[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4508 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4508

To authorize appropriations for the Legal Services Corporation and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 26, 1994

  Mr. Bryant introduced the following bill; which was referred to the 
                       Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
To authorize appropriations for the Legal Services Corporation and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE, REFERENCE, AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Legal Services 
Reauthorization Act of 1994''.
    (b) Reference.--Except as otherwise expressly provided, whenever in 
this Act an amendment or repeal is expressed in terms of an amendment 
or repeal of a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Legal 
Services Corporation Act (42 U.S.C. 2996 and following).
    (c) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title, reference, and table of contents.
Sec. 2. Findings.
Sec. 3. Authorization of appropriations.
Sec. 4. Protection against theft and fraud.
Sec. 5. Prohibitions on lobbying.
Sec. 6. Enforcement.
Sec. 7. Monitoring and independent evaluation.
Sec. 8. Class actions.
Sec. 9. Negotiation requirement.
Sec. 10. Restrictions on use of funds for legal assistance to aliens.
Sec. 11. Governing bodies of recipients.
Sec. 12. Professional responsibilities.
Sec. 13. Solicitation.
Sec. 14. Certain eviction proceedings.
Sec. 15. Procedural safeguards for litigation.
Sec. 16. Competition study.
Sec. 17. Fee-generating case provisions.
Sec. 18. Miscellaneous restrictions.
Sec. 19. Recordkeeping and noncorporation funds.
Sec. 20. Evasion.
Sec. 21. Attorneys' fees provisions.
Sec. 22. Corporation Board composition and control over policy.
Sec. 23. Reprogramming provisions.
Sec. 24. Grants.
Sec. 25. Establishment of local priorities.
Sec. 26. Staff attorneys.
Sec. 27. Studies.

SEC. 2. FINDINGS.

    Section 1001 (42 U.S.C. 2996) is amended to read as follows:

                               ``findings

    ``Sec. 1001. The Congress finds that--
            ``(1) there is a need to provide equal access to the system 
        of justice in our Nation for those who are unable to afford 
        adequate legal counsel to pursue and resolve their grievances 
        and protect their legal rights and interests;
            ``(2) funds made available pursuant to this title have made 
        it possible for millions of individuals, who would otherwise be 
        unable to afford legal counsel, to receive high quality, 
        efficient, and effective legal representation;
            ``(3) the present legal services program should be 
        maintained and its resources expanded to serve the unmet legal 
        needs of indigent clients;
            ``(4) local control by recipients of assistance under this 
        title over policy, resource allocation, and case selection has 
        enabled the legal services program to meet the priority needs 
        of clients in the communities served;
            ``(5) providing legal assistance to those who face an 
        economic barrier to adequate legal counsel will serve best the 
        ends of justice and assist in improving opportunities for low-
        income persons consistent with the purposes of this title;
            ``(6) for many of our citizens, the availability of legal 
        services has reaffirmed faith in our government of laws;
            ``(7) to preserve its strength, the legal services program 
        must be kept free from the influence of or use by it of 
        political pressures; and
            ``(8) attorneys providing legal assistance must have full 
        freedom to protect the best interests of their clients in 
        keeping with the rule of ethics and professional responsibility 
        that apply in the jurisdiction where the legal assistance is 
        provided and the highest standards of the legal profession.''.

SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

    Section 1010(a) (42 U.S.C. 2996i(a)) is amended by striking the 
first three sentences and inserting the following: ``There are 
authorized to be appropriated for the purpose of carrying out the 
activities of the Corporation such sums as may be necessary for each of 
fiscal years 1995, 1996, 1997, 1998, and 1999.''.

SEC. 4. PROTECTION AGAINST THEFT AND FRAUD.

    Section 1005 (42 U.S.C. 2996d) is amended by adding at the end the 
following:
    ``(h) For purposes of sections 286, 287, 641, 1001, and 1002 of 
title 18, United States Code, the Corporation shall be considered to be 
a department or agency of the United States Government.
    ``(i) For purposes of sections 3729 through 3733 of title 31, 
United States Code, the term `United States Government' shall include 
the Corporation, except that actions that are authorized by section 
3730(b) of such title to be brought by persons may not be brought 
against the Corporation or any recipient or employee thereof.
    ``(j) For purposes of section 1516 of title 18, United States 
Code--
            ``(1) the term `Federal auditor' shall include any auditor 
        employed or retained on a contractual basis by the Corporation,
            ``(2) the term `contract' shall include any grant or 
        contract made by the Corporation, and
            ``(3) the term `person', as used in subsection (a) of such 
        section, shall include any recipient receiving financial 
        assistance under section 1006(a)(1) or 1006(a)(3).
    ``(k) Funds provided by the Corporation under section 1006 shall be 
deemed to be Federal appropriations for the purpose of all Federal 
criminal laws when used by a recipient.
    ``(l) For purposes of section 666 of title 18, United States Code, 
funds provided by the Corporation shall be deemed to be benefits under 
a Federal program involving a grant or contract.
    ``(m) The Corporation shall make available to the appropriate legal 
authority any evidence of criminal conduct by a recipient or an 
employee of a recipient.''.

SEC. 5. PROHIBITIONS ON LOBBYING.

    Section 1007(a) (42 U.S.C. 2996f(a)) is amended by amending 
paragraph (5) to read as follows:
            ``(5) ensure that no funds made available by the 
        Corporation to any recipient are used to pay for any personal 
        service, advertisement, telegram, telephone communication, 
        letter, printed or written matter, or other device, or to pay 
        for any publicity or propaganda, intended or designed--
                    ``(A) to influence any decision by a Federal, 
                State, or local agency, except when legal assistance is 
                provided by an employee of a recipient of the 
                Corporation to an eligible client on a particular 
                application, claim, case, or other matter, which 
                directly involves the client's legal rights or 
                responsibilities, or
                    ``(B) to influence any Member of Congress or any 
                other Federal, State, or local elected official to 
                favor or oppose any Act, bill, resolution, or similar 
                legislation, or any referendum, initiative, 
                constitutional amendment, or any similar procedure of 
                the Congress, any State legislature, any local council, 
                or any similar governing body,
        except that this paragraph does not preclude funds made 
        available to a recipient from being used in connection with--
                    ``(i) any communication made in response to any 
                Federal, State, or local agency or elected official,
                    ``(ii) any communication to a Federal, State, or 
                local elected or agency official pertaining to the 
                authorization or appropriation of funds or any other 
                measure affecting the authority, functions, or funding 
                of the recipient or the Corporation or pertaining to 
                oversight measures directly affecting the recipient if 
                the project director (or project director's designee) 
                has expressly determined that the legislative body 
                involved is considering such authorization, 
                appropriation, or other measure or is conducting 
                oversight of the recipient or the Corporation, or
                    ``(iii) any communication on behalf of an eligible 
                client in the course of representation of that client 
                before a legislative body, if the project director or 
                designee of the recipient has expressly approved such 
                representation in accordance with policy established by 
                the governing or policy body of the recipient and such 
                project director or designee has determined, before 
                approving the undertaking of such representation, 
                that--
                            ``(I) the client seeks representation to 
                        protect the client's existing legal rights or 
                        interests or is in need of relief which can be 
                        provided by the legislative body involved, and
                            ``(II) documentation specifically 
                        authorizing such representation has been 
                        secured from the eligible client by a 
                        recipient,
        but nothing in this paragraph shall be construed to permit the 
        use of such funds to engage in communication which is intended 
        or designed to encourage the general public to support or 
        oppose legislation pending before the Congress or State or 
        local legislative bodies or any decision by a Federal, State, 
        or local agency or to solicit a client, in violation of 
        professional responsibilities, for the purpose of making 
        possible any activity permitted by this paragraph;''.

SEC. 6. ENFORCEMENT.

    (a) Enforcement.--Subparagraph (A) of section 1006(b)(1) (42 U.S.C. 
2996e(b)(1)) is amended to read as follows:
    ``(A)(i) The Corporation shall have the authority to ensure the 
compliance of recipients and their respective employees with this 
title. The Corporation may issue rules, regulations, guidelines, and 
instructions to interpret the provisions of this title, but may not 
impose, by regulation or otherwise, restrictions or limitations on 
types of cases or forms of representation of clients unless such 
restrictions or limitations are explicitly authorized by this title or 
other applicable law, and may not impose, by regulation or otherwise, 
restrictions or requirements on such recipients that are inconsistent 
with this title and other applicable law.
    ``(ii) If the Corporation receives information that a recipient has 
violated this title or the rules, regulations, guidelines, 
instructions, grant conditions, or assurances issued under this title, 
the Corporation shall commence an investigation, resolve the 
allegations without further investigation, or reject the complaint as 
groundless. Except in cases where it is alleged that a recipient or an 
employee of a recipient has violated criminal law, the Corporation 
shall notify the recipient of the allegations and the Corporation's 
planned action. Such notification shall include a description of the 
factual allegations, a copy of any written materials submitted by the 
person making the allegations, and a designation of the provisions of 
this title or the rules, regulations, guidelines, instructions, grant 
conditions, or assurances issued under this title that are alleged to 
have been violated. If the Corporation has determined that an 
investigation is warranted, the Corporation shall provide the recipient 
a reasonable opportunity to respond in writing to the allegations 
before commencing a formal investigation. The Corporation shall 
complete such investigation in a timely manner and shall inform the 
recipient of the final determination with respect to such 
investigation. Unless required by law, the Corporation shall not make 
the findings of its investigation public until a final report is issued 
or unless such disclosure is made with the consent of such recipient. 
If, at the conclusion of the investigation, the Corporation determines 
that it will take action under paragraph (5) of this subsection, it 
shall notify the recipient of its right to request a hearing.''.
    (b) Regulations for Enforcement.--Paragraph (5) of section 1006(b) 
(42 U.S.C. 2996e(b)) is amended to read as follows:
    ``(5)(A) The Board shall issue regulations to provide for the 
enforcement of this title. Such regulations may include, among 
available remedies, provisions for the immediate suspension of 
financial assistance under this title, suspension or termination of an 
employee of the Corporation or of any employee of a recipient by such 
recipient, the reduction or termination of such financial assistance, 
and denial of an application for refunding. Any such employee may be 
terminated only after consideration of other remedial measures and only 
after the employee has been afforded reasonable notice and opportunity 
for a timely, full, and fair hearing. When requested, such hearing 
shall be conducted by an independent hearing examiner. Unless the 
Corporation seeks to deny an application for refunding under 
subparagraph (B), the Corporation may suspend, reduce, or terminate 
financial assistance under this title or deny an application for 
refunding under this title only--
            ``(i) when there has been a substantial failure to comply 
        with the provisions of--
                    ``(I) this title,
                    ``(II) rules, regulations, guidelines, or 
                instructions issued under this title, or
                    ``(III) other laws,
        which failure continues after notice and an opportunity to 
        correct such failure has been provided to the recipient, or
            ``(ii) when independent evaluations demonstrate that a 
        recipient has consistently failed to use its resources to 
        provide economical and effective legal assistance of high 
        quality as measured by generally accepted professional 
        standards which failure continues after notice and an 
        opportunity to correct such failure has been provided to such 
        recipient.
    ``(B) The Corporation may deny an application for refunding of a 
recipient when, based on independent evaluation, the Corporation has 
identified an applicant for financial assistance under this title that 
is better able to provide high quality, economical, and effective legal 
assistance. Such evaluation shall be based on criteria developed 
pursuant to section 1007(d)(5).
    ``(C) Financial assistance under this title may not be terminated 
or suspended, an application for refunding under this title may not be 
denied, and the annual level of financial assistance under this title 
may not be reduced by more than 5 percent or $20,000, whichever is 
less, unless the recipient has been afforded reasonable notice, an 
adequate opportunity to respond to the allegations concerning failures 
and, if requested by the recipient, a timely and fair hearing before an 
independent hearing examiner pursuant to regulations issued by the 
Corporation. Such regulations shall provide for commencement of the 
hearing before an independent hearing examiner at the earliest 
appropriate date. As soon as practical after the hearing, the 
independent hearing examiner shall make a recommended decision on the 
matter. A copy of the recommended decision shall be sent to the 
Corporation and the recipient. If neither the Corporation nor the 
recipient requests review by the president of the Corporation of that 
recommended decision, the decision shall become final. If either party 
does request a review of a recommended decision, the president of the 
Corporation shall make a final decision with respect to that 
recommended decision. In addition to other remedies provided by law, 
the recipient may appeal the final decision to the Board.''.
    (c) State Advisory Councils.--Section 1004 (42 U.S.C. 2996c) is 
amended by striking subsection (f) and redesignating subsections (g) 
and (h) as subsections (f) and (g), respectively.
    (d) Technical Amendments.--
            (1) Section 1006(b)(2).--Section 1006(b)(2) (42 U.S.C. 
        2996e(b)(2)) is amended by striking ``provisions of section 
        1011'' and inserting ``regulations issued under paragraph (5) 
        of this subsection''.
            (2) Section 1006(b).--Section 1006(b) (42 U.S.C. 2996e(b)) 
        is amended by adding at the end the following:
    ``(7) The Corporation shall ensure that--
            ``(A) no employee of the Corporation or any recipient or 
        other grantee or contractor of the Corporation (except as 
        permitted by law in connection with such employee's own 
        employment situation), while carrying out legal assistance 
        activities supported under this title, engages in, or 
        encourages others to engage in, any public demonstration or 
        picketing, boycott, or strike; and
            ``(B) no such employee, at any time, engages in, or 
        encourages others to engage in--
                    ``(i) any rioting or civil disturbance,
                    ``(ii) any activity which is determined by a court 
                of competent jurisdiction to be in violation of an 
                outstanding injunction,
                    ``(iii) any other illegal activity, or
                    ``(iv) any intentional identification of the 
                Corporation or any recipient or other grantee or 
                contractor of the Corporation with any political 
                activity prohibited by section 1007(a)(6).''.
            (3) Section 1007.--Section 1007(a)(9) (42 U.S.C. 
        2996f(a)(9)) is amended by striking ``1011'' and inserting 
        ``1006(b)(5)''.
            (4) Section 1011.--Section 1011 (42 U.S.C. 2996j) is 
        repealed and sections 1012, 1013, and 1014 (42 U.S.C. 2996k, 
        2996l, 2996nt) are redesignated as sections 1011, 1012, and 
        1013, respectively.

SEC. 7. MONITORING AND INDEPENDENT EVALUATION.

    Section 1007(d) (42 U.S.C. 2996f(d)) is amended to read as follows:
    ``(d)(1) The Corporation shall monitor recipients to ensure that 
the provisions of this title, the rules, regulations, guidelines, and 
instructions issued under this title, and other laws are carried out by 
such recipients.
    ``(2) The Corporation shall provide for independent evaluations to 
determine whether such recipients are providing economical and 
effective legal assistance of high quality to eligible clients and to 
assist them in providing such assistance. Evaluations shall be carried 
out primarily by persons who are experienced in the delivery of legal 
services to the poor and are knowledgeable about the types of matters 
to which the recipient to be evaluated devotes its resources and shall 
be carried out primarily by persons who are not employees of the 
Corporation.
    ``(3) The Corporation shall adopt standards and procedures to 
implement the provisions of section 1006(b)(1)(A) and this subsection 
as regulations under section 1008(e). The standards and procedures 
adopted shall--
            ``(A) take into account that each recipient has both the 
        right and the responsibility to manage its day-to-day 
        operations and to assure that its employees comply with all 
        applicable law and deliver high quality legal assistance in an 
        effective and economical manner,
            ``(B) protect the personal privacy of eligible clients,
            ``(C) be consistent with the rules of ethics and 
        professional responsibility that are applicable in the 
        jurisdiction where a recipient delivers legal assistance, and
            ``(D) protect matters and documents that are personal or 
        private and related to an individual employee from examination 
        by the Corporation except to the extent that such records can 
        be expected to contain information directly pertinent and 
        necessary to an audit or to an investigation of--
                    ``(i) a likely pattern of discrimination,
                    ``(ii) lack of compliance with the law, the 
                provisions of this title, or the rules, regulations, 
                guidelines, or instructions issued by the Corporation, 
                or
                    ``(iii) or poor performance by a recipient,
        which is indicated by other external evidence.
    ``(4) The Corporation shall ensure that the monitoring process is 
fair and conducted in a manner that does not cause more than a 
necessary disruption to the provision of legal services provided by the 
recipient being monitored and provides--
            ``(A) sufficient notice before monitoring is conducted,
            ``(B) flexibility to negotiate with the Corporation when 
        disagreements arise over the timing and conduct of monitoring,
            ``(C) reasonable opportunity to respond and comment on 
        draft reports on monitoring,
            ``(D) protection from disclosure to third parties of the 
        results of monitoring and the contents of any draft reports on 
        monitoring before a final report on the monitoring is issued, 
        and
            ``(E) protection from disclosure to third parties of any 
        documents obtained during monitoring except to the extent 
        necessary to carry out the monitoring, consistent with the laws 
        and the rules of ethics and professional responsibility 
        applicable to the jurisdiction where such documents are 
        maintained, except that the Corporation shall at all times have 
        the authority to make evidence of criminal conduct available to 
        the appropriate legal authority.
The Corporation shall ensure that the monitoring process is reasonably 
related to the purposes which the monitoring is intended to accomplish.
    ``(5) The Corporation, in cooperation with recipients and other 
appropriate groups, shall develop comprehensive criteria for use in 
evaluating the capability and performance of recipients, including the 
assessment of--
            ``(A) the extent to which any such recipient provides a 
        comprehensive range of legal assistance to eligible clients, 
        including, in the case of support entities, a comprehensive 
        range of appropriate support services;
            ``(B) the extent that any such recipient has succeeded in 
        providing effective, economical, and high quality legal 
        services to eligible clients and is able to use and develop 
        additional resources, including pro bono services from the 
        private bar; and
            ``(C) the ability of any such recipient to determine and 
        address the most pressing legal problems and needs of eligible 
        clients.
    ``(6) Notwithstanding the preceding provisions of this subsection, 
the Inspector General of the Corporation shall not, in carrying out the 
Inspector General's functions, be subject to any restriction that--
            ``(A) is contained in the standards and procedures adopted 
        by the Corporation under this subsection; and
            ``(B) limits access by the Corporation to documents or 
        other information.''.

SEC. 8. CLASS ACTIONS.

    Section 1006(d)(5) (42 U.S.C. 2996e(d)(5)) is amended--
             (1) by striking ``No'' and inserting ``(A) Subject to 
        subparagraph (B), no''; and
            (2) by adding at the end the following:
    ``(B) No recipient or employee of any such recipient may bring a 
class action suit against the Federal Government or any State or local 
government unless--
            ``(i) the project director of the recipient has expressly 
        approved the filing of such an action in accordance with 
        policies established by the governing or policy body of the 
        recipient;
            ``(ii) the class relief which is the subject of such an 
        action would significantly benefit individuals who are eligible 
        for legal assistance under this title; and
            ``(iii) before filing such an action, the project director 
        of the recipient determines that the government entity is not 
        likely to change the policy or practice in question, that the 
        policy or practice will continue to adversely affect eligible 
        clients, that the recipient has given notice of its intention 
        to seek class relief, and that responsible efforts to resolve 
        without litigation the adverse effects of the policy or 
        practice have not been successful or would be adverse to the 
        interest of the clients.''.

SEC. 9. NEGOTIATION REQUIREMENT.

    Section 1007(a) (42 U.S.C. 2996f(a)) is amended--
            (1) in paragraph (9) by striking ``and'' after the 
        semicolon; and by striking the period at the end of paragraph 
        (10) and inserting ``; and''; and
            (2) by adding at the end the following:
            ``(11) require recipients to adopt policies, consistent 
        with the rules of ethics and professional responsibility that 
        apply in the jurisdiction in which legal assistance is to be 
        provided, which encourage employees of the recipients to 
        attempt to negotiate settlements and to use alternative dispute 
        resolution mechanisms, where appropriate and available, before 
        filing suit, except that nothing in this paragraph shall be 
        construed to permit the Corporation--
                    ``(A) to require policies which restrict 
                representation of clients to matters where the clients 
                agree to such negotiation or use of alternative dispute 
                resolution mechanisms; or
                    ``(B) to preclude an attorney from filing suit 
                where the attorney's professional responsibility to the 
                client requires that litigation be commenced without 
                notice to or negotiations with the opposing parties.''.

SEC. 10. RESTRICTIONS ON USE OF FUNDS FOR LEGAL ASSISTANCE TO ALIENS.

    Section 1007 (42 U.S.C. 2996f) is amended by adding at the end the 
following:
    ``(i) No funds appropriated to the Corporation may be used to 
provide legal assistance for or on behalf of any alien unless the alien 
is present in the United States and is--
            ``(1) an alien lawfully admitted for permanent residence as 
        defined in section 101(a)(20) of the Immigration and 
        Nationality Act (8 U.S.C. 1101(a)(20)), including aliens who 
        acquire the status of lawful permanent resident aliens under 
        the provisions of section 216 or 245A of that Act (8 U.S.C. 
        1186a, 1255a);
            ``(2) an alien who is either married to a United States 
        citizen or is a parent or an unmarried child under 21 years of 
        age of such citizen and who has filed an application to adjust 
        status to lawful permanent resident under the Immigration and 
        Nationality Act, and such application has not been finally 
        adjudicated;
            ``(3)(A) an alien who is lawfully present in the United 
        States pursuant to an admission under section 207 of the 
        Immigration and Nationality Act (8 U.S.C. 1157), who has been 
        granted suspension of deportation under section 244 of the 
        Immigration and Nationality Act, or who has been granted asylum 
        by the Attorney General under such Act; or
            ``(B) an alien who is lawfully present in the United States 
        as a result of being granted conditional entry pursuant to 
        section 203(a)(7) of the Immigration and Nationality Act before 
        April 1, 1980, because of persecution or fear of persecution on 
        account of race, religion, or political opinion or because of 
        being uprooted by catastrophic natural calamity;
            ``(4) an alien who is lawfully present in the United States 
        as a result of the Attorney General's withholding of 
        deportation pursuant to section 243(h) of the Immigration and 
        Nationality Act (8 U.S.C. 1253(h));
            ``(5) an alien who is authorized to work in the United 
        States by the Immigration and Naturalization Service;
            ``(6) an alien who has been provided a record of permanent 
        residence under section 249 of the Immigration and Nationality 
        Act;
            ``(7) an alien who is an eligible immigrant (as defined in 
        section 301(b)(1) of the Immigration Act of 1990), was 
        physically present in the United States on May 5, 1988, and is 
        seeking admission as an immediate relative under the 
        Immigration and Nationality Act or under section 203(a)(2) of 
        such Act (including under section 112 of the Immigration Act of 
        1990) or is seeking (or is being provided) benefits under 
        section 301(a) of the Immigration Act of 1990; or
            ``(8) an alien who is eligible for medical assistance under 
        title XIX of the Social Security Act, if the legal assistance 
        to be provided is needed in order to help obtain such medical 
        assistance.''.

SEC. 11. GOVERNING BODIES OF RECIPIENTS.

    Subsection (c) of section 1007 (42 U.S.C. 2996f) is amended to read 
as follows:
    ``(c)(1) In making grants or entering into contracts for legal 
assistance, the Corporation shall ensure that--
            ``(A) any recipient (other than a recipient defined in 
        section 1002(6)(B)) which has as one of its purposes the 
        provision of legal assistance to eligible clients is governed 
        by a body--
                    ``(i) the majority of which is comprised of 
                attorneys who are appointed by the governing bodies of 
                State, county, or local bar associations the 
                memberships of which together represent a majority of 
                the attorneys practicing law in the locality or 
                localities in which the recipient is to provide legal 
                assistance or, in the case of programs providing 
                service in more than one State, in the State or 
                locality in which the principal office of the recipient 
                is located;
                    ``(ii) at least 60 percent of which consists of 
                attorneys who are members of the bar of a State in 
                which the legal assistance is to be provided; and
                    ``(iii) at least one-third of which consists of 
                persons who are, when selected, eligible clients who 
                may also be representatives of associations or 
                organizations of eligible clients; and
            ``(B) any other recipient is governed by a body that meets 
        the requirements of subparagraph (A) or has established a 
        policy body, whose membership is selected consistent with such 
        requirements, to establish policy with respect to the 
        administration of any grant or contract under this title.
 Any attorney serving on a governing body or policy body of a recipient 
described in this paragraph may not, while so serving, receive 
compensation from the recipient on whose board the attorney sits. 
Subparagraph (A)(i) shall not be construed to prevent the governing 
body of a bar association from appointing members of the governing or 
policy bodies of more than one recipient.
    ``(2) The Corporation--
            ``(A) shall, upon application, grant waivers of the 
        requirements of clauses (i) and (ii) of paragraph (1)(A) for a 
        legal services program, supported under section 222(a)(3) of 
        the Economic Opportunity Act of 1964, which on the date of the 
        enactment of this title has a majority of persons who are not 
        attorneys on its policymaking board;
            ``(B) may grant, pursuant to regulations issued by the 
        Corporation, a waiver of the requirements of clauses (i) and 
        (ii) of paragraph (1)(A) for recipients which, because of the 
        nature or size of the population, legal community, or area they 
        serve, are unable to comply with such requirements; and
            ``(C) may, upon application, grant waivers of clause (iii) 
        of paragraph (1)(A) for a recipient which the Corporation has 
        determined does not have as a primary purpose the provision of 
        legal assistance to clients eligible for assistance under this 
        title.
As a condition for a grant of a waiver under subparagraph (C), the 
Corporation may require the recipient to establish a policy body whose 
membership is selected consistent with the requirements of subparagraph 
(A) of paragraph (1) with respect to the administration of any grant or 
contract under this title.
    ``(3) Consistent with the provisions of this title, the rules, 
regulations, guidelines, and instructions issued under this title, and 
any other laws, each recipient, pursuant to the direction and control 
of its governing or policy body, and not the Corporation, shall 
determine all broad policies concerning its provision of legal 
assistance and other activities of the recipient, including--
            ``(A) financial eligibility criteria of clients 
        represented, consistent with the guidelines established 
        pursuant to section 1007(a)(2)(B);
            ``(B) the services that the recipient will make available;
            ``(C) the policies that will govern the fiscal, 
        administrative, and representational activities of the 
        recipient in compliance with the provisions of this title and 
        regulations issued under this title, other applicable law, or 
        requirements imposed by grantors of resources to the recipient;
            ``(D) subject to the prohibitions and requirements 
        contained in this title, the priorities of the recipient for 
        the use of all available resources, including the policies 
        regarding the types of cases or matters attorneys, paralegal 
        staff, and other staff may undertake using such resources; and
            ``(E) subject to regulations on private attorney 
        involvement promulgated by the Corporation under section 
        1008(e), significant policy decisions concerning the use of 
        staff attorneys and other available and appropriate staff and 
        nonstaff resources, including private attorneys and others, to 
        provide legal assistance to eligible clients and to carry out 
        activities relating to the delivery of legal assistance.
    ``(4) The governing or policy body of a recipient shall--
            ``(A) not interfere with the lawyer-client relationship in 
        the representation of specific clients by the recipient;
            ``(B) comply with the legal and ethical requirements on 
        conflicts of interest that apply in the jurisdiction where the 
        recipient is located;
            ``(C) not act on a case-by-case basis in setting 
        priorities, except that the governing or policy body may 
        reconsider priorities at any time for future applications for 
        services in light of changing legal needs of clients or in 
        light of an emergency; and
            ``(D) ensure that activities under this title are carried 
        out in a manner consistent with attorneys' professional 
        responsibilities to a client as established in the rules of 
        ethics and professional responsibility that apply in the 
        jurisdiction where the legal assistance is provided.
    ``(5) The Corporation shall not--
            ``(A) interfere with the governing or policy bodies 
        described in paragraph (1) in their determinations of the broad 
        policy matters described in paragraph (2);
            ``(B) impose requirements or limitations on the types of 
        cases or representation of clients unless those requirements or 
        limitations are explicitly authorized by this title or other 
        applicable law; or
            ``(C) impose requirements or limitations on the governing 
        or policy bodies of recipients that are additional to, or more 
        restrictive than, the provisions of this subsection.''.

SEC. 12. PROFESSIONAL RESPONSIBILITIES.

    (a) Responsibilities of the Corporation.--Paragraph (3) of section 
1006(b) (42 U.S.C. 2996e(b)) is amended to read as follows:
    ``(3) The Corporation shall not, under any provision of this title, 
interfere with any attorney in carrying out the attorney's ethical or 
professional responsibilities to a client as established in the rules 
of ethics and professional responsibility that apply in the 
jurisdiction where the legal assistance is provided or abrogate as to 
attorneys in programs assisted under this title the authority of a 
State or other jurisdiction to enforce the standards of professional 
responsibility generally applicable to attorneys in such 
jurisdiction.''.
    (b) Grants and Contracts.--Paragraph (10) of section 1007(a) (42 
U.S.C. 2996f(a)) is amended to read as follows:
            ``(10) ensure that all attorneys employed by recipients 
        supported, in whole or in part, by the Corporation, while 
        engaged in legal assistance activities, refrain from the 
        persistent incitement of litigation and any other activity 
        prohibited by the rules of ethics or professional 
        responsibility that apply in the jurisdiction where the legal 
        assistance is provided, and ensure that such attorneys refrain 
        from personal representation for a private fee from the client 
        in any cases in which they were involved while engaged in such 
        legal assistance activities; and''.
    (c) Access to Records.--Section 1009(d) (42 U.S.C. 2996h(d)) is 
amended by inserting before the period at the end the following: ``or 
protected from disclosure by the laws or the rules of ethics or 
professional responsibility that apply in the jurisdiction where such 
reports or records are maintained''.

SEC. 13. SOLICITATION.

    Section 1007 (42 U.S.C. 2996f) (as amended by section 10) is 
amended by adding at the end the following:
    ``(j) A recipient and any employee of any such recipient shall not 
solicit professional employment from a prospective client if--
            ``(1) the prospective client has made known to the 
        recipient or employee of such recipient a desire not to be 
        solicited by the recipient or employee of such recipient;
            ``(2) the solicitation involves coercion, duress, or 
        harassment; or
            ``(3) the solicitation is made in order to urge the client 
        to initiate litigation without a proper factual basis for the 
        complaint.''.

SEC. 14. CERTAIN EVICTION PROCEEDINGS.

    Section 1007 (42 U.S.C. 2996f) (as amended by section 13) is 
amended by adding at the end the following:
    ``(k)(1) No funds made available by the Corporation may be used for 
initiating the defense of a person in a proceeding to evict that person 
from a public housing project if the person has been convicted of the 
illegal sale or distribution of a controlled substance and if the 
eviction proceeding is brought by a public housing agency because the 
illegal drug activity of that person threatens the health or safety of 
other tenants residing in the public housing project or employees of 
the public housing agency.
    ``(2) As used in this subsection--
            ``(A) the term `controlled substance' has the meaning given 
        that term in section 102 of the Controlled Substances Act (21 
        U.S.C. 802); and
            ``(B) the terms `public housing project' and `public 
        housing agency' have the meanings given those terms in section 
        3 of the United States Housing Act of 1937 (42 U.S.C. 
        1437a).''.

SEC. 15. PROCEDURAL SAFEGUARDS FOR LITIGATION.

    Section 1007 (42 U.S.C. 2996f) (as amended by section 14) is 
amended by adding at the end the following:
    ``(l) Except when necessary to respond to an emergency situation, 
no recipient or employee of such recipient may with respect to a claim 
or controversy engage in precomplaint settlement negotiations, file a 
complaint, or otherwise pursue litigation against a defendant unless a 
written retainer agreement which enumerates the particular facts on 
which the claim or controversy is initially based has been signed by 
the plaintiff (including named plaintiffs in a class action). Such 
retainer agreement shall be executed when representation commences or 
as soon thereafter as is practicable. Such retainer agreement--
            ``(1) shall be kept on file by the recipient in a manner 
        that prevents disclosure of information protected by the 
        attorney-client privilege or by the rules of ethics or 
        professional responsibility that apply in the jurisdiction in 
        which the legal assistance is provided; and
            ``(2) shall be made available--
                    ``(A) to any Federal department or agency that is 
                auditing the activities of the Corporation or of any 
                such recipient; and
                    ``(B) to any auditor receiving Federal funds to 
                conduct such auditing, including any auditor or monitor 
                of the Corporation.
Other parties shall have access to such agreement only through the 
applicable rules of discovery after litigation has begun. The recipient 
is not required to execute a written retainer agreement under this 
subsection when the only service to be provided is a brief service, 
advice, or consultation that does not obligate the recipient to provide 
additional service or undertake continued representation. Unless 
authorized by a court of competent jurisdiction, no recipient or 
employee of such recipient may file a complaint or petition in a court 
until all plaintiffs known to plaintiff's counsel at the time have been 
specifically identified in the complaint or petition.''.

SEC. 16. COMPETITION STUDY.

    Section 1007 (42 U.S.C. 2996f) (as amended by section 15) is 
amended by adding at the end the following:
    ``(m)(1) The Corporation shall study the feasibility of a system of 
competition in the delivery of legal assistance and related activities 
under subsections (a)(1) and (a)(3) of section 1006 and shall report 
its conclusions to the Congress not later than 3 years after the date 
of the enactment of the Legal Services Reauthorization Act of 1994. 
Such study shall be conducted in conjunction with an advisory committee 
which includes project directors, attorneys providing legal assistance, 
the organized bar, and eligible clients, who are selected by 
appropriate representatives of these groups.
    ``(2) The study under paragraph (1) shall examine how a system of 
competition would--
            ``(A) ensure access to, and the continued provision of, 
        high-quality, economical, and effective legal services;
            ``(B) take into account--
                    ``(i) the ongoing ethical and professional 
                responsibilities of recipients and their attorneys for 
                existing cases;
                    ``(ii) the potential for disruption in the delivery 
                of services to clients, including pro bono services or 
                the loss or reduction of funding or other resources 
                from sources other than the Corporation if an existing 
                recipient were replaced;
                    ``(iii) whether competition would harm the ability 
                of existing recipients to recruit and retain qualified 
                staff; and
                    ``(iv) whether the Corporation could require a new 
                recipient, as a condition of a competitive grant, to 
                assume collective bargaining agreements or to hire non-
                management or other staff from the previous provider in 
                order to minimize the loss of experienced staff.
    ``(3) If the Corporation decides to adopt a competitive model for 
the award of some or all grants for the delivery of legal assistance to 
eligible clients, it may do so only in accordance with regulations 
promulgated pursuant to section 1008(e) and the other requirements of 
this title.''.

SEC. 17. FEE-GENERATING CASE PROVISIONS.

    Subsection (b)(1) of section 1007 (42 U.S.C. 2996f(b)(1)) is 
amended by striking ``(which guidelines'' and all that follows through 
the end of the paragraph and inserting the following: ``, except that--
                    ``(A) such guidelines shall not preclude the 
                provision of legal assistance in cases in which a 
                client seeks only statutory benefits and appropriate 
                private representation is not available and the 
                recipient does not seek or accept any fee that is 
                deducted directly from the individual client's 
                recovery; and
                    ``(B) the Corporation may not--
                            ``(i) prevent recipients from seeking, 
                        receiving, or retaining attorneys' fees awarded 
                        or approved by a court or administrative body 
                        or included in a settlement in any matter that 
                        may be appropriately undertaken under the 
                        guidelines promulgated under this paragraph, or
                            ``(ii) offset attorneys' fees against grant 
                        amounts or take into account the amount of any 
                        such attorneys' fees in establishing funding 
                        levels, fund balances, or distributing funds 
                        appropriated under this title;''.

SEC. 18. MISCELLANEOUS RESTRICTIONS.

    (a) Restricted Activities.--Section 1007(b)(6) (42 U.S.C. 
2996f(b)(6)) is amended to read as follows:
            ``(6) to support or conduct training programs for the 
        purpose of advocating particular public policies or encouraging 
        political activities, labor or antilabor activities, boycotts, 
        picketing, strikes, or demonstrations, except that this 
        subsection shall not be construed to prohibit the training of 
        attorneys or paralegal personnel necessary to prepare them to 
        provide adequate legal assistance to eligible clients, to 
        advise any eligible client as to the nature of the legislative 
        process, or to inform any eligible client of the client's 
        rights under any statute, order, or regulation;''.
    (b) Recommendations Regarding Hiring of Staff Attorneys.--Paragraph 
(8) of section 1007(a) (42 U.S.C. 2996f(a)) is repealed and paragraphs 
(9), (10), and (11) are redesignated as paragraphs (8), (9) and (10), 
respectively.
    (c) Labor Law Violations.--Section 1006 (42 U.S.C. 2996e) is 
amended by adding at the end the following:
    ``(g) No recipient may engage in activity that, with respect to the 
recipient, is determined to be a violation of applicable labor laws by 
the National Labor Relations Board or a court or other State or local 
agency.''.
    (d) Recipient Defined.--Section 1002(6) (42 U.S.C. 2996a(6)) is 
amended to read as follows:
            ``(6) `recipient' means--
                    ``(A) any grantee, contractor, or recipient of 
                financial assistance described in subparagraph (A) of 
                section 1006(a)(1); or
                    ``(B) any subrecipient, subgrantee, or 
                subcontractor of any recipient described in 
                subparagraph (A) or any grantee or contractor receiving 
                funds from the Corporation under subparagraph (B) of 
                section 1006(a)(1) or under section 1006(a)(3), but 
                only with respect to the provision of legal assistance 
                to eligible clients that are supported with funds 
                provided under this title;''.
    (e) Limitation on Use Amendment.--Section 1007(b) (42 U.S.C. 
2996f(b)) is amended by inserting ``and'' at the end of paragraph (7) 
and by striking paragraphs (9) and (10).

SEC. 19. RECORDKEEPING AND NONCORPORATION FUNDS.

    (a) Non-Corporation Funds.--Subsection (c) of section 1010 (42 
U.S.C. 2996i) is amended to read as follows:
    ``(c)(1) Funds received by a recipient from sources other than the 
Corporation shall be accounted for and reported as receipts and 
disbursements separate and distinct from Corporation funds, pursuant to 
generally accepted accounting principles. A recipient shall maintain a 
system of recordkeeping which discloses the activities supported by 
Corporation and non-Corporation funds and allocates costs appropriately 
to such activities. The recipient shall adopt procedures providing for 
the design and implementation of such a recordkeeping system. The 
specific recordkeeping system to be employed shall be determined by the 
recipient in a manner that meets the requirements established by the 
Office of Management and Budget and published as Circular A-122 (Cost 
Principles for Nonprofit Organizations).
    ``(2) Private funds received by a recipient or other grantee or 
contractor of the Corporation for the provision of legal assistance 
shall not be used to engage in activities prohibited by paragraph (2), 
(3), (4), (6), or (7) of section 1007(b) or by section 1007(k). This 
subsection shall not be construed to prevent recipients or other 
grantees or contractors of the Corporation from receiving tribal funds 
(including foundation funds benefiting Indians or Indian Tribes) and 
expending them in accordance with the purposes for which they are 
provided or to prevent contracting or making other arrangements with 
private attorneys, private law firms, or other State or local entities 
of attorneys or with legal aid societies having separate public 
defender programs for the provision of legal assistance to eligible 
clients under this title.''.
    (b) Annual Financial Audit.--Paragraph (1) of section 1009(c) (42 
U.S.C. 2996h(c)) is amended to read as follows:
    ``(1) The Corporation shall require each recipient to provide for 
an annual financial audit but the Corporation may not select the 
auditor employed for such audit by such recipient. The Corporation may 
conduct its own financial audits of recipients and may use funds 
appropriated to the Corporation to retain independent auditors to 
conduct financial audits of any recipient. The report of each audit 
shall be maintained for a period of at least 5 years at the principal 
office of the Corporation.''.

SEC. 20. EVASION.

    The Legal Services Corporation Act (as amended by section 6(d)(4)) 
is amended by inserting after section 1013 the following new section:

                                ``evasion

    ``Sec. 1014. The use of `alternative corporations' to avoid or 
otherwise evade the provisions of this title or the Legal Services 
Reauthorization Act of 1994 is prohibited. The term `alternative 
corporation' means any corporation, law firm, business association, 
group, entity, or enterprise which, through control over workload or 
interlocking boards of directors, has a single identity of interest 
with a recipient. Any recipient which shares employees with any other 
corporation, law firm, business association, group, entity, or 
enterprise shall specify with particularity the use of any funds by 
such employees in accordance with the recordkeeping requirements 
established under section 1010(c).''.

SEC. 21. ATTORNEYS' FEES PROVISIONS.

    Subsection (f) of section 1006 (42 U.S.C. 2996e) is amended to read 
as follows:
    ``(f) If any court finds, based on substantial evidence, that a 
recipient commenced an action for the purpose of harassment or 
retaliation or maliciously abused legal process, or that the 
plaintiff's action was frivolous or without foundation and not 
warranted by existing law or by a non-frivolous argument for the 
extension, modification, or reversal of existing law or the 
establishment of new law, the court may award reasonable costs and 
attorneys' fees incurred by the defendant in defending the action. Any 
such costs and fees shall be paid directly by the Corporation. The 
Corporation may recover the amount of any costs and fees paid by the 
Corporation from the recipient against whom the award was made by 
offsetting that amount against future grant awards made by the 
Corporation to such recipient. Unless otherwise agreed by the 
Corporation and the recipient the Corporation, in any one grant year, 
may not deduct more than 5 percent of a grant for purposes of 
recoupment of such costs and fees.''.

SEC. 22. CORPORATION BOARD COMPOSITION AND CONTROL OVER POLICY.

    (a) Term of Office.--Subsection (b) of section 1004 (42 U.S.C. 
2996c) is amended to read as follows:
    ``(b) The term of office of each member of the Board shall be 3 
years, except that a member of the Board shall continue to serve after 
the end of the member's term of office until the successor to such 
member has been appointed and qualified. The term of each member shall 
be computed from the date of termination of the preceding term. Any 
member appointed to fill a vacancy arising as a result of a prior 
member's resignation, death, or removal pursuant to subsection (e) 
occurring before the expiration of the term for which such member's 
predecessor was appointed shall be appointed for the remainder of such 
term. No member shall be reappointed to more than 2 consecutive terms 
immediately following such member's initial term unless the initial 
term served by that member was less than one year in duration.''.
    (b) Chairman.--Subsection (d) of section 1004 (42 U.S.C. 2996c) is 
amended to read as follows:
    ``(d) The Board shall annually elect a chairman from among its 
voting members.''.
    (c) Procedure.--Section 1006 (42 U.S.C. 2996e), as amended by 
section 18(c), is amended by adding at the end the following:
    ``(h) All rules, regulations, guidelines, instructions, and grant 
conditions under this title, and all policies or changes in policy 
directly affecting recipients shall be adopted by the Board after 
notice and comment. For purposes of this subsection, policies or 
changes in policies include increasing or decreasing funding to, 
imposing new terms and conditions on, or making changes in, the classes 
of recipients which provide and support the delivery of legal 
assistance. This subsection shall not preclude the staff of the 
Corporation from imposing, without notice and comment, specific 
conditions on a grant or contract to an individual recipient which are 
not applicable to other such recipients if the conditions relate 
specifically to a prior determination that the recipient has not 
complied with the provisions of this title or the rules, regulations, 
guidelines, or instructions issued under this title or has failed to 
provide high quality, effective, and economical legal assistance.''.
    (d) Compensation of Officers and Employees.--Section 1005(d) (42 
U.S.C. 2996(d)) is amended by striking ``level V'' and inserting 
``level III''.

SEC. 23. REPROGRAMMING PROVISIONS.

    Section 1008 (42 U.S.C. 2996g) is amended by adding at the end the 
following:
    ``(f) The Corporation may not promulgate rules, regulations, 
guidelines, or instructions under this title unless the Corporation has 
so notified the Committee on Appropriations and the Committee on the 
Judiciary of the House of Representatives and the Committee on 
Appropriations and the Committee on Labor and Human Resources of the 
Senate at least 15 days before final publication of the rules, 
regulations, guidelines, or instructions, and has given such committees 
an opportunity to comment on such rules, regulations, guidelines, or 
instructions.''.

SEC. 24. GRANTS.

    (a) 12-Month Grants Required.--Section 1010 (42 U.S.C. 2996i) is 
amended by adding to the end the following:
    ``(e) All grants and contracts made pursuant to sections 1006(a)(1) 
and (3) for calendar years 1995, 1996, 1997, 1998, and 1999 shall be 
made for a period of at least 12 months, except for any grant to a new 
program commencing operations after the beginning of the applicable 
calendar year.''.
    (b) Authority for Grants to States and Local Governments 
Repealed.--Section 1006(a)(1) (42 U.S.C. 2996e(a)(1)) is amended to 
read as follows:
            ``(1)(A) to provide financial assistance to qualified 
        programs furnishing legal assistance to eligible clients and to 
        make grants and contracts with individuals, partnerships, 
        firms, corporations, and nonprofit organizations for the 
        purposes of providing legal assistance to eligible clients 
        under this title, and (B) to make such other grants and 
        contracts as are necessary to carry out the purposes and 
        provisions of this title;''.

SEC. 25. ESTABLISHMENT OF LOCAL PRIORITIES.

    Section 1007(a) (42 U.S.C. 2996f(a)) is amended--
            (1) in paragraph (2)(C)(i) by striking ``goals established 
        by the Corporation'' and inserting ``the principles of section 
        1001 of this title and any goals established by this title''; 
        and
            (2) by adding after paragraph (10) (as redesignated by 
        section 18(b) of this Act) the following:
``The procedures adopted pursuant to paragraph (2)(C)(i) shall require 
the governing or policy bodies of recipients to review annually the 
priorities that are adopted in accordance with such procedures, and 
periodically analyze the legal needs of clients in the area served by 
each such recipient to take into account new or changing circumstances 
of such clients. As part of such analysis, each such recipient shall 
seek comments and information from clients, the organized bar, and 
program staff and from other parties with relevant information 
concerning client needs.''.

SEC. 26. STAFF ATTORNEYS.

    Paragraph (7) of section 1002 (42 U.S.C. 2996a) is amended to read 
as follows:
            ``(7) `staff attorney' means an attorney who--
                    ``(A) is employed by a recipient that provides 
                legal assistance to eligible clients under this title; 
                and
                    ``(B) a significant part of such attorney's annual 
                professional salary is derived from the proceeds of a 
                grant or contract from the Corporation to such 
                recipient; and''.

SEC. 27. STUDIES.

    (a) Study on Legal Assistance to Older Americans.--Section 1007 (42 
U.S.C. 2996f) (as amended by section 16) is amended by adding at the 
end the following:
    ``(n) The Corporation shall conduct a study to determine the extent 
and effectiveness of legal assistance provided by recipients to older 
Americans. The Corporation shall submit to the Congress, not later than 
6 months after the date of the enactment of the Legal Services 
Reauthorization Act of 1994, a report on the study, together with any 
recommendations that the Corporation has on ways to improve the 
provision of such legal assistance to older Americans.''.
    (b) Study on Recruitment and Retention.--Section 1007 (42 U.S.C. 
2996f) (as amended by subsection (a)) is amended by adding at the end 
the following:
    ``(o) Within 6 months after the date of the enactment of the Legal 
Services Reauthorization Act of 1994, the Corporation shall undertake a 
study of factors that affect the recruitment and retention by 
recipients of legal services attorneys and other personnel, including 
loan forgiveness programs and the need for and availability of 
retirement benefits. The Corporation shall submit to the Congress a 
report on such study, together with recommendations on how to improve 
recruitment of a highly qualified and diverse workforce and increase 
retention of experienced personnel. Such study shall be conducted with 
an advisory committee which includes project directors, attorneys and 
paralegals providing legal assistance and eligible clients, all of whom 
shall be selected by appropriate representatives of such groups.''.
    (c) Other Studies.--Section 1007 (42 U.S.C. 2996f) is amended--
            (1) by striking subsections (g) and (h), and
            (2) by redesignating subsections (i) through (o) as 
        subsections (g) through (m), respectively.

                                 <all>

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