hand that feeds them may appeal to fiscal conservatives, federally financed poverty law offices have challenged the law in numerous ways. Its restrictions on legal work for prisoners, immigrants, and members of class action suits appeared to defy the First, Fifth, and Tenth Amendments. Velazquez v. Legal Services Corp. saw this point argued from the Eastern District of New York to the Supreme Court. The results were mixed for the legal services lawyers: some of the restrictions were held unconstitutional, but the majority of the law remained intact.

But only recently did courts begin to flesh out the manner in which the Legal Services Corporation (LSC) would apply the law. In guidelines analogous to those that restrict federally funded abortion counseling, the LSC did not just assert that an office's federal money could not be spent on certain activities. A complicated set of regulations also established that any organization receiving funding "must have objective integrity and independence from any organization that engages in restricted activities." For an LSC-funded firm, this meant different personnel, separate identification, and even physical separation from the privately financed arm of the organization.
When analyzing portions of the law back in 1999, the Second Circuit did not fail to notice that this "program integrity rule" could "prove unduly burdensome and inadequately justified." At the end of last month, the Eastern District agreed. After the LSC rejected proposals from organizations trying to keep their federally funded litigation separate from their privately funded litigation, the Velazquez dispute was back in court - and this time the poverty lawyers prevailed. Judge Block held that the government regulations - which required duplicative office costs that could destroy many legal services organization - unduly burdened First Amendment rights. The holding allows LSC funded and non-LSC funded organizations to share some office space and only forces them to keep employees financially separate for billing purposes, since the LSC's interests "provide no sound reason to preclude sharing lawyers." Meanwhile, with regard to sharing equipment, the court found "no legitimate justification for requiring the duplication of costs." This solution parallels the Bush administration's treatment of faith-based non-profits. Within these organizations, publicly funded and privately financed activities must remain financially distinct, but the non-profits do not need to maintain two offices.
While the government is expected to appeal, the plaintiffs seem happy with the ruling. "Judge Block's decision removes much of the sting from the Gingrich rules," NYU Law Professor Burt Neuborne told the New York Times. As legal director for the Brennan Center for Justice, Neuborne has been arguing Velazquez for years. In an email correspondence, he explained the opportunities Block's decision provides to poverty law organizations. "My hope is that the Velazquez opinion will enable most Legal Services offices to reconfigure in a way that allows them to use a mix of federal and non-federal funds to provide a full spectrum of legal help to the poor in an efficient and effective manner," Neuborne wrote. "We will continue to press the issues dealing with restrictions on the use of federal funds as the case goes through the appeals process."
Others have challenged the government to repeal the law rather than appeal the ruling. "Congress needs to apply the same rules to legal services that apply to other non-profits, including faith-based non-profits," said David Udell, director of the Brennan Center's Poverty Program. "More than 40 members of Congress have spoken out against the legal services private money restriction, and now a court has declared the rule unconstitutional. Instead of continuing to defend this unconstitutional restriction, Congress should simply get rid of it."