The Heritage Foundation

Backgrounder #496 on Legal Issues

March 19, 1986

March 19, 1986 | Backgrounder on Legal Issues

New Ways to Provide Legal Services to the Poor


(Archived document, may contain errors)

4 96 March 19, 1986 NEW WAYS TO PROVIDE LEGAL SEKVICES TO THE POOR INTRODUCTION Americans rightly believe that access to justice is an essential element of a democrat ic system. It is generally agreed that every individual should be able to protect his or her rights, regardless of personal wealth. With this in mind, Congress in 1965 created a program for the provision of legal services to the poor. This later became th e Legal Services Corporation (LSC).

The legal services program, however, quickly turned into one of the federal budget's most controversial items. Legal services outliiys skyrocketed from just over $1 million in 1965 to $321 million in 19

30. More importa nt, the attorneys it funded often acted PS political advocates of the causes they favored, rather than as representatives of the clients they served fails to fulfill the goals of its creators. It fails to provide access to justice to those who cannot affo rd it.

As such, it is. now time to examine other means of providing the pocr with legal help proposed which would not just decrease'the cost to the taxpayers but--more important--would improve the quality of services available to the poor. These alternativ es include The result is that the program often A wide variety of alternatives has been o Providing legal services on a competitive basis, using vouchers, lljudicare,Il or contracts with private law firms o Making greater use of such voluntary resources a s pro bono services by lawyers in private practice and the services of law students who need actual work experience.o Reducing the cost of the legal system by encouraging alternative dispute resolution systems using ombudsmen in government agencies, and st reamlining rules governing the practice of law.

Legal service agencies also should begin seeking funding sources other than the federal government. Increased private support contributions from clients according to the amount they are able to pay, interest on lawyer's trust accounts which can be put toward legal services, and stepped-up support from state and local governments should all be pursued In light of the Gram-Rudman-Hollings budget balancing law Congress will cut spending substantially this year, including outlays on LSC. This should be used to institute long-overdue reforms. While reducing federal expenditures, these reforms would improve the quality of legal service to the poor.

THE FEDERAL LEGAL SERVICES PROGRAM While the federal Legal Services Corporation was created by Congress only eleven years ago, organizations to provide basic legal services to the poor have existed for over a century associations, law schools, social agen c ies, and municipa:l.ities, these organizations offered free legal advice and representation to those unable to afford attorneys. Though often underfunded, these organizations operated in almost every major U.S. city Operated by bar In 1965, as part of Lyn don Johnson's War on Poverty, the federal government entered the field. A legal services program vas established within the Office of Economic Opportunity, funding the activities of hundreds of "poverty lawyer_sI' throughout 'the country.

In 1974, this program was replaced by the Legal Services Corporation.

Oraanization of the Proaram The LSC itself provides no legal services. It merely grants federal money to over 300 local legal services organizations throughout the country. These grantees are supposed to provide legal services to those in need.

The LSC has little actual control over how its funds are spent by these organizations. While the grantees are obliged to follow certain minimal federal rules, they for the most pcrt are free to spend their funds as they see fit. Until very recently, in fact, the LSC rarely even audited the grantees' expenditures. Instead, the LSC is required by law to continue funding each of its grantees at the same level each year, unless it can show that the grantee actually h as violated its contract. Predictably, this has resulted i.n a wide variance in the 2 cost of services provided by grantees.

LSC case has been calculatedlto be $182.50, the average for some grantees is as high as $725 While the cost of the average Tmes of Leaal Services Provided The services provided to the poor by the LSC program are typically quite different.from those imagined by most Americans. In fact LSC services are neither offered nor Tequired in two of the most common types of cases Criminal cases : The U.S. Constitution gives every defendant in a criminal case the right to be represented by an attorney she cannot afford to hire one, one will be appointed at no charge.

This representation is provided through public defender services organized and fi nanced by the state and federal courts, and by lawyers in private practice who have their fees paid by the government If he or Fee-aeneratina cases: In cases where defendants can reasonably expect to receive a significant amount in damages, including most tort cases, even a person with no resources of his own can hire a lawyer.

Under the Ilcontingent feelV system prevalent in the U.S. legal system the attorney's fee in such cases can be set as a percentage of the expected court award in the case fee is ded ucted from the cash award. If he loses, he pays no fee at all. Through this simple market mechanism, the interests of all potential plaintiffs are served, regardless of their income, with no taxpayer involvement at all If the client wins, the lawyer's The activities of the LSC are limited to non-criminal cases in which an award of money damages is not requested or expscted.

Generally, these cases fall into a limited number of categories. In 1984, for example, 29.2 percent of the cases completed by LSC atto rneys involved family law, including divorces, adoption, and child custody cases. Another 19.1.percent involved housing matters--rent disputes and other landlord-tenant problems. Another 18.2 percent of cases actually involved disputes with other governme n tal units regarding claims for particular government benefits, such as welfare Social Security, or disability payments. Some 12.4.percent concern consumer problems, while the remaining 18.4 percent of LSC cases are spread through a wide variety of categor i es, ranging from employmept and health issues to cases involving education and discrimination 1. Figures from LSC Board Member LeAnn Bernstein, Budget Dissent for Fiscal Year 1987 unpublished p. 6, n.2 2. Figures from Legal Services Corporation, 1985 Fiel d Program Data, p 10 3I PROBLEMS WITH THE LSC From its inception, the l'egal services program has been controversial. One reason is its continuing increase in costs. They have ballooned seemingly uncontrollably during the 1960s and 1970s In fiscal year 196 9 , $35.8 million was budgeted for federal legal service activities. sFive years later, the LSC's first year, the budget was 90 million. In 1980, the federal government was spending $321 million'per year on the agency in eleven years 25 percent in 1982, it h as begun to increase again fiscal year, the LSC plans to sppd $305.5 million, and has requested the same amount for fiscal 1987 This was nearly a ten-fold increase While the Reagan Administration cut this budget by In the current A second problem is that l awyers in federal legal service programs often see themselves mainly as social reformers the problems of the poor on a case by case basis is frequently viewed as a very time-consuming, and mundane, way of alleviating the illsnof the poor. Attorneys would b e much more effective, it is reasoned, as advocates of changes in the law and political processes LSC attorneys thus have brought a broad range of lawsuits to ttre'formlt the law, including suits to establish rights to welfare, tg block increases in trans i t fares.by local governments, find even to encourage the use of ''black English" in public schools. The attorneys often act as federally funded lobbyists rather than the providers of the day-to-day legal assistance that they were intended to be reformg1 c a ses, attorneys often have neglected the needs of many poor Americans with serious, yet routine, problems Handling While they have concentrated so many resources on such Itlaw A third problem with the program is simply the fact that it has failed to fulfil l the legal needs of the poor as well as it could.

Despite massive increases in funding, the program has been unable to adequately serve the legal needs of the poor. Worse, the assumption by the LSC of responsibility for these services has long hindered th e 3. Congressional Budget Office, The Legal Services CorDoration--BudPetarv Issues and Alternative Federal ADoroacheS July 1977, pp. 2-3 4. The President has proposed that the agency be abolished, and therefore no funds for LSC were included in the budget he submitted to Congress. According to statute, however, the LSC independently submits to Congress it own budget 5. James T. Bennett and Thomas J. DiLorenzo Poverty, Politics, and Jurisprudence Illegalities at the Legal Services Corporation," Cat0 Institu te Policv Analvsis No. 49 February 26, 1985, p 3. See also, Washington Legal Foundation, Legal Service Corooration: The Robber Barons of the Poor? 1985 4-development of other posfible resources, and of beneficial reforms in the legal system itself.

REFORMI NG LEGAL SERVICES To date, governmental efforts to provide the poor with access to justice system have centered upon only one model: the establishment of legal service agencies, primarily funded by the federal government employing staffs of attorneys to r e present the poor. These agencies have held a virtual monopoly, leaving the poor with few alternatives for obtaining legal help quality of service, and a tendency by the legal service attorneys to pursue their own social and political goals, rather than th e needs of their particular client.

A wide range of alternative approaches exists. These include 1 fostering competition among the providers of legal services; 2) making better use of the voluntary resources available in the bar and elsewhere; and 3) reduc ing the complexity and cost of access to the legal system The result has been a generally lower Increasina Cometition in the Deliverv of Leaal Services Many methods have been developed by which legal services could be delivered to the poor in a'competitiv e manner. Among these are Leaal service vouchers: Under this system, eligible clients, if deemed needy by a referral office, would receive a certificate, valid for the purchase of a certain amount of legal services. The client would then decide for himself which attorney to hire to handle his case, based on information provided by the referral office word-of-mouth recommendations from friends, or personal experience.

If he wished, he could pay his attorney more, or less, than the voucher amount. The.result: the voucher would turn the recipient into an active consumer with a consumer's power to choose whom he wants to handle his problem.

Judicare: This is modelled on the the existing federal Medicare system. Eligible clients would be able to engage the servi ces of attorneys, with the bill later paid by the federal government. As with Medicare, the government could establish limits on the compensation for particular types of legal services and on who provides them 6. See Stephen Chapman The Rich Get Rich and t he Poor Get, Lawyers: The Intellectual Poverty of Legal Services The New ReDubliG September 24, 1977, pp. 9-15 5Contracts wi.th private law firms: Here, the governinent would negotiate with individual law firms to provide legal services to eligible client s amount, or on a per case basis.

The fee would be fixed 'in advance, either as' a flat Each of these programs offers advantages and disadvantages.

Judicare appears to be the least desirable of the three, raising serious cost control problems similar to those plaguing Medicare. By contrast, vouchers would provide clients with as much choice as does Judicare, but without the cost problems. Policymaker s would have to take care, however, that a voucher program not be transformed into an entitlement for legal services, through which a "right," without limit, to a federally paid lawyer is created. The contracting out option would not provide as much choice to the poor; but since it would guarantee a high volume of business to the private law firms involved, it could be less costly.

The Legal Services Corporation currently is conducting several pilot projects testing the relative effectiveness and cost of th e competitive delivery of legal services. While final results are not yet in, early reports indicate that these innovative approaches cost much less than originally expected and that clients are very satisfied with the levels of service being provided. If the pilot projects do rove to be as successful as these early results indicate, the systems should be put into more general'use.

Adoption of a competitive model for the provision of legal services would not mean abolition of the existing legal service age ncies. It mrely means that they would have to compete for funding with those who 'believe they can perform a better job at a lower cost.

Fresumably, those agencies now performing quality legal services would prosper in a canpetitive system.

Better Use of Existina Voluntarv Resources In addition to finding better ways of expending governmental funds, the LSC should explore ways to use better the enormous amount of voluntary legal talent available to help the poor.

Pro Bono work: According to the berican B ar Association's Code o:P Professional Responsibility, each attorney has a responsibility to spend some time each year providing free or pro bono legal help to those who cannot afford it. This is not a legal requirement, nor should it be--not every attorn ey is in a position to provide such services, nor should the full burden of helping the poor be.assigned 7. Code of Professional Responsibility, Ethical Consideration 2-25 6to lawyers legal profession cannot be ignxed.

According to a recent pol.1 conducted by the ABA Journal, about 52 percent of U.S. attorneys, some 325,000, contributed pro bono services over the past year, averaging about 60 hours each. This is the equivalent of thousands of lawyers working full-time on x)ro bono activities. Even more can be mobilized. The LSC should devote more resources toward encouraging pro bono activities.

Example: LSC could be a national clearinghouse for information.

Law Schools: Another resource is the thousands of law students throughout the country. The needs of these students, in fact dovetail very well with the needs of the poor. During their three years in law school, most students receive a good grounding in the principles of law, but get little experience in the actual practice of law provide services to th e poor Yet the tremendouia resources which can be offered by the The talents of these students should be utilized better to An increasing number of U.S. law schools have begun S1clinical programs" for law students, to provide them with this vital hands-on e xperienced The LSC should f'oster these programs and encourage their expansion LSC support, however, should go only toward getting such programs startad well as the poor, a permanent: federal subsidy is ne-ither necessary or desirable Since clinical progr a ms benefit the.students as Reducina the Cost of the Leaal System: IfDeleaalizationtf The basic need of any person with a legal problem is not a lawyer, but a Lesolution of that problem. Therefore, any governmental policy regarding legal services must look not just at providing lawyers, but at better ways t.0 resolve disputes.

Barriers have been erected making it difficult for the poor to benefit from the court system expensive matter state-licensed attorney, who has spent years in training, can provide it Going to court is a complex and Even getting basic advice is costly, as only a Among the ways.these artificial barriers to the resolution of disputes can be reduced 8. Lauren Rubenstein Reskin Lawyers Fall Short of Self-Imposed Pro Bono Standards ABA Jour n al, November 1985, p. 42 9. See, Frederic R. Kzllogg, Federal Involvement in Legal Services for the Poor Encouraeinp Private Secto r Fulfillment of a Public Remonsibilitv, Ripon Society Policy Paper, November 1985, p. 12 7 1) Alternative Dispute Resolutio n Svstm Although !!Alternative Dispute Resolut$onI1 (ADR) is a fairly new phrase, the concept has existed for centuries. It means resolving disputes between individuals through mechcnisms other than the government court system. For many years, for instance , corporations have hired professional arbitration services, such as the American Arbitration Association, to settle contract disputes and other matters, where traditional litigation was seen as too costly or unpredictable. Recently, ADR systems inc?&easin ly have served the needs of individuals, including the poor.

In San Francisco, for example, a system of Community Boards in 25 neighborhoods helps resolve disputes in a informal manner. Founded in 1977, the Community Boards train volunteers to serve on pa nels which mediate disputes remarkably similar to those handled by legal service attorneys landlord-tenant disputes, merchant-consumer disputes, racial tensions or litigation--and at no cost to the taxpayer The cases handled by these Community Boards are T he disputes are resolved without the need for an attorney According to the Dispute Resolution Information Center, hundreds They have been highly of such neighborhood-basefl programs now exist successful at reducing the cost of reso1v:lng disputes. In fact , the average cost of an ADR case during 1984 was $36--less Lhan one-fifth the average cost of a Legal Services Corporation case.

Some advantages of private dispute rtrsolution systems can be delivered by the traditional court system operate small claims c ourts, in which litigants can make claims for small amounts of damages, usually about 50. These courts are very accessible and are generally seen as very fair. Greater use of such courts could help resolve many common landlord-tenant, consumer, and other i ssues Most states already 10. See, Bill Richards Can We Talk? Mediation Gains in Law Disputes The Wall Street Journal, May 14, 1985 11. Paul Gorden, "Justice Goes Private", Reason MagizinG September 1985, pp. 23-30 12. Bernstein, OD. ciL p. IS. For a good summary of alternative dispute resolution systems, see Jonathan B. Marks, Earl Johnson, Jr and Peter L. Szanton, DisDute Resolution in America: Processes in Evolution (National Institute of Dispute Resolution 1984 a2) Ombudsmen to avoid disputes reqardina qovernment. aaencies.

Almost one-fifth of all Legal Services Corporation cases involve disputes with government agencies, usually regarding wkether an individual is eligible for a particular benefit program. Thus the federal government ends up paying for two sets of attorneys- its own and those of the plaintiff.

This is unnecessary. The underlying issue in most of these cases is bureaucratic inertia.

LSC attorneys could be settled easily through ombudsman offices within the agencies concerned. These ombudsmen, who need not be a ttorneys could provide advice to dissatisfied applicants and resolve simple problems. When necessary, they could also represent the applicant's interests against the agency bureaucracy quicker, less expensive, and more satisfactory for both the individual s and the government Many of the disputes now being handled by The result would be 3) Greater Use of Non-Lawvers in Providina Leaal Advice.

A key way by which the legal system raises the cost of legal services is through the monopoly which lawyers enjoy in even elementary legal functions. According to the law of mast states, no one may provide legal advice to another without being licensed by the state as an attorney. These laws are vigorously enforced recent Florida case, for instance, a stenographer who S ad been giving customers advice on how to fill out simple legal forms concerning divorces,Iswills, and other matters was given a 30-day jail sentence In a Many simple disputes and problems do not require an attorney's services. In 1984, for example, 35.1 percent of-the cases handled by the LSC were resolved by advice only; another 19.5 percent required only brief service to the client have been saved if more non-lawyers could have handled these cases.

Many valuable resources would ACHIEVING THE REFORMS Man y of the reforms proposed could :be achieved by the states and local bar associations without waiting for action by Congress 13. See, Maxwell Glen and Cody Shearer Public May Gain From Legal Services Competition,"

Sorinafield Union, January 18, 19

85. Du e to a public owcry, the sentence was later set aside by the Governor 14. Legal Services Corporation, Field Program Data, 1985, p.39 Nevertheless, assuming Congress is to continue to allocate federal funds for legal services, it should consider granting m o ney directly to states, state courts systems, or to local bar associations. These institutions not only could tailor programs better to local needs, but would likely avoid the politicization which has plagued the LSC If the LSC itself is to take a lead in encouraging beneficial reform, it must be given more flexibility in its spending the LSC is forced to continue to fund each of its grantees each year unless an actual contract violation takes place. 'It is thus tied to the outdated and limited staff attor ney model for.the delivery of services, and is unable to shift resources to more promising areas.

It is essential for Congress to change this restrictive funding rule so that the LSC can change Currently ALTERNATIVE SOURCES OF FUNDING In addition to improv ing the availability of the legal system to the poor, reforms would reduce the overall cost of legal services.

Some funds, of course, would still be needed. But given the public's determination to balance the federal budget, it is essential that the legal services providers begin to look to sources otker than the federal government for revenue received about 22.7 million in donations from foundations, ba5 associations, and other private groups such as the United Way.

While this amount is not insignificant , it represents less than one dollar in private resources for every fourteen dollars which come from the federal government. So far, however, grantees do not try very hard to raise private funds. Thus the total could be increased substantially.' The feder al government should make its own contributions contingent upon the receipt of a certain level of funding from the private sector, under a matching funds arrangement.

Client contributions: Currently no LSC client is charged for services, regardless of the individual's ability to pay. A fee system should be established, by which clients pay for legal services in accordance with their income level. In addition to increasing the LSC's funds, this would, explains Lorain Miller, the representative of the client population on the LSC Board of Directors Among such sources are Private donations: In 1985, Legal Services Corporation grantees 15. Legal Services Corporation, 9 cit p. 12 10 -help clients assert greater control over their case, ensuringlsthat the needs o f the client, rather than the attorney, are addressed.

Interest on Lawers' Trust Accounts (IOLTAI: Lawyers are often asked to hold small amounts of money in trust for their clients but when combined, they can generate substantial amounts. Over the past thr ee years, many states have established programs to donate these proceeds to legal services for the poor. In 1985, the 17 states with such programs accrued 27 million in extra funds. Potentially IOLTA could provide well over 100 million for legal services p rograms should be voluntary on the part of lawyers and their clients however, as they must have the ultimate say over how their funds are used These State and local funds: State and local governments, which provided 20 million to 5SC grantees in 1985, sho u ld shoulder more of the legal services load. For the most part, it is state laws and state rules of court which have made the legal system inaccessible to many of the poor provide the necessary incentives for states to reduce the costs of their legal syst e ms Greater state responsibility for funding would CONCLUSION The current method of providing the poor with access to the legal system, operating a single, government funded staff of attorneys in each local area is outdated and ineffective. Alternasives ex i st which will 1) reduce the cost and 2) increase the quality of services. Greater competition in the delivery of services, greater use of'voluntary resources,'and delegalization should all be considered involved in delivering these services to reform woul d reduce steadily the need for any governmental involvement, and the states and the private sector could provide cor any remaining needs. If the LSC is to continue to provide services however, it must be given the flexibility needed to reform There is no n e ed for a fede,rally funded corporation to be A reduction in legal costs due For too long, supporters of the Legal Services Corporation hzve portrayed any criticism of the program as an attack upon the principle 16. Letter from Lorain Miller to Senate Labo r and Human Resources Committee, April 26 1985 17. Legal Services Corporation, 90. cit, p. 14. of equal access to justice be LSC's supporters which are cheating the poor. By clinging to a siligle, ineffective method of providing legal services, and concent r ating its efforts on political change, rather than the needs of its clients, the Legal Services Corporation has ignored reforms and innovations which would increase access to justice and help the taxpayer This simply is not the case., It may even It is ti me for.those options to be explored.

James L. Gattuso Policy Analyst i I 12

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