[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                       LEGAL SERVICES CORPORATION

=======================================================================



                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   COMMERCIAL AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 27, 2009

                               __________

                           Serial No. 111-59

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov




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                       COMMITTEE ON THE JUDICIARY



                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
ROBERT WEXLER, Florida               STEVE KING, Iowa
STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
  Georgia                            JIM JORDAN, Ohio
PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
MIKE QUIGLEY, Illinois               JASON CHAFFETZ, Utah
JUDY CHU, California                 TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

           Subcommittee on Commercial and Administrative Law

                    STEVE COHEN, Tennessee, Chairman

WILLIAM D. DELAHUNT, Massachusetts   TRENT FRANKS, Arizona
MELVIN L. WATT, North Carolina       JIM JORDAN, Ohio
DANIEL MAFFEI, New York              HOWARD COBLE, North Carolina
ZOE LOFGREN, California              DARRELL E. ISSA, California
HENRY C. ``HANK'' JOHNSON, Jr.,      J. RANDY FORBES, Virginia
  Georgia                            STEVE KING, Iowa
ROBERT C. ``BOBBY'' SCOTT, Virginia
JOHN CONYERS, Jr., Michigan
JUDY CHU, California

                     Michone Johnson, Chief Counsel

                    Daniel Flores, Minority Counsel


                            C O N T E N T S

                              ----------                              

                            OCTOBER 27, 2009

                                                                   Page

                           OPENING STATEMENTS

The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Chairman, Subcommittee on Commercial 
  and Administrative Law.........................................     1
The Honorable Trent Franks, a Representative in Congress from the 
  State of Arizona, and Ranking Member, Subcommittee on 
  Commercial and Administrative Law..............................     2
The Honorable Robert C. ``Bobby'' Scott, a Representative in 
  Congress from the State of Virginia, and Member, Subcommittee 
  on Commercial and Administrative Law...........................     4

                               WITNESSES

Mr. Michael D. McKay, Vice Chairman of the Board, Legal Services 
  Corporation
  Oral Testimony.................................................     6
  Prepared Statement.............................................     8
Ms. Helaine M. Barnett, President, Legal Services Corporation
  Oral Testimony.................................................    13
  Prepared Statement.............................................    16
Mr. Harrison D. McIver, III, Executive Director/CEO, Memphis Area 
  Legal Services, Inc.
  Oral Testimony.................................................    40
  Prepared Statement.............................................    43
Mr. Donald Saunders, Director of the Civil Legal Services 
  Division, National Legal Aid and Defender Association
  Oral Testimony.................................................    52
  Prepared Statement.............................................    54
Mr. H. Thomas Wells, Jr., Immediate Past President, American Bar 
  Association
  Oral Testimony.................................................    66
  Prepared Statement.............................................    68
Ms. Susan Ragland, Director, Financial Management and Assurance 
  Team, Government Accountability Office
  Oral Testimony.................................................    79
  Prepared Statement.............................................    81

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable Henry C. ``Hank'' Johnson, 
  Jr., a Representative in Congress from the State of Georgia, 
  and Member, Subcommittee on Commercial and Administrative Law..     5

                                APPENDIX
               Material Submitted for the Hearing Record

Answers to Post-Hearing Questions from Michael D. McKay, Vice 
  Chairman of the Board, Legal Services Corporation..............   106
Answers to Post-Hearing Questions from Helaine M. Barnett, 
  President, Legal Services Corporation..........................   111
Answers to Post-Hearing Questions from Harrison D. McIver, III, 
  Executive Director/CEO, Memphis Area Legal Services, Inc.......   115
Answers to Post-Hearing Questions from Donald Saunders, Director 
  of the Civil Legal Services Division, National Legal Aid and 
  Defender Association...........................................   120
Answers to Post-Hearing Questions from H. Thomas Wells, Jr., 
  Immediate Past President, American Bar Association.............   133
Answers to Post-Hearing Questions from Susan Ragland, Director, 
  Financial Management and Assurance Team, Government 
  Accountability Office..........................................   136
Letter from Alan Reuther, Director, CWA-UAW Alliance.............   141
Prepared Statement of Rebekah Diller, Deputy Director, Justice 
  Program, on behalf of the Brennan Center for Justice at NYU 
  School of Law..................................................   143

                        OFFICIAL HEARING RECORD
      Material Submitted for the Hearing Record but not Reprinted

Reports submitted with the prepared statement of Rebekah Diller, Deputy 
    Director, Justice Program, on behalf of the Brennan Center for 
    Justice at NYU School of Law. The reports are entitled 
    ``Foreclosures: A Crisis in Legal Representation,'' and ``A Call to 
    End Federal Restrictions on Legal Aid for the Poor.'' These reports 
    are available at the Subcommittee and can also be accessed at, 
    respectively:

    http://brennan.3cdn.net/a5bf8a685cd0885f72_s8m6bevkx.pdf

    http://brennan.3cdn.net/7e05061cc505311545_75m6ivw3x.pdf


                       LEGAL SERVICES CORPORATION

                              ----------                              


                       TUESDAY, OCTOBER 27, 2009

              House of Representatives,    
                     Subcommittee on Commercial    
                            and Administrative Law,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 11:07 a.m., in 
room 2237, Rayburn House Office Building, the Honorable Steve 
Cohen (Chairman of the Subcommittee) presiding.
    Present: Representatives Cohen, Watt, Lofgren, Scott, Chu, 
Franks, Jordan, Coble, and King.
    Staff present: (Majority) Norberto Salinas, Counsel; Adam 
Russell, Professional Staff; and (Minority) Justin Long, 
Counsel.
    Mr. Cohen. This hearing of the Committee on Judiciary, 
Subcommittee on Commercial and Administrative Law is called to 
order.
    Without objection, the Chair will be authorized to call a 
recess during the hearing.
    And I will now recognize myself for a short statement.
    This morning, we meet to discuss the Legal Services 
Corporation. Congressionally established in 1974, the LSC is a 
private, non-profit corporation which promotes equal access to 
justice under the law by providing grants to programs for civil 
legal assistance for low-income persons.
    The programs which receive these grants help the most 
vulnerable, specifically those living at or below 125 percent 
of the Federal poverty level. The grantee programs help those 
who face a variety of matters, including displaced persons 
attempting to obtain Federal emergency assistance following 
hurricanes or floods or earthquakes, if they should happen, and 
victims of predatory lending practices.
    During this economic downturn, the grantee programs have 
played an even more significant role. The programs have 
provided legal assistance to families and individuals to obtain 
public benefits and to fend off foreclosures in their personal 
lives.
    Because LSC distributes more than 95 percent of its total 
funding to over 135 legal aid programs, providing legal 
assistance in every congressional district, we can be sure that 
many of those in need are receiving legal assistance. However, 
according to a recent report, not all eligible potential 
clients of LSC-funded programs were receiving the legal 
assistance they so desperately need.
    In Memphis, my hometown, the Memphis Area Legal Services 
handled nearly 5,600 cases in 2008. Both the downturn in the 
economy and the resulting increase in requests for legal 
representation, the Memphis Area Legal Services has handled 
over 4,500 cases through the first 6 months of this year. That 
would extrapolate to 9,000 cases, or an increase of about 40 
percent, at least.
    I am very interested in hearing why LSC-funded programs 
have been unable to meet the needs of half of all the potential 
clients that have walked through the office doors and how that 
problem could be resolved. What avenues are available for 
families and individuals to seek legal assistance, but cannot 
obtain them from the LSC-funded programs?
    I served for a brief period of time as a general sessions 
judge in Shelby County, and Legal Services often represented 
people who otherwise would have been taken advantage of by 
landlords. And it was important that the Allied Legal Services 
will be available to represent individuals or else they would 
not have been treated fairly and justly. So I have seen it 
firsthand.
    Since the Subcommittee's last hearing on Legal Services in 
2005, Legal Services and some of its grantees have received 
criticism for inappropriate use of Federal funds, and other 
criticisms, as well, have been heard. Members of this 
Subcommittee want to know that taxpayer money is being used 
efficiently and appropriately and that anyone who violates 
taxpayers' trust is held accountable.
    There are special places held for people who steal from the 
poor. We seem to have some type of reverence in our society for 
people like Jesse James, who steal from the rich, but not for 
those who steal from the poor.
    Although we have Ms. Barnett and Mr. McKay here to discuss 
what LSC is doing to improve accountability and proper use of 
Federal funds, we also welcome Susan Ragland from the General 
Accounting Office, to give us some information and help us 
determine whether LSC has implemented measures to protect 
against misuse of Federal funds and protect those funds 
entrusted to them for the benefit of people who need that help.
    Finally, Mr. Scott, distinguished Member of the 
Subcommittee and chairman of the Criminal Law section, has 
recently introduced the Civil Access to Justice Act of 2009, 
legislation which several Members of this Subcommittee, 
including myself, have co-sponsored. The bill would authorize 
an increase in funding for the Legal Services Corporation, 
strengthen Legal Services, internal controls and corporate 
governance, and allow LSC-funded programs to utilize non-
Federal funds more efficiently. Mr. Scott has a special 
concern, and I appreciate that. Hopefully, the witnesses will 
be able to address this legislation, as well.
    Accordingly, I look forward to receiving today's testimony, 
and I now recognize Mr. Franks, the distinguished Ranking 
Member of the Subcommittee, for his opening remarks.
    Mr. Franks. Well, thank you, Mr. Chairman, and thank you 
folks for being here. I know it is always a pretty heart-
stopping challenge sometimes to come before a bunch of Members 
of Congress that know a lot less about the issues than you do 
and yet have to say some of the things they have to say, but I 
appreciate you being here.
    Mr. Chairman, I welcome this opportunity to renew our 
oversight of the Legal Services Corporation. I don't think any 
hearings have been held on this topic since at least the 
beginning of the 110th Congress, and I think this oversight is 
long overdue.
    And I say this because we know that LSC has had a troubling 
history of mishandling Federal funds. And this has been 
revealed by reports from LSC's inspector general and the GAO 
and has been pursued in various news articles, as well.
    It is also clear that this historical pattern hasn't 
stopped yet. To the contrary, troubles continue even to this 
year. As recently as July, the Washington Times and CBS News 
reported numerous instances of wasted funds, including 
unnecessary travel expenses and a decorative wall costing over 
$180,000.
    In July, LSC's inspector general reported problems with the 
organization's consulting contracts. And as we speak, the GAO 
is in the middle of preparing its third report on LSC in as 
many years.
    Our witnesses today undoubtedly will cite structural and 
other changes being implemented by LSC in an effort to bring it 
into compliance with recommendations in the most recent GAO and 
inspector general reports, and I do applaud those efforts, of 
course. At the same time, I am sincerely concerned over pending 
legislation that would vastly expand LSC's funding and lift 
restrictions on its activities before we know definitively that 
LSC has cleaned house and turned the page.
    How can we trust that the most recent fixes at the 
corporation will be any more effective than LSC's past fixes, 
given the fact that GAO and the inspector general keep coming 
back and finding more problems that need fixing on an ongoing 
basis?
    Doesn't logic dictate that we wait and watch vigilantly at 
least another year or 2 to see if funding at current levels is 
used properly before we reward LSC with another increase in 
annual funds, this time from $390 million in 2009 to $440 
million in 2010, and doesn't logic demand that we refrain from 
lifting restrictions on how LSU--I am sorry, LSC can use the 
funds?
    In March of this year, Senator Tom Harkin introduced a bill 
that would lift restrictions on the ability of LSC grantees to 
file ideologically motivated lawsuits. Our colleague, 
Congressman Scott, introduced similar legislation, H.R. 3764, 
this month in the House.
    These restrictions were enacted by Congress in 1996 in 
response to evidence that Legal Services lawyers were 
systematically using taxpayers' money to further partisan 
policies. I guess that troubles me as much as anything, Mr. 
Chairman.
    The restrictions ban representation--I am sorry, the 
restrictions ban representation of undocumented aliens, 
abortion-related litigation, class-action lawsuits, prisoner 
advocacy, challenges to the welfare reform, and congressional 
restricted redistricted cases.
    Not only do they keep LSC out of the partisan arena, they 
focused LSC on what should have always been its true mission, 
and that is to provide legal aid to the poor. Given that these 
restrictions, however, Legal Services lawyers funded by LSC 
have attempted to use Federal funds to engage in prohibited 
activism.
    As recently as 2008, for example, LSC's inspector general 
subpoenaed California Rural Legal Assistance to see if it had 
violated the restriction on representing undocumented aliens. 
The National Legal and Policy Center reported this year that a 
``former CRLA lawyer said the organization had a policy of 
providing aid to illegal aliens.''
    Now, Mr. Chairman, evidence like this, misuse of Federal 
funds, should stop before we reward LSC with increased funds, 
though it will probably take another year before LSC's 130-plus 
grantee boards receive even orientation on modernized auditing 
practices. And it is absurd that Congress is considering giving 
LSC more money and more ways to misuse its money at this 
particular time.
    Oversight and not increased funding and lifted restrictions 
is what is needed today and in the foreseeable future. Until 
LSC has proven over a sustained period of time that its funds 
are no longer being used for partisan activism, we should not 
consider rewarding LSC with increased funds and lifted 
restrictions.
    And I thank you, Mr. Chairman.
    Mr. Cohen. I thank the gentleman for his statement.
    I now recognize Mr. Scott, the Chairman of the Crime 
Subcommittee and a particularly knowledgeable person on this 
issue who has a bill before us on the LSC.
    Mr. Scott, you are recognized.
    Mr. Scott. Thank you, Mr. Chairman, for holding this 
important hearing on the Legal Services Corporation.
    I have long been a supporter of legal assistance to 
indigent persons and for LSC dating back to the 1970's when I 
led the effort to establish the legal aid program on the 
Virginia peninsula and became the first chairman of the board 
of the Peninsula Legal Aid Center, which is funded by the LSC.
    The Legal Services Corporation was established by Congress 
in 1974 to provide legal assistance for those with low income 
in civil matters. The LSC directs and supervises the Federal 
grants and local legal services providers, and over the years, 
the Legal Services Corporation has been stripped of many of its 
most effective tools to give those who need the help--give help 
to those who need it the most.
    Specifically, there have been restrictions placed on the 
use of Federal and non-Federal funds that have limited the 
types of cases that Legal Services attorneys can bring, and the 
funds appropriated for LSC are insufficient to meet the needs 
of their clients. Unfortunately, the corporation has not been 
re-authorized since 1977.
    For these reasons, I introduced the Civil Access to Justice 
Act of 2009, which reauthorizes the Legal Services Corporation. 
The bill will provide relief to those who need civil legal 
representation by accomplishing several goals.
    First, it increases the authorization level for the LSC to 
$750 million. This is approximately the same amount, adjusted 
for inflation, appropriated in 1981. LSC is currently funded at 
$390 million, which in current dollars is well below the amount 
needed to respond to significant requests for Legal Services.
    The bill also lifts most of the restrictions placed on the 
program through the appropriations bills over the years, 
including the restriction on collecting attorney's fees and 
prohibition on legal aid attorneys bringing class-action suits. 
The bill does maintain the prohibition on abortion-related 
litigation and incorporates some limits on whom the LSC-funded 
programs can represent, including the prohibition against 
representing prisoners challenging prison conditions and people 
convicted of illegal drug possession in public housing eviction 
proceedings.
    The bill also provides for more effective administration of 
LSC. Recent GAO reports emphasized the need for better 
corporate oversight and governance. The bill seeks to improve 
corporate practices of LSC.
    I would like to thank the current co-sponsors of the bill, 
including Chairman Conyers and Chairman Cohen, and former 
Chairs of the Subcommittee, Congresswoman Sanchez and 
Congressman Watt and Congressman Delahunt and Johnson for their 
leadership on this issue. We look forward to working with the 
LSC and civil legal advocacy groups as we move forward to its 
markup and ultimately passage of the bill in the House.
    And, again, thank you, Mr. Chairman. I look forward to the 
witnesses' testimony.
    Mr. Cohen. Thank you, Mr. Scott. I appreciate your 
statement.
    Without objection, other Members' opening statements will 
be submitted and included in the record.
    [The prepared statement of Mr. Johnson follows:]
 Prepared Statement of the Honorable Henry C. ``Hank'' Johnson, Jr., a 
   Representative in Congress from the State of Georgia, and Member, 
           Subcommittee on Commercial and Administrative Law
    Chairman Cohen, Thank you for holding this important hearing. I am 
glad that CAL is taking the opportunity to look at the role that the 
Legal Services Corporation plays in ensuring that all Americans have 
access to justice.
    In this current economic climate, it is vitally important to make 
sure that the funding that Legal Services Corporation receives is not 
placed on the backburner as a means to cut costs, as in these difficult 
economic times the importance of their work will only grow. Recent 
statistics indicate that for each client that the legal services 
corporation takes on, one eligible client is turned away due to 
inadequate resources. This means that an overwhelmingly large 
percentage of the legal needs of low income Americans are being unmet. 
Adequate legal representation can be costly, often forcing individuals 
to represent themselves, pro se. Pro se civil litigants represent a 
significant and growing burden on a judicial system which is not well-
equipped to deal with them. Unsophisticated and inexperienced pro se 
litigants complicate the process and burden the entire system by 
complicating not only their own cases but by increasing the burden and 
transaction costs of other parties, represented or not.
    Thus, it is imperative that we consider not only the costs of 
increasing the Legal Service Corporation's funding, but more 
importantly what costs we will face if we do not support them. Not only 
will we clog the judicial system, we essentially ensure a great 
miscarriage of justice by forcing litigants to go pro se. To suggest 
that that pro bono legal services or volunteers can begin to address 
the tremendous legal needs of low income Americans is unrealistic. This 
need exists amongst each of our constituencies across this country. 
Therefore, I implore my colleagues on this subcommittee to consider 
these needs as we hear testimony from the witnesses today.
    I yield back the balance of my time. Thank you.
                               __________

    Mr. Cohen. I thank all the witnesses for participating in 
today's hearing. Your written statements, without objection, 
will be placed into the record, and we would ask you limit your 
remarks to 5 minutes. We have got a lighting system. Green 
means you are in the first four; yellow means you are winding 
down to your last minute; and red means you should have 
finished.
    After you have presented your statement testimony, 
Subcommittee Members will be permitted to ask questions, same 
5-minute limit.
    Now, I am pleased to introduce our witnesses for our first 
panel. And our first witness will be Mr. McKay. Mr. McKay is on 
the board of the Legal Services Corporation and serves as vice 
chair. He was confirmed in 2003, long and commendable record 
with Legal Services, is a founding partner of McKay Chadwell 
legal corporation, a practice which focuses on commercial 
litigation, white-collar criminal defense, and corporate and 
government internal investigations.
    We appreciate--and you were a former U.S. attorney, as 
well?
    Mr. McKay. I was, Mr. Chairman.
    Mr. Cohen. Yes. Thank you. And we welcome you as our 
witness.
    Well, I have got a second page which still says that you 
served as U.S. attorney for the western district of Washington 
from 1989 to 1993. And then in 2008, hired by the Port of 
Seattle to serve as legal counsel for special investigative 
committee's investigation of important contracting policies, 
run numerous political campaigns, and I won't go into those, 
for none of those were successful or ones that we would like to 
talk about too much.
    Thank you, Mr. McKay. Will you proceed with your testimony? 
[Laughter.]

        TESTIMONY OF MICHAEL D. McKAY, VICE CHAIRMAN OF 
             THE BOARD, LEGAL SERVICES CORPORATION

    Mr. McKay. Chairman Cohen, Congressman Franks, Members of 
the Subcommittee, good morning. It is my pleasure to be with 
you today.
    Mr. Chairman, thank you for holding this hearing and for 
your interest in LSC and the provision of civil legal 
assistance to low-income Americans.
    I bring you greetings from our entire bipartisan board. 
Each board member is eager to do the right thing for the people 
we serve and understands that providing civil legal assistance 
to low-income citizens is quite important.
    As you have noted from my resume, I was honored to be the 
United States attorney for the western district of Washington 
in Seattle under President George H.W. Bush, and I currently 
have a practice in Seattle with McKay Chadwell.
    And a few of our cases do end up on the front pages of the 
Seattle newspapers, like the Port of Seattle case you just 
referenced, Mr. Chairman. However, some of my most rewarding 
cases have been the least publicized.
    I had the opportunity to represent a public housing tenant 
whose case I took through our local volunteer lawyer services 
office many years ago. She endured harassment, broken windows, 
and physical violence at the hands of her neighbors. When the 
police came to investigate, language barriers led them to 
believe her attackers. She was evicted and brought up on 
criminal charges.
    I took her case pro bono, and the charges were ultimately 
dropped, and she was moved into another housing unit far from 
her attackers. Without pro bono legal assistance, women like 
her would be out on the street.
    Mr. Chairman, I feel so strongly about the obligation of 
all attorneys to contribute to equal justice that I continued 
to take cases pro bono while I was a United States attorney. 
Those of us that do this know just how gratifying it is, but we 
also know how great the need is in our society for legal aid. 
Government has a role in this. Proper levels of funding, as 
well as leadership and oversight, are necessary if we are to 
ensure equal access to justice for all Americans.
    The recently released report on the justice gap in America, 
about which President Barnett will be speaking today, makes 
clear that legal aid has never been more in need of resources. 
In today's economic downturn, more women are victims of 
domestic violence, more elderly Americans are being wrongfully 
evicted from their homes, more children are at risk, and half 
of our eligible clients are being turned away from the legal 
assistance they need to protect themselves.
    The LSC board of directors over the last several years has 
worked hard to increase more private attorney involvement and 
has recommended increases in LSC funding to help meet that 
need. We sincerely appreciate the bipartisan support our 
requests have received.
    Equally important, as Congressman Franks has indicated, of 
course, is the proper use of those funds that Congress has 
entrusted to our stewardship. And we consider this a central 
mission for the board and entire management.
    And prompted by two GAO reports, we have worked to 
strengthen our governance practices, improve our oversight, and 
to work with management to improve management practices. We 
adopted a code of ethics. We train all employees every year on 
the code of ethics, and we included an orientation for the new 
employees.
    We created a new audit committee. We created an ad hoc 
committee to make sure that all the GAO recommendations are 
being faithfully executed. For the fifth consecutive year, we 
received an opinion from outside auditors that our financial 
statements fairly present the financial position of LSC.
    Oversight and emphasis on compliance with proper financial 
management practices has continued to be a priority for the 
board. We receive ongoing advice from the I.G., whose charge, 
of course, is to find and deter waste, fraud and abuse, and the 
I.G. is playing an essential role, and we appreciate working 
with him.
    Mr. Chairman, in closing, let me say again what a privilege 
it is to be here today and an honor it has been to work with my 
board colleagues to support the mission of the Legal Services 
Corporation. My career has been about ensuring that the rule of 
law is properly carried out in this country and that all 
attorneys do their part to fulfill the promise of equal justice 
under the law.
    And I will be happy to answer any questions that you might 
have. Thank you very much.
    [The prepared statement of Mr. McKay follows:]
                 Prepared Statement of Michael D. McKay











                               __________
    Mr. Cohen. Thank you, Mr. McKay. I appreciate your service 
and your testimony.
    Our next witness is Ms. Helaine Barnett, appointed 
president of the Legal Services Corporation in January 2004, 
first legal aid attorney to serve as president of the LSC. 
Under her leadership, the LSC has emphasized strategies to 
enhance the quality of legal services provided by LSC programs. 
The centerpiece has been the revision of LSC's performance 
criteria.
    Before joining LSC, she devoted her entire 37-year 
professional career providing legal services to the indigent 
with the Legal Aid Society of New York City, the oldest and 
largest Legal Services organization in the country, for nearly 
3 decades involved in managing the society's multi-office civil 
division, which she headed from 1994 to the end of 2003 when 
she assumed this position.
    Under her watch, the division earned universal respect for 
its legal work, adherence to the highest professional and 
ethical standards, innovative projects, and disaster response 
plans to coordinate delivery of critical assistance to New 
Yorkers in the aftermath of the September 11 attacks.
    Ms. Barnett, we appreciate your appearance and your 
service. And would you please proceed with your testimony?

          TESTIMONY OF HELAINE M. BARNETT, PRESIDENT, 
                   LEGAL SERVICES CORPORATION

    Ms. Barnett. Thank you, Chairman Cohen, Congressman Franks, 
and Members of the Subcommittee.
    Thank you for holding this hearing and providing the Legal 
Services Corporation with the opportunity to discuss the 
continuing justice gap facing our Nation and the importance of 
civil legal assistance to low-income individuals and families 
across this country.
    It is my privilege to appear before you with Mike McKay, 
the distinguished vice chairman of the corporation's board of 
directors and a longtime champion of pro bono services for low-
income persons with pressing civil legal problems. I share the 
sentiments he expressed about holding LSC and its programs to 
the highest standards.
    Low-income Americans come to civil legal aid programs when 
they need assistance to help them escape an abusive 
relationship, to gain access to health care, food, disability 
benefits, to prevent foreclosure and eviction that may lead to 
homelessness.
    Ensuring that the poor are adequately represented in the 
civil justice system greatly improves their chances of keeping 
or securing basic necessities, the keys to stability and self-
sufficiency. It also keeps communities healthy.
    With millions of Americans falling deeper into poverty 
because of the economic recession, and millions more slipping 
into poverty for the first time, the work of LSC-funded 
programs is more critical than ever before. Many of the 137 
nonprofit programs funded by LSC are increasingly involved in 
foreclosure cases, and they frequently involve allegations of 
predatory lending.
    For example, Community Legal Services in Phoenix has 
established a foreclosure law project to help homeowners and 
participates in a volunteer lawyers program, which recruits and 
trains pro bono attorneys to help low-income homeowners at risk 
of losing their homes.
    Our foreclosure projects reflect the difficult economic 
times facing our Nation. The magnitude of our challenge can be 
seen in new Census Bureau data. Close to 54 million people, 
including 18.5 million children, are eligible for LSC-funded 
services, according to the Census Bureau. That represents a 1-
year increase of almost 3 million.
    With unemployment projected to peak at above 10 percent, 
LSC will see another increase in the number of poor people 
eligible for legal services when the census issues its 2009 
estimate. It is important to note that three out of four 
clients at LSC-funded programs are women, and many of them are 
struggling to keep their families together and their children 
safe.
    Many programs have domestic violence projects, including 
Memphis Area Legal Services. In one of its cases, the Memphis 
program represented the mother of three children who was 
trapped in an abusive relationship with her estranged husband. 
Although she had left him, he stalked her, harassed her, and 
vandalized her property. After being convicted for aggravated 
assault and burglary, but before sentencing, he taunted her by 
claiming he could deny her a divorce.
    With the assistance of the Memphis program, the woman was 
able to obtain the divorce and is raising her children in a 
stable home, free of abuse and violence.
    The challenge confronting the Nation in providing equal 
access to justice is urgent. As you and Members of the 
Subcommittee know, LSC recently issued a report on the justice 
gap, the difference between the level of civil legal assistance 
available to low-income Americans and the level that is 
necessary to meet their needs.
    The 2009 justice gap report updates and expands the first 
report, released by the corporation in 2005. The data collected 
in 2009 confirmed the earlier conclusion that there continues 
to be a major gap between the civil legal needs of low-income 
people and the legal help that they receive.
    For every client served by an LSC-funded program, one 
person who sought help is turned down because of insufficient 
resources. In one category, foreclosures, LSC-funded programs 
are turning away two people for every client served. Programs 
are also meeting less than half of the requests for assistance 
with employment and family law matters.
    There are people walking through the doors of our programs 
who never imagined that they would find themselves in need of 
legal help. Many have lost their homes and their jobs, their 
unemployment benefits are running out, and they have no place 
to turn. Their only hope is for justice, and it should not be 
denied.
    Our study shows that, regrettably, many of these same 
people walk out those same doors with no relief. It is a 
heartbreaking scenario played out much too often throughout our 
country. Just as the recession has impacted clients, it has 
also put more strain on the resources that support civil legal 
aid programs. Many States are confronted by budget shortfalls, 
and the drop in short-term interest rates to virtually zero has 
eroded the second-largest source of legal aid funding, interest 
on lawyer trust accounts, or IOLTA.
    Numerous LSC programs project they will receive 
significantly less IOLTA funding this coming year and will 
struggle to maintain staff and services. It is clear that the 
support of the Congress is even more vital than before. Closing 
the justice gap will require a multifaceted approach that 
includes increasing pro bono, expanding partnerships, and 
promoting technology investments that expand access to justice.
    For those millions of low-income Americans who are trying 
to keep a roof over their heads, who are trying to escape an 
abusive or life-threatening relationship, who are trying to 
keep their families together and safe, civil legal assistance 
is not just an abstract concept, but a vital service rendered 
at a critical moment in their lives. This is the essential 
mission that LSC and our programs across the country strive to 
fulfill every single day.
    Thank you. And I would be pleased to answer your questions.
    [The prepared statement of Ms. Barnett follows:]
                Prepared Statement of Helaine M. Barnett






















                               __________

    Mr. Cohen. Thank you for your testimony.
    I will start with questioning, and I will be first. And my 
first question will be for Mr. McKay, who I will mention, 
before my questioning, who was the Washington State vice chair 
of the 1988, 2000, and 2004 Bush campaigns and co-chair of the 
steering committee of the McCain 2008 campaign. So his bona 
fides have been well described here.
    You believe that the additional--do you believe that the 
additional monies that are being appropriated or proposed to be 
appropriated for LSC are needed in these economic times?
    Mr. McKay. I do. And, first, Mr. Chairman, not to rub salt 
in anyone's wounds, you neglected to point out that I was the 
State vice chair for President Bush in 2000 and 2004, as well. 
[Laughter.]
    Yes, we do. The justice gap report, which we have provided 
you, shows that 50 percent of low-income people who come to our 
grantees asking for help are turned away. The State studies 
show an even larger number of people who have needs who do not 
ask for help simply because they just don't think they are 
going to get it. Clearly, we need more help.
    I firmly believe, as I indicated in my opening statement, 
that more private attorneys need to donate their time. But even 
if they do, we will still need help. So the answer is, if at 
least 50 percent of low-income people who need legal assistance 
are turned away, that we do need additional help.
    I do want to hasten to add, because I want to echo 
Congressman Franks' comments, that an important facet of the 
budgetary request includes an increase of the number of 
individuals in our Office of Compliance and Enforcement to make 
sure that the congressional restrictions as they now exist are 
faithfully executed. And that is an important part of our 
budgetary request.
    Mr. Cohen. Let me ask you this, and it is important. Ms. 
Ragland in her written testimony is going to suggest that all 
of the GAO's recommendations have not been implemented. Can you 
comment on why they haven't?
    Mr. McKay. I certainly can, and it is something that we as 
a board--and I believe management--have taken very, very 
seriously. Immediately upon the issuance of the first GAO 
audit, we created an ad hoc committee to make sure they are 
faithfully executed.
    There are quite a few of the recommendations that have been 
completed from the GAO's perspective. Others have not, for a 
series of reasons. One is, as I understand it--and, of course, 
Ms. Ragland can speak for herself, but I did call her yesterday 
to make sure that what I am about to say is accurate, is that 
sometimes these things take longer. They cannot be done right 
away. And I believe Mr. Ragland will confirm that the pace that 
we are addressing these recommendations is appropriate under 
the circumstances.
    And also, one last point. We may have said, all right, we 
are going to do this, and we have adopted a policy to do it. I 
believe GAO's position is, ``We see you have adopted the 
policy. We want to make sure you do it.'' So it isn't completed 
yet because they want to watch us for a while to make sure that 
that policy that we have adopted in response to the GAO is 
faithfully executed. I can assure you, Mr. Chairman, and 
everyone on the Committee that that is being done.
    Mr. Cohen. Let me ask you this. Mr. Franks mentioned 
something about LSC agencies going beyond their charters in 
dealing with everything but ACORN. Are there provisions that 
you know of that can give us some assurances that those type of 
things won't occur in the future?
    Mr. McKay. Well, the policies are certainly in place. We 
have staff that goes out to make sure this doesn't happen. We 
need more staff to go out and make sure it doesn't happen.
    It will serve two purposes. One, we will catch those who do 
it. And if we have a larger compliance staff, it will also 
serve as a deterence, because those few grantees that violate 
our regulations know they are eventually going to get caught. 
And if we get a larger staff, we are going to catch them 
sooner.
    So the assurance is, number one, yes, the policies are in 
place. We have staffs that are trying to enforce those 
policies. We would appreciate more staff to look at more 
grantees to make sure they are faithfully enforced.
    Mr. Cohen. Ms. Barnett's contract ends at the end of this 
calendar year. Where is the board in finding her replacement?
    Mr. McKay. We have a committee that has been created to 
address the interim president question. We respect the fact 
that there is a new Administration and that this Administration 
is nominating a new board. And we think it is the new board's 
responsibility to find a new president. We think it is our 
obligation to fulfill our fiduciary duties to make sure there 
is an interim president in place by January 1.
    Mr. Cohen. The Senate confirmed one nomination to the 
board, and they also--last week, the HELP committee approved 
five pending nominations, a total of six new members, which 
would be a majority. Do you presently have a full complement of 
members to do your----
    Mr. McKay. I don't believe--I think we are short one.
    Mr. Cohen. Just one?
    Mr. McKay. Oh, yes. Short--just one, then? Yes, just one. 
Lillian BeVier has resigned, so we are short one right now.
    Mr. Cohen. Okay. Thank you, sir. My time has----
    Mr. McKay. I am sorry. I am told we lost one who is 
deceased, and so there are actually two vacancies right now.
    Mr. Cohen. I appreciate your responses.
    And I now recognize the Ranking Member, Mr. Franks, for his 
5-minute questioning.
    Mr. Franks. Well, thank you, Mr. Chairman.
    And, again, thank you both for being here.
    Ms. Barnett, I am told, during your tenure as LSC 
president, that you have changed the process by which LSC staff 
can request legal opinions from OLA. And is it true that LSC 
staff now must submit to requests for legal opinions to the 
executive management team, in other words, not allowed to go 
directly to OLA? And does LSC executive management now decide 
whether the legal opinion request is submitted to OLA? And if 
there were changes, what were the reasons for those changes?
    Ms. Barnett. Congressman Franks, I saw a story in the 
Washington Times this morning that seems to allude to what you 
are asking. We have responded to Senator Grassley in July 
indicating that we have robust discussions about legal opinions 
that affect our program, as I think many Federal agencies, 
government agencies and private institutions, do.
    However, general counsel is all--indicates and issues 
opinions to which he agrees. We do not in any way tell him what 
to issue. In fact, general counsel is right here behind me, 
very experienced, and I suggest that he would be the most 
appropriate----
    Mr. Franks. Ms. Barnett, it is your testimony that OLA has 
been allowed to issue final opinions without the approval, I 
mean, of the executive time, and specifically you, the LSC 
president. Can they issue these things with or without your 
approval?
    Ms. Barnett. I don't give approval. We have robust 
discussions at executive team meetings on certain opinions that 
are requested and affect our programs and the clients we serve. 
Ultimately, the decision of what should be in that opinion is 
up to general counsel, and in no way do we influence what his 
ultimate decision is.
    And the general counsel reports both to me and to the board 
and if there is an another avenue, if there was any thought 
that the general counsel was not doing his job independently.
    Mr. Franks. Thank you, Ms. Barnett.
    I wanted to, if I could, return to Mr. McKay. Mr. McKay, 
you know, I know you understand that there is a debate within 
Congress as to exactly what the funding levels and exactly what 
the mission of the organization that you work with should be, 
but I think that one thing should be agreed upon by all of us, 
and that is that top-tier funding of a Legal Services outreach 
shouldn't be allowed to try to make partisan legal battles in 
order to shake the political culture, that they should 
primarily focus on helping the underserved, those who can't 
afford legal representation for themselves.
    I mean, I am hoping that you agree with that.
    Mr. McKay. Absolutely.
    Mr. Franks. And do you think that, in the future, what can 
we do to try to make sure that Legal Services focuses on its 
primary duty, which is to give legal services and aid to the 
poor?
    Mr. McKay. The kind of cases you are referring to have 
happened over the years, quite a while ago. If any occur now, 
they are pretty quickly rooted out by either our compliance 
team or the I.G. There is no one who is more opposed to 
political cases being brought by LSC grantees than me, mainly 
because I know of how many families are being wrongfully 
evicted, that may be deprived of legal services because these 
political cases are being brought. But to my knowledge, these 
kinds of cases haven't been brought for quite some time.
    Mr. Franks. And under your tenure in the future, that would 
be something that you would be very vigilant about?
    Mr. McKay. I have been very vigilant about it since I was 
sworn in, in 2003. My days are numbered, though, Mr. Franks.
    Mr. Franks. It is your testimony that you think that it is 
the right thing for Congress at this point to lift 
restrictions, as is being discussed here today?
    Mr. McKay. I am here as a member of the board of directors, 
speaking on behalf of the board of directors, and so I don't 
think it is appropriate for me to share with you my personal 
views, other than to say that--and I will very firmly say that 
any restrictions or lack of restrictions that are a product of 
this Congress will be faithfully executed by the board, 
certainly as long as I am on the board.
    Mr. Franks. Well, thank you, sir. Maybe it is too bad you 
are leaving.
    Mr. McKay. Well, talk to----
    Mr. Franks. Thank you very much.
    Mr. Cohen. Thank you, Mr. Franks.
    I now recognize Mr. Watt, the distinguished Member from 
great State of North Carolina, the predecessor to the State of 
Tennessee, and we give thanks.
    Mr. Watt. Thank you, Mr. Chairman.
    And I thank the witnesses for being here.
    I think I will refrain from all of the philosophical 
discussions that have been going on and maybe talk about what 
the hearing was designed to focus on, which is the bill that 
Mr. Scott has introduced and which I am happy to be a co-
sponsor of.
    I did want to make sure that Mr. McKay, if he had any 
connections with the Reagan era, got an opportunity to tell us 
about those. Maybe that would satisfy some of my colleagues on 
the Committee, too. So if he has got any connections to former 
President Reagan's campaign, I am going to give him the 
opportunity to--he may be too young for that era.
    Mr. McKay. I wish I were. I did not work on those two 
campaigns. I was working on local campaigns, Congressman.
    Mr. Watt. For equally robust and philosophically sound 
candidates, I presume?
    Mr. McKay. Yes, sir.
    Mr. Watt. Okay. All right.
    Ms. Barnett, you have had a chance to review Representative 
Scott's bill, H.R. 3674. I guess both of you have. I am 
wondering if you could just tell us a little bit about--either 
one of you could tell us a little bit about how this 
legislation would help the Legal Services Corporation achieve 
its mission.
    Ms. Barnett. We certainly welcome and support the bill to 
reauthorize the Legal Services Corporation. I think, as 
Congressman Scott said in his opening remarks, the corporation 
hasn't been reauthorized since 1977.
    We certainly greatly appreciate the funding level that is 
reflected in the bill at $750 million for 5 years. And we 
appreciate the inclusion, about which we have already done, to 
improve our governance and our oversight. And we look forward 
to working with the sponsors as this bill moves forward.
    Mr. Watt. As a practical matter, Mr. McKay, the 
restrictions that have been placed on funds that are not even 
government funds have nothing to do with taxpayer money. What 
impact does that have?
    Mr. McKay. And you are talking about questions like sharing 
office space and things like that, Congressman?
    Mr. Watt. No, I am talking about the restrictions that have 
been placed on non-government money, non-taxpayer money.
    Mr. McKay. Well, there are certain restrictions that 
prohibit grantees from using non-LSC funds. And, again, those 
are the kinds of things that we need to make sure are 
faithfully executed until and unless Congress changes those.
    Mr. Watt. Well, I understand you will be executing them 
until Congress changes them, but they have some impact, I 
presume, on the operations of the Legal Services Corporation.
    Ms. Barnett, maybe you are in a better position, since you 
are operating the agency on a day-to-day basis?
    Ms. Barnett. Congressman, the position of the corporation, 
I guess both the board and management, is that we enforce the 
will of Congress.
    Mr. Watt. I understand. I think you are missing the import 
of the question. What impact does it have? I understand that 
you are enforcing them. You have got to enforce the law as we 
write it. But what impact does it have, as a practical matter, 
on your operations?
    Ms. Barnett. Well, I guess we would have to ask our 
programs what impact it has with regard to the current 
restrictions, because right now, they are mandated to follow 
the current restrictions, which we enforce.
    Mr. Watt. I understand. Have you not asked your related 
organizations? Or maybe this is something--should I be taking 
this up with the next panel? That would----
    Ms. Barnett. I would suggest that you do. And I think they 
will be in a far better position to answer the question 
directly.
    Mr. Watt. Well, it is not a trick question.
    Ms. Barnett. No.
    Mr. Watt. I am just trying to get to the practical 
consequences of some of the restrictions that we have placed, 
that the law has placed on the receipt and use of non-taxpayer 
funds. It is one thing to control taxpayer funds, which we have 
an obligation to do. My question relates to non-taxpayer funds.
    Mr. McKay? And I----
    Mr. McKay. I consulted with Karen Sergeant, who helped me, 
and I understand the congressman's question better. Stating 
factually, if there is a restriction on a grantee--that is, a 
grantee cannot do something--but the grantee--and I will just 
use an example, Northwest Justice Project in Washington State. 
It also receives funds from the Washington State government, 
Washington State legislature and the governor.
    Those funds might not have a similar restriction, but the 
fact that the Northwest Justice Project is receiving those 
unrestricted funds, but is receiving funds from LSC, they 
cannot use the unrestricted funds in such a way that would 
violate the congressional restrictions.
    Mr. Watt. I thought that was the case as a practical 
matter. I will take it up--my time is expired. I will take it 
up with the second panel.
    Mr. McKay. I apologize. I didn't understand what you were 
looking for, so----
    Ms. Barnett. Congressman, if I could just add, also, 
currently, we are involved in defending the regulations in two 
court cases, as well, and that is why I would suggest that the 
second panel may be more appropriate.
    Mr. Watt. Defending them in the sense that that is taking 
time and resources away from other things, to defend litigation 
related to the restrictions?
    Ms. Barnett. We have two longstanding court cases on both 
sides of the country in which LSC is defending the will of 
Congress in upholding these restrictions, yes.
    Mr. Watt. Okay. All right. Thank you.
    I yield back, Mr. Chairman. I am sorry I went over time.
    Mr. Cohen. Thank you, sir.
    I now recognize the distinguished--another gentleman from 
Carolina, Mr. Coble?
    Mr. Coble. Mr. Watt, I am glad he is making both of us 
distinguished today. I appreciate that, Mr. Chairman.
    Good to have you all with us.
    Mr. Watt. He is from Tennessee, and he understands that 
Tennessee wouldn't be around but for North Carolina.
    Mr. Coble. I am not sure he would admit that.
    Good to have you all with us.
    Mr. Cohen. That is true. And Texas wouldn't be around for 
us.
    Mr. Coble. Oftentimes, impoverished citizens do come to LSC 
for assistance. You gave a very moving example, Mr. McKay, in 
your opening statement. That is the good news.
    The bad news is I have heard that there may have been 
imprudent spending, so I want to touch on that, maybe even 
reckless spending. That is the bad news, if, in fact, it is 
true.
    Ms. Barnett, describe, if you will, the relationship 
between the LSC management and the Office of Legal Affairs and 
the inspector general and the board of directors? Specifically, 
does management--and when I say ``management,'' I include you 
in that, Ms. Barnett--does management willingly share 
information with these other offices and allow these other 
offices to independently perform their duties?
    Ms. Barnett. Let me see if I understand to your question, 
Congressman, by beginning with the relationship with the Office 
of Inspector General, where we cooperate fully with their 
reviews and we welcome their reviews. And they certainly 
operate independently of LSC management.
    With respect to the board, we make every effort to keep the 
board timely informed about any action or policy. And I think 
we do a good job at doing that.
    But Mr. McKay is here, and he can respond with respect to 
the board.
    Mr. Coble. Well, Mr. McKay, you want to weigh in on this?
    Mr. McKay. I think there is a consistent effort for all of 
us to do a better job, and there are--if we as a board feel 
like we are not getting enough information and we make it clear 
to management that we need more information.
    Same thing relates to our legal counsel. And we have worked 
hard to make sure that the legal advice we receive from our 
legal counsel is good and clean and unfettered. And we are 
satisfied with that process.
    Mr. Coble. Well, Ms. Barnett, to follow up on the Ranking 
Member's question regarding the process by which staff can 
request legal opinions, has that process been altered or 
changed by you or anyone else?
    Ms. Barnett. I believe I will try to answer it the same way 
I did with previous questions.
    Mr. Coble. And that is why I am revisiting it, because I 
didn't follow it that clearly. That may be my fault.
    Ms. Barnett. No. We have robust discussions on certain 
opinions that have been requested that impact all our programs 
and the clients they serve. I would like to believe that those 
discussions raise issues that general counsel may have 
considered, should in addition consider, but ultimately, in the 
end, it is general counsel who has to issue opinions that he 
believes is the correct opinion.
    And I believe he does so, but as I indicated, the Committee 
is certainly free to ask general counsel directly, who is here. 
I have been informed that the Office of Inspector General has 
been asked to look into this matter. We welcome that inquiry.
    And as with any GAO or OIG inquiry during my entire tenure, 
we intend to cooperate fully with that review and await the 
report, which I think will vindicate the position that I am 
advocating and sharing with you today.
    Mr. Coble. Let me try to beat that red light before it 
illuminates. Mr. McKay, let me ask you this. Has there been a 
time when management did not provide you with all the 
information you desired or significantly delayed the providing 
of such information to you?
    Mr. McKay. I cannot point to any example. I think this is a 
traditional tension between a board and management. And 
sometimes it is the opportunity for management to understand 
what a particular board's needs are.
    But there have been times in the 6 years I have had the 
privilege of serving where I have made it clear and with the 
entire board have made it clear to management that we needed 
more information about certain things. We have also made it 
clear that certain things should be done, in addition to giving 
us information.
    So, yes, it has happened. It is not unusual. If we are 
doing our job, we should be routinely saying, ``Well, what 
about this? What about that? And we need more information about 
this,'' and so forth. So, yes, it has happened.
    Mr. Coble. Thank you both for your testimony.
    I yield back, Mr. Chairman.
    Mr. Cohen. Thank you, sir.
    I now recognize Ms. Lofgren, the lady from California.
    Ms. Lofgren. Thank you very much, Mr. Chairman, and for 
this hearing.
    I was interested to read the General Accounting Office 
report. And in the conclusions, they say the following: ``The 
improvements that LSC has made in its governance and 
accountability provide a good foundation for completing 
implementation of the elements needed for a strong program of 
governance and internal controls.''
    So I think that is a pretty positive statement, and 
certainly the witnesses here have indicated here certainly a 
desire--more than a desire, an eagerness to reach out to the 
GAO and implement all of the recommendations. It is obvious the 
program sees this as helpful. Not every agency does see the GAO 
recommendations as helpful. So that is a very positive piece of 
information that we have gained out of this hearing.
    I am interested--you know, I served on the board of legal 
aid in Santa Clara County for many years and did not agree with 
the restrictions that were put in place some years ago.
    But what happened in Santa Clara County--and I think it 
happened in many places around the country--was that sort of 
secondary offices were established that were able to do the 
work that legal aid was now prohibited from doing. And in many 
cases, there was funding from the local bar association in 
California. The interest from trust accounts is diverted to 
Legal Services.
    So I am just wondering, in this economy where there isn't 
any interest because of the financial situation, what is 
happening to those other efforts? And is it impossible with the 
State budget cuts and the decrease in interest rates for those 
secondary efforts that could do the things prohibited from LSC 
to keep up and sort of make up for the cuts and the 
prohibitions? Do you know that?
    Ms. Barnett. I do not know about the non-LSC-funded 
programs. I do know that the LSC-funded programs themselves 
have had significantly reduced IOLTA funding, when the interest 
rate, as you point out, went to zero and the projected decrease 
is like 21 percent in 2009 State by State, It is a significant 
drop.
    Also, as you point out, the State budget deficits have 
limited the State funding for civil legal aid programs. So I 
can speak from LSC-funded programs' perspective that the 
decrease in resources that leverage Federal dollars has greatly 
been decreased, and many programs, because of that, have laid 
off staff or closed offices.
    Ms. Lofgren. Do you know, Mr. McKay?
    Mr. McKay. I can only talk about Washington State----
    Ms. Lofgren. Okay.
    Mr. McKay [continuing]. And what you are talking about 
certainly happened there. We had two other non-LSC grantee 
providers, Evergreen Legal Services and Columbia Legal 
Services, and they were free to do the kinds of things that our 
grantee, Northwest Justice Project, is not able to do. They 
don't exist anymore.
    Ms. Lofgren. Really?
    Mr. McKay. They are gone. And those good lawyers, some of 
whom, jeez, happily were picked up by Northwest Justice 
Project, but others--Ada Shen-Jaffe is now teaching at Seattle 
University Law School. She is not providing the legal services 
that she used to provide. So it has been a hard hit.
    And now, while our county bar association plays a role by 
trying to get private attorneys to help, but it is woefully 
inadequate. Eleven percent of the attorneys in King County, of 
the 14,000 attorneys, donate their time every year, 20 hours or 
more every year. So the answer is, it has been a hard hit.
    Ms. Lofgren. All right. Well, and it is more difficult for 
members of the bar actually to donate time. Because of the 
economic conditions, people are scrambling, aside from the 
large firms that are jettisoning their first-year associates to 
go work full time.
    So the picture you have painted here is really a dire one. 
I am especially concerned--well, there are many issues--but in 
this foreclosure crisis that we are facing, one of the things 
that has become obvious is that there are institutions 
attempting to foreclose who don't have a legal right to 
foreclose. And so individuals who do not have representation 
are losing their homes in a miscarriage of justice.
    Are you seeing those cases being turned away from legal 
aid?
    Ms. Barnett. Well, unfortunately, our justice gap report, 
which showed for every one eligible client we represent, we 
turn away one eligible applicant, in the area of foreclosure, 
we are turning away two for one. And you are absolutely right 
that the necessity for a lawyer in a foreclosure action makes 
all the difference, whether they keep their home or they don't, 
whether they assert a legal defense, whether they assert truth 
in lending, whether they are able to request that the 
foreclosed party has actual title to foreclose.
    So the difference a lawyer can make in these very complex 
cases means whether there is a roof over a family's head or 
not.
    Ms. Lofgren. Thank you very much, Mr. Chairman. My time has 
expired.
    Mr. Cohen. Thank you, Ms. Lofgren.
    I now recognize the gentleman from the State of Iowa, Mr. 
King?
    Mr. King. Thank you, Mr. Chairman. I want to thank both 
witnesses, and I appreciate Mr. McKay's opening this discussion 
up with his pro bono work. I think that set the right tone for 
the spirit that we hope to see and have seen, I think, in much 
of the past of LSC.
    But I think about some other things, the consequences that 
seem to be kind of moving in the background here and was part 
of the opening statement of Mr. Franks, as well, and has a lot 
of questions on a lot of different subject matter.
    But I think I would turn first to Ms. Barnett, and you have 
twice mentioned the will of Congress and it is your intent to 
follow the will of Congress. And I have just heard Ms. 
Lofgren--I am sorry that she left the room. She said she didn't 
agree with the restrictions put in place in 1996. I will submit 
that is the will of Congress.
    And I will just ask you the question, how do you identify 
the will of Congress?
    Ms. Barnett. As reflected in the laws that are passed, the 
appropriations acts and the restrictions that were placed in 
1996 and carried forward in every appropriations act. We agree 
that is the will of Congress, and that is what we expect our 
programs to abide by, and that is what our programs do abide 
by.
    Mr. King. Thank you. And I just wanted to have you an 
opportunity to put that particular response into the record.
    I am looking back at some information I have in front of me 
with regard to the California Rural Legal Assistance, and going 
back to even as recently as 2008, a case where the inspector 
general wanted to look into the situation of a case that had to 
do with--determine if it had violated the restriction or 
representing undocumented aliens.
    And I would go--a case that underlies that is in 2002, the 
Legal Aid Foundation of Los Angeles introduced a case that even 
though the General Assembly in bill number 60 had never enacted 
into law, they introduced a case to promote the granting of 
driver's licenses to undocumented aliens. And I would suggest 
that that violated their restriction on assisting undocumented 
aliens.
    However, there is a refusal to release some of the 
information on these related cases. And it turns out that Mary 
Grace Odias didn't have a Social Security number. And so if 
these kind of things can happen in such an obvious way, how 
could we possibly audit and keep track of the 
compartmentalization of funding if the Scott bill were passed?
    And I would tell you that I am focused on ACORN. It was 
brought up by our Chairman. And we are watching the fungibility 
of funding be passed through the joint accounts and as many as 
361 different affiliations. I have a real aversion to expanding 
anything that could turn into an arm of any organization that 
might have an undercurrent like ACORN.
    So I would be interested in your response. How do we 
protect against that? How could we in any kind of good faith go 
forward and lower their restrictions when these things happen 
with the restrictions in place?
    Ms. Barnett. Well, I can only comment on what we do now to 
ensure that the programs comply with the existing law. We have, 
as Mr. McKay has indicated, increased our staff in our office 
of compliance and enforcement.
    Mr. King. Since the clock is ticking, I would just 
appreciate that that--I have heard that response from Mr. 
McKay, and I respect that response that you would use more 
resources. But what has happened to the people that have 
violated the 1996 statute? Are they still working? Do they 
still have a job? What were the consequences?
    And I think I would turn to Mr. McKay, so I can hear from 
him, as well.
    Mr. McKay. Well, I want to augment President Barnett's 
answer to make sure you know, Congressman, that, in addition to 
the statute, we have our own regulations, that we have them in 
place, that set forth in more detail the congressional 
restrictions and other obligations that are imposed upon us, so 
they are there. And, of course, it is part of a checklist that 
the office of compliance and enforcement bring out.
    There are sanctions. And I will turn back to President 
Barnett. She is in a better position to answer that. But for 
certain grantees, we change the level of the nature of the 
funding. Instead of giving them a chunk of cash for the entire 
year, we switch to month to month, to use that as a tool to----
    Mr. King. But let's get them back to rectitude. The people 
that have violated the 1996 statute, are they still working for 
LSC?
    Mr. McKay. I will have to turn to President Barnett, but if 
I could just complete my answer.
    Mr. King. And I would ask right in the middle this 
question----
    Mr. McKay. Just to make sure you know that we are----
    Mr. King [continuing]. Because we are going to run out of 
time in a moment. I think the Chairman will allow the questions 
answered by both of you, but I would like to know if they are 
still working for LSC. And what are the names of those 
individuals?
    Ms. Barnett. I am not aware of anybody who is working at 
LSC who violated the 1996 restrictions. What we do, do when we 
find questionable activities, we have corrective actions. We 
have questioned cost proceedings, where we get back the money 
that LSC provided, so the Federal taxpayer is made whole, for 
instance, on the marble that was used in a recent office 
building.
    We have special grant conditions that we impose on a grant 
to ensure that there is compliance. We have short funding 
cycles that are sure they are in compliance. And, ultimately, 
we can terminate a grant, if that is necessary.
    Mr. Cohen. Your question now--Mr. King?
    Mr. King. Thank you. And I would just ask consent for Mr. 
McKay to complete his answer.
    Mr. McKay. I would simply invite the congressman's 
attention to the way we have dealt with particular grantees who 
have violated the sanctions and we weren't satisfied with their 
response. And when I say ``we,'' we as a board specifically ask 
questions about it.
    I am familiar with the examples that you have given. And we 
have asked for briefings for these different cases to make sure 
that the problems are turned around and, where they are not 
satisfactorily turned around, that the funding is impacted, 
that is, we are not going to give them the full chunk of cash. 
We are going to do it on a month-to-month basis.
    We have reviewed changes in our regulations to punish them 
in other ways, to deter them from doing this in the future. So 
it is something that is in the forefront of our minds, 
something that we discuss every board meeting, and I just 
wanted to reassure you of that.
    Mr. King. I thank you. I thank the witnesses. And I yield 
back.
    Mr. Cohen. Thank you, Mr. King.
    And I will recognize Mr. Scott, of Virginia.
    Mr. Scott. Thank you.
    Ms. Barnett, as I understand the funding mechanism, you 
fund by formula, not by line item in a proposal. Is that right?
    Ms. Barnett. We are mandated to fund by a congressional 
formula that states it is based on the poor person population 
in the service area in the decennial census. So we are funding 
now based on the poor person population of 2000.
    Mr. Scott. And the fact that you do not fund by line item, 
does that affect your ability to provide oversight for the 
physical management of local programs?
    Ms. Barnett. No, Congressman, it does not. We have a 
rigorous request for proposal that every grantee has to submit 
at least every 3 years. And in that, they attach their budgets. 
In that, they attach an answer to many specific questions that 
gives us the ability to know whether this program is capable of 
providing high-quality legal services in conformity with the 
mandates of Congress.
    We also do program visits. We also have grant activity 
reports quarterly that give us information for us to review. We 
get coordinated impact input from the Office of Inspector 
General, as well, based on their visits to programs. We hear 
from the public. We hear from Members of Congress.
    So we feel that we have an opportunity to review adequately 
the program's ability to provide high-quality legal services in 
conformity with the mandates of Congress.
    Mr. Scott. How do you do oversight on ensuring that the 
salary level of LSC program attorneys is sufficient to attract 
the best and the brightest?
    Ms. Barnett. Well, you have mentioned something that is of 
major concern to LSC-funded programs, and that is, the starting 
salary for legal aid attorneys is the lowest of any public-
sector attorneys. And these young attorneys are graduating with 
huge student debt from their law schools.
    We, in fact, have started a pilot loan repayment assistance 
program to be able to attract and retain these attorneys in our 
programs. In the course of our review of their budgets and 
their quarterly grantee reports, they indicate what their 
salaries are, so we can see, unfortunately, we don't have any 
programs that are paying exceeding high salaries, because the 
average starting salary is $40,000 for a legal aid attorney.
    Mr. Scott. Now, you indicated that 50 percent of the people 
turned away, are those people that would be qualified for 
services by every other measure, but for the resources of the 
program?
    Ms. Barnett. Yes, Congressman. In our justice gap report, 
we indicated--we had uniform instructions to every one of our 
programs that was collecting this data and that the data was 
that if the person who came would be eligible for the services 
fell within the office priorities of the program would have 
been helped but for the fact of lack of resources.
    Mr. Scott. And you turned away two-thirds of the persons 
for foreclosure assistance. You indicated the difference you 
can make. How often are you able to actually help someone in a 
foreclosure situation?
    Ms. Barnett. Well, we are being--I think our programs are 
being inundated with requests for foreclosure assistance. And 
they are seeing a huge percentage increase over last year.
    Last year was the first year we started to collect data on 
foreclosures themselves, so we will have more concrete data at 
the conclusion of 2009 when we can have a comparative basis. We 
hadn't thought to take out of housing the separate category of 
foreclosures up until last year.
    Mr. Scott. When you find that--in an area that people are 
systematically being ripped off in certain ways, how do you 
deal with that without a class action?
    Ms. Barnett. Well, for instance, in the foreclosure area, 
LSC has taken a leadership role in hosting national calls with 
national providers and legal aid programs that specialize in 
foreclosure on an every-other-monthly basis to share 
developments that are happening in Los Angeles with court 
mediation, in Philadelphia with the newly enacted Federal 
legislation, so that we get to share what are the different 
practices and the way that different programs are dealing with 
it----
    Mr. Scott. If you have a lot of people with essentially the 
same case, how do you deal with that without being able to 
bring a class action?
    Ms. Barnett. Well, right now, our programs cannot bring 
class actions, so they have to bring individual cases.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Cohen. You are welcome, Mr. Scott.
    I now recognize our newest Member from the Golden State, 
Congresswoman Chu.
    Ms. Chu. Ms. Barnett, my question has to do with the 
greatest use of dollars for legal services and partnerships. 
And, in fact, the budget request document for 2010 mentions two 
innovative LSC-funded programs that are from my area, the Legal 
Aid Foundation of Los Angeles and the Neighborhood Legal 
Services of Los Angeles County. And they partnered with 
nonprofits and banks to keep families in their homes.
    Can you tell me how these partnerships were established in 
both cases and whether you feel this approach can be replicated 
in other areas?
    Ms. Barnett. Actually, the representatives from 
Neighborhood Legal Services participate in our foreclosure 
calls and shared with all the participants how they partnered 
with the banks to renegotiate the loans. So I think this is 
based on a local basis, where the program establishes a 
partnership, and what we want to do is facilitate sharing that 
information with other programs so they can replicate that in 
their own communities.
    Ms. Chu. And do you think that is a doable thing?
    Ms. Barnett. I hope so. I certainly do.
    Ms. Chu. My other question has to do with closing the 
justice gap. In particular, with regard to people who are 
limited English, California, in fact, is home to one of the 
most racially and ethnically diverse populations. About 26 
percent are foreign-born. In my district, the number of 
foreign-born jumps to 41 percent. And, in fact, the number of 
people that don't speak English at home is 70 percent.
    If LSC receives more funding through appropriations, what 
is your plan to address language assistance to LSC-funded 
programs?
    Ms. Barnett. Well, we are also very concerned, as are our 
programs, on the non-English-speaking eligible applicants for 
our services and to find out which programs are doing the best 
job with language access, sharing that information. In 
foreclosure alone, predatory lending not only impacts seniors, 
but--and minority communities, but also targets the less fluent 
English-speakers, as well.
    So this is an area that we--and I think our programs--
recognize we need to have culturally competent services 
available and we need to have language availability to 
effectively represent and give legal advice to these 
populations.
    Ms. Chu. And are you able to hire attorneys that speak 
other languages?
    Ms. Barnett. I think our programs very much do that, 
particularly in communities where there are non-English-
speaking languages, that they make an effort to hire bilingual 
staff. And many of our programs have many different language 
capabilities on their own staff.
    Ms. Chu. Is there a difficulty with doing that, considering 
your ability to pay for attorney salaries?
    Ms. Barnett. Well, it is our hope that there always will be 
those attorneys who want to work in the legal aid program, that 
want to make a meaningful difference in the lives of their 
clients, to want to help low-income people keep their families 
together and a roof over their head. And hopefully, they will 
be attracted to our programs.
    Ms. Chu. Thank you.
    Mr. Cohen. Do you yield back the remainder of your time?
    Ms. Chu. Yes, I yield back the remainder of my time.
    Mr. Cohen. Thank you, ma'am.
    We appreciate the panelists. And we appreciate your service 
and your testimony. And we will now shift to the next panel.
    Mr. McKay. Thank you.
    Ms. Barnett. Thank you very much.
    Mr. Cohen. You are welcome--second panel's attendance here. 
If you notice, our attendance is diminishing. This regularly 
happens with lunch hour and is one of the downsides of being 
Chairman and Ranking Member, hunger. [Laughter.]
    But I am pleased we have our second panel. And our first 
witness is Mr. Harrison McIver III. He has held the executive 
legal management position in legal aid and related 
organizations for 27 years in Mississippi, Washington, DC, and 
now in Memphis, TN, where he is executive director, CEO of 
Memphis Area Legal Services. He has had that position for more 
than 10 years, done an admirable job, well respected to the 
legal community.
    Prior to joining Memphis Area Legal Services, he was 
executive director of the project, advocacy, advisory group 
National Organization of Legal Services programs here in D.C., 
working on a national level to preserve the national commitment 
to civil legal aid to indigents, as embodied in Legal Services 
Corporation.
    In Mississippi, he held positions as staff attorney and 
managing attorney at two legal aid programs and finally as 
executive director of the then-Central Mississippi Legal 
Services in Jackson, Mississippi.
    Mr. McIver, we appreciate your being here and testifying 
and your service, and if you would now begin your testimony.

 TESTIMONY OF HARRISON D. McIVER, III, EXECUTIVE DIRECTOR/CEO, 
               MEMPHIS AREA LEGAL SERVICES, INC.

    Mr. McIver [continuing]. Sorry.
    Chairman Cohen, if I may, I would like to--I would be 
remiss if I were not to acknowledge your hard work and 
effectiveness as a congressman, my congressman from the Ninth 
Congressional District, and I wanted to say thank you publicly 
for the hard work and efforts you do not only for advancing 
equal access to justice, but so much you do in our community.
    Mr. Cohen. Thank you. And would staff have those words put 
on the Internet and broadcast?
    Mr. McIver. I will repeat them.
    Today, I appear on behalf of a wonderful and effective law 
firm, Memphis Area Legal Services, and my dedicated staff, 
board, volunteers, and, of course, our client population. MALS 
grew out of a national tragedy, the death of Dr. Martin Luther 
King in 1968, and now, more than 40 years later, we are a 
viable legal aid organization serving a client population 
desperately in need of our services.
    I submit my sharing some facts will illuminate our 
realities. Fact one: The average unemployment figure for our 
four-county service area is 13.3 percent, with the most rural, 
Lauderdale County, over 19 percent.
    Fact two: Since 2000, we have experienced a 45,000 increase 
in poverty population from 155,000 to 200,000 individuals 
living at the poverty line and eligible for our services. This 
translates into one legal aid attorney for every 10,000 
eligible clients, whereas in the general population, the ratio 
is 1 to 300.
    Fact three: In 2006, MALS received 6,631 applications for 
our services in 2008. That rose to 8,552, a 29 percent 
increase. We project by year's end that we will receive a 25 
percent increase to 10,694. And if the trend continues into 
2010, we expect over 15,000 applications.
    These are very compelling facts that we must contend with 
in the course of the work that we do on behalf of our clients. 
This means we have to be resourceful and we have to be 
creative. Our resourcefulness has been called upon in times of 
crisis.
    Three examples are illustrative. Disaster response, after 
Katrina and Rita hit the Gulf Coast, we estimated that between 
20,000 and 25,000 displaced individuals, including children, 
arrived in Memphis and the surrounding communities. MALS was 
called upon to coordinate the legal community's response, and 
we served as the hub for pro bono volunteerism and our staff's 
participation, and we did it. Subsequently, we acquired grants 
to expand that services over the course of a year.
    Domestic violence continues to plague our community. In 
2008, 35 homicides and 58 percent of all violent crimes related 
to domestic violence. We secured an LAV grant from DOJ to 
address the legal needs, but created the Opportunity Plus 
project to remove the economic barriers that impede our clients 
from being free of an abusive environment.
    The foreclosure crisis has not escaped our service area. 
Through the end of August, 9,104 foreclosures were initiated in 
Shelby County, compared to 8,494 for the same period in 2008, a 
7 percent increase. In response, we sought and received funding 
to create our home preservation project. We are assisting more 
than 1,000 clients with their foreclosure legal needs.
    Obviously, we cannot do all of this alone. I direct your 
attention to page six, where there is a listing of pro bono 
opportunities at MALS office to our private attorneys and other 
volunteers.
    In conclusion, I again want to thank the Subcommittee and, 
in particular, Chairman Cohen and Ranking Member Franks for 
this opportunity. But I want to leave you with a client's story 
that is not included in the materials in my written testimony.
    An Army Vietnam veteran, a Mr. Calhoun, was almost killed 
by a landmine. In fact, he thought he was dead. He was awarded 
the Purple Heart, but for many years, and even at the point 
before he came into our office, he was unaware that he had 
received a Purple Heart because of lost memory that was caused 
by his injuries. And he now has a host of other problems.
    So he came to us to get increased veteran benefits. And 
now, because of the advocacy of a paralegal in our office, he 
increased his rating to 100 percent to expand those benefits. 
Our paralegal, as he sifted through the papers, realized that 
this gentleman was entitled to the Purple Heart and had been 
awarded the Purple Heart.
    Do you know what we do even more than just serve our 
clients? Our paralegal contacted the Pentagon or the Army and 
asked that--brought it to their attention that he didn't have 
the Purple Heart. A ceremony was convened by the Army to award 
him the long-awaited Purple Heart.
    And, indeed, we attended that ceremony, and we were very 
proud. That is just one example of the work that we do on 
behalf of our clients.
    Do I have more time? I can go through some more.
    Mr. Cohen [continuing]. Give you that time, but I don't 
know that I have it, Mr. McIver. And I appreciate your 
testimony----
    Mr. McIver [continuing]. Thank you again. And that is just 
one example of the kind of work that Memphis Area Legal 
Services and the legal aid programs across this country provide 
to our most needed citizens. And I want to, again, thank you 
for this opportunity.
    [The prepared statement of Mr. McIver follows:]
             Prepared Statement of Harrison D. McIver, III


















                               __________

    Mr. Cohen. Thank you, sir.
    Our next witness is Mr. Don Saunders. He has worked with 
Legal Services for over 32 years, director of Legal Services, 
the National Legal Aid and Defender Association. He has been in 
Washington. And before coming here, he was executive director 
of the North Carolina Legal Services Resource Center in Raleigh 
for about 7 years in the 1980's and was a staff attorney in the 
D.C. area in Wilmington.
    And he has also been at Boone, North Carolina, so it is 
appropriate that East Carolina plays the University of Memphis 
tonight on television, a game that I am sure nobody but some 
few of us from Tennessee, Memphis, and Carolina will care 
about, and even then it is questionable that you follow Mr. 
McIver.
    Welcome.

   TESTIMONY OF DONALD SAUNDERS, DIRECTOR OF THE CIVIL LEGAL 
 SERVICES DIVISION, NATIONAL LEGAL AID AND DEFENDER ASSOCIATION

    Mr. Saunders. Chairman Cohen, Ranking Member Franks, and 
the Subcommittee, the National Legal Aid and Defender 
Association, founded in 1911, is the oldest and largest 
membership organization in the Nation advocating for equal 
access to justice for all people, regardless of their income.
    NLADA greatly appreciates your convening this important 
hearing, and I am very proud personally to be here today in 
support of over 6,500 attorneys and thousands of other 
advocates, such as those Mr. McIver mentioned, dedicated to 
ensuring our democratic principle of equal justice under the 
law.
    As pointed out in our written testimony, establishing 
justice holds a preeminent place in the preamble to the 
Constitution of the United States. My colleagues work every 
day--often at significant personal sacrifice--to make that 
principle a reality for low-income families in communities in 
every corner of the Nation.
    I appear before you today particularly to support H.R. 
3764, the Civil Access to Justice Act, introduced by 
Representative Scott, co-sponsored by the Chairman and a number 
of other Members of this Subcommittee. Like your prior 
witnesses and Mr. McIver so eloquently testified, legal aid 
programs across the country are being stretched dangerously 
thin, as the most recent poverty figures underscore.
    Our testimony also vividly indicates how the growing need 
for services has come at the worst possible time for legal aid 
programs nationwide as State and local resources of revenue 
have been greatly undercut by the economic downturn. Federal 
support to ensure at least a minimum of access to justice has 
never been more critical. We heartily endorse section 14 of the 
Civil Access to Justice Act, authorizing Federal support 
sufficient to put a significant dent in the justice gap, amply 
illustrated in the LSC report.
    However, H.R. 3764 goes much further in providing 
meaningful access to justice for our Nation's disadvantaged. As 
you know, the legal services corporation has not operated under 
a current authorization since 1980. Much has changed in our 
Nation, our justice system, and in the delivery of civil legal 
aid since that time.
    In our view, it is not good policy to continue to define 
the parameters of legal aid delivery through the annual 
appropriations process. It is time, however, to return to the 
original vision of legal aid contained in the LSC act, wherein 
LSC advocates were free to use the tools available to every 
other lawyer practicing in the United States.
    The restriction on advocacy placed on all of the money held 
by LSC grantees since 1996 have greatly undercut the ability of 
low-income people to fully vindicate their rights under the law 
and it limited the efficient and effective use of scarce legal 
aid funding.
    The Civil Access to Justice Act, by returning in general to 
the restrictions placed on LSC grantees in the original act, 
would provide a tremendous impetus to attack the justice gap in 
America. Specifically by allowing attorneys fees who are 
provided by law, H.R. 3764 not only increases the resources 
available for civil legal aid, but also it levels the playing 
field and negotiations on behalf of clients.
    Under the current restrictions, fee claims that are 
available to every other practicing attorney can be ignored by 
defendants who have seriously violated clients' rights. 
Likewise, to suggest that class-action relief, where 
appropriate and provided by law, is available to each and every 
attorney except those representing the disadvantaged denies the 
full measure of justice to low-income communities and greatly 
diminishes the effectiveness of scarce Federal dollars in 
addressing significant client problems.
    Regarding legislative and administrative advocacy, the 
lives of low-income people are more impacted by legislation 
administrative rules than almost any other sector of our 
population. Denying advocates the ability to raise their 
clients' particular problems before these bodies is to deny 
access to the full justice system in America.
    Finally, Congress should trust our State legislatures and 
courts to set appropriate guidelines on the money they allocate 
to address legal issues affecting the poor at the State and 
local level. You should do away with the application of Federal 
restrictions to State, local and private funds that already 
have adequate local safeguards on overreaching and abuse.
    Again, Mr. Chairman, I thank you for the ability to appear 
before you today and would be happy to answer any questions at 
the appropriate time.
    [The prepared statement of Mr. Saunders follows:]
                 Prepared Statement of Donald Saunders

























                               __________

    Mr. Cohen. Thank you, sir. I appreciate your testimony and 
your service.
    Third witness is Mr. Thomas Wells, partner and founding 
member of Maynard, Cooper & Gale in Birmingham, diversified 
practice, past president of the American Bar Association, 
served in the policymaking group of the House of Delegates 
since 1991 and was chair of the ABA House of Delegates in 2002 
to 2004, former chair of the ABA section of litigation.
    And we thank you for your service to the bar and appreciate 
your testimony today, Mr. Wells.

 TESTIMONY OF H. THOMAS WELLS, JR., IMMEDIATE PAST PRESIDENT, 
                    AMERICAN BAR ASSOCIATION

    Mr. Wells. Thank you, Chairman Cohen, Congressman Franks, 
Members of the Committee. I thank you again for calling today's 
hearing to discuss the essential role of the Legal Services 
Corporation in closing the justice gap. Indeed, the justice gap 
is now looking more like the justice chasm.
    The ABA believes that this objective must largely be 
achieved by strengthening the legal services corporation and 
urges the 111th Congress to enact bipartisan legislation to 
reauthorize, strengthen and improve LSC. At the same time, the 
ABA and America's lawyers will continue to advocate for private 
bar involvement and pro bono service to supplement the work of 
LSC.
    Long before I became ABA president, I began visiting my 
congressional delegation, both Republicans and Democrats, to 
explain how important LSC funding is to Alabama and the most 
vulnerable citizens in our State. Until recently, the only 
funding for Alabama legal services was Federal funding. Over 
the years, strong bipartisan support for LSC has energized not 
just in Alabama, but around the country.
    In addition to being year-round work at home, ABA members 
and State and local bar presidents, many on their own dime, 
travel to D.C. every year to remind Congress how important LSC 
is to their States and their districts. Importantly, in the 
past 2 years, the bar presidents of all 50 States, plus the 
District of Columbia, the U.S. Virgin Islands, and Puerto Rico, 
have jointly urged Congress to increase funding for LSC.
    In addition to the support of the legal community, the 
American people strongly support a Federal legal services 
program. This past spring, the ABA released a newly completed 
Harris public opinion poll which demonstrated strong national 
support for providing free legal services to qualified low-
income families.
    The LSC is the central foundation of the legal aid system. 
Other components--State and local funding and pro bono 
contributions by private lawyers--are catalyzed by LSC seed 
funding and serve to supplement the LSC resources.
    LSC is a model private-public partnership. The core Federal 
funding provides for client intake and screening referral of 
cases, responding to emergency matters, training pro bono 
lawyers, and handling cases where no private lawyer can do so.
    LSC leverages and facilitates the utilization of private 
resources, both in-kind pro bono services and private funding. 
A comprehensive national system is necessary to assure that all 
persons have access to the justice system, yet every indicator 
shows that the efforts described above have proven to be 
inadequate and that access to justice is still largely denied 
to the poor.
    One significant problem is that resources that are provided 
to LSC are not able to be used to maximum effect. The ABA 
strongly urges the Subcommittee and Congress to address in 
reauthorization legislation three measures that have been 
included in appropriations riders since 1995 that have impeded 
LSC in fulfilling its mission.
    We request specifically the Subcommittee eliminate, one, 
the restriction that prevents recipients of LSC funding from 
freely utilizing State, local, private, and other non-LSC funds 
to provide needed legal assistance to poor clients.
    Second, the restriction that prevents LSC recipient 
programs from obtaining statutorily permitted attorney fees, as 
the House did in its version of the CJS bill. And, third, the 
restriction on class actions.
    Another roadblock to closing the justice gap is that legal 
aid systems--other funding sources are insufficient or 
unstable. The good news is that most, if not all, State 
governments are now partners in the efforts to provide legal 
aid to the poor, and now 48 States, in fact, provide funding. 
Unfortunately, that funding, as you probably know, has been 
either decreased or is in jeopardy.
    In addition, several States have sharply reduced State 
appropriations. And at the same time, while there are many 
positive efforts to supplement LSC's Federal funding, these 
efforts cannot supplant LSC. For example, the ABA promotes 
generous contributions of pro bono service and money by private 
lawyers through our center for pro bono. We support charitable 
giving through the ABA resource center and through long-time 
advocacy for IOLTA accounts.
    Unfortunately, as you have noted before, IOLTA monies have 
all but dried up, and therefore, that source of funding for 
legal services has been essentially eliminated.
    The ABA this week is sponsoring a national celebration of 
pro bono to draw the bar and the public's attention to the pro 
bono contributions of lawyers and to encourage even more 
lawyers to participate. This week, there will be over 500 
events nationwide.
    While pro bono remains an important part of the delivery 
system, a strong, efficient, well-funded LSC is the central 
mechanism for making any headway toward closing the justice 
chasm. The ABA, our members, and State and local bars 
nationwide stand ready to help get this important job done.
    Thank you very much.
    [The prepared statement of Mr. Wells follows:]
               Prepared Statement of H. Thomas Wells, Jr.






















                               __________

    Mr. Cohen. Thank you, Mr. Wells. I appreciate your 
testimony and your service in the ABA.
    Our last witness is Ms. Susan Ragland, director in the 
GAO's financial management assurance team, responsible for work 
in governance, internal control, grants accountability, and 
implementation of the Recovery Act, written--a wide range of 
experience leading cross-cutting efforts at GAO regarding 
government-wide management reforms. She has received a variety 
of awards that recognized her leadership and teamwork, and we 
appreciate your testimony today.

TESTIMONY OF SUSAN RAGLAND, DIRECTOR, FINANCIAL MANAGEMENT AND 
        ASSURANCE TEAM, GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Ragland. Thank you, Chairman Cohen, Representative 
Franks, and the Subcommittee.
    I am pleased to be here to discuss GAO's prior work on the 
Legal Services Corporation's governance, accountability, and 
grants management practices. Today, I will highlight key 
findings from our August 2007 report on LSC's governance and 
accountability and our December 2007 report on LSC's grants 
management and oversight.
    I will put this in context by presenting the status of 
LSC's actions to respond to the recommendations that we made. 
We have been following up on these actions since May, and we 
will continue to do so.
    LSC's governance and accountability practices and internal 
control are key in maintaining trust and credibility. LSC 
agreed with all 12 of our recommendations in this area and have 
implemented four recommendations that we made to LSC 
management.
    LSC has implemented a formal risk assessment program, 
established a conflict of interest policy, established and 
tested a continuity of operations plan, and decided to base 
LSC's financial reporting on standards set by the Governmental 
Accounting Standards Board.
    LSC's board has fully implemented three of eight 
recommendations we made to the board to help strengthen 
governance. The board established an audit committee chartered 
to the board's committees and a shorter timeframe for issuing 
LSC's audited financial statements.
    However, the board has not fully implemented five remaining 
recommendations. One of these was for the board to develop and 
implement procedures to periodically evaluate key management 
processes. This recommendation is key, because it contributes 
to establishing an effective internal control environment at 
LSC, and it helps keep LSC management accountable.
    The other recommendations to the board that remain 
outstanding are to establish and implement an orientation 
program, develop a training plan, establish a compensation 
committee function, and conduct a periodic self-assessment of 
the board's, committees', and members' performance.
    At this time, all but one of the board's terms have--
members' terms have expired. As new members transition to the 
board, it will be important that the new board make it a 
priority to fully implement these recommendations.
    Turning to the area of grants management and oversight, LSC 
continues to meet improved internal controls. Our December 2007 
report identified weaknesses in LSC's internal controls that 
left grant funds vulnerable to misuse. Such weaknesses and 
improper expenditures can result in a loss of credibility to 
the grantee, the grantor, and allows instances of fraud to take 
place if not addressed.
    LSC has addressed two recommendations we made. It has 
followed up on the improper uses of grant funds that we 
identified, and it developed and implemented policies and 
procedures for sharing information among the Office of the 
Inspector General, the Office of Program Performance, and the 
Office of Compliance and Enforcement.
    However, LSC has not yet fully implemented a key 
recommendation to employ a systematic approach for assessing 
risks across its 137 grantees. LSC needs a sound, analytical 
approach consistently applied to determine whether its 
oversight resources are being used effectively.
    LSC management has also not fully implemented a 
recommendation to revise its guidelines for fiscal compliance 
reviews, and the LSC board has not fully implemented a 
recommendation to clearly delineate organizational roles and 
responsibilities for grantee oversight and monitoring.
    In conclusion, LSC's board of directors and managers have 
made progress and fully implemented nine recommendations. The 
improvements that LSC has made in its governance and 
accountability provide a good foundation LSC can build upon to 
effectively adjust to evolving practices and risk.
    However, LSC needs to complete implementation of the 
remaining recommendations and focus continuing attention on the 
elements needed for strong governance and internal control. In 
particular, continuing risk assessments and a robust risk 
management program and mitigation will be crucial components of 
LSC's overall internal control structure.
    Similarly, although the board has taken an important step 
by establishing the audit committee, it will be important for 
the board to continue to develop and implement procedures to 
periodically evaluate key management processes, such as 
financial reporting.
    Thank you. I will be happy to answer any questions you may 
have.
    [The prepared statement of Ms. Ragland follows:]
                  Prepared Statement of Susan Ragland
































                               __________

    Mr. Cohen. Thank you, Ms. Ragland.
    Just like in the first panel, we will now have a series of 
questions, and I will begin the questions. And I will start 
with Ms. Ragland.
    Legal Services has corrected most of the problems that were 
cited, but they haven't completed. How many areas have they 
still not complied with?
    Ms. Ragland. There are eight recommendations in a couple 
areas that I tried to highlight as being key areas, in 
particular.
    Mr. Cohen. Do you have any belief why they haven't 
completed that?
    Ms. Ragland. Well, I believe that it is a combination of 
factors that Mr. McKay referred to, in that sometimes you need 
to do one step, like establishing the audit committee first 
before you can take some of the other actions. And so there is 
sort of a normal progression like that.
    So that is basically the reasons that we believe that they 
are not all implemented at this time. Some of these actions 
just take time.
    However, I would like to emphasize that we do think it is 
important, obviously, to implement all of our recommendations. 
And, you know, LSC remains at greater risk until we feel--until 
all of the recommendations are fully implemented.
    Mr. Cohen. How much time do you think it would take to 
complete implementing all of your recommendations?
    Ms. Ragland. Well, I think that, generally for our 
recommendations, we look for recommendations within a period of 
4 years. That is across all recommendations that we make to 
agencies. And so I feel that LSC has made progress and is on 
the way on some of these other recommendations that they have 
not yet fully implemented them.
    Mr. Cohen. Do you think if we had a hearing next year, some 
time maybe like September, we have a new president appointed, 
we have got new board members approved, do you think by next 
September, if we have a hearing, that all of these 
recommendations could be implemented, if the board and the 
president knew that they were a priority of this Subcommittee.
    Ms. Ragland. I can't say. But I would think that that would 
be something that would be helpful to have, you know, 
continuing oversight and making sure that this is a priority, 
given the turnover and the transitions that will be happening.
    Mr. Cohen. Thank you, Ms. Ragland.
    Mr. McIver, Memphis has recently discovered through data 
that we are the poorest of the 60 urban regions in the country. 
You said we have but 1 Legal Services--what were the 
statistics? They were amazing, 1 to 10,000?
    Mr. McIver. Yes. We have 20 lawyers and, we estimate, about 
200,000. The increase from the 2000 decennial census to now, 
based upon our research, indicates that we have 45,000 increase 
in the poverty population. And in our area, we have a small pro 
bono program that you are aware of called Committee Legal 
Center, but it is not a full-fledged law firm to address the 
sorts of issues that we have to contend with on a daily basis.
    Mr. Cohen. Mr. King talked about pro bono volunteer 
efforts. Do we have a good response from the legal community in 
Memphis to pro bono already? And is that a realistic 
expectation, to fill the gap that we currently see?
    Mr. McIver. I think it--without Memphis Area Legal Services 
or legal aid organization as the hub, the pro bono efforts 
would fall short. It is very evident, even from the inception 
of Memphis Area Legal Services, that the Neighborhood Legal 
Services project founded by, you know, our friend, Mike Cody, 
and the 29 others, that pro bono just doesn't work without an 
independent legal services--not the independent--without a 
legal aid organization as the center, center at its efforts.
    As reflected in my testimony, written testimony, we have 
just a host of opportunities that private lawyers and 
paralegals--we have volunteerism on the part of the paralegals. 
The paralegal association out here really has stepped up to the 
plate and done yeoman's work in terms of that.
    You have the traditional kind of case referrals. We have 
now--it is very interesting, because our area, as you well 
know, Mr. Chairman, that bankruptcies are a very predominant 
issue in our area. We have probably called the mid-South's--and 
probably the whole country--the bankruptcy capital of the 
world. That is what I have heard.
    Through the efforts of Judge Latta, who is a bankruptcy 
judge, and with our pro bono program, we have created the 
bankruptcy--pro bono project, which is designed to help 
potential bankruptcy or debtors to appreciate some alternatives 
to just going in to file bankruptcy. And that has been set up.
    There are other opportunities. We have created the Memphis 
Bar Association, with the help of the Memphis Bar Association, 
business section, corporate accounts pro bono initiative. We 
have established a pro bono capacity to assist nonprofits, 
which are really suffering in our various communities, and even 
across this country, in need of legal assistance. We have 
created that capacity locally.
    And you are aware--aren't you a University of Memphis Law 
School graduate?
    Mr. Cohen. Yes, sir.
    Mr. McIver. You know about the legal clinic. We have had 
the legal clinic for almost 20 years. The Memphis Area Legal 
Services now is going to move down the street to that beautiful 
building in a few months, but we have had that capacity in 
house for third-year law students who are student attorneys to 
assist our clients in providing legal representation.
    We have a stellar pro bono program. While we reach and try 
to involve private attorneys to a certain level, only about 700 
lawyers are actually participating in our pro bono program, and 
we have 3,000, so you can see that we still have work to do. 
But as you also know, the Tennessee Supreme Court, through its 
access to justice commission and its recent promulgation of the 
rule that require pro bono reporting to be made within the 
States, so that is another opportunity where we can see some 
growth in pro bono.
    But in our community, we have seized upon Pro Bono Week, 
and we have had--and an event was called, attorney of the day, 
a legal clinic each day this week in order to avail our 
services with the help of the legal community to assist those 
in need. So it is really--I think it is truly--the bar in our 
community has been just unbelievable in its willing to embrace 
the need that we have.
    But, again, we have to have a legal aid organization to 
make it most effective, and we are the hub to make that 
effective.
    Mr. Cohen. Thank you, sir.
    The Ranking Member, Mr. Franks, for questioning?
    Mr. Franks. Well, thank you, Mr. Chairman.
    Mr. Wells, you mentioned that there were three areas of 
restrictions in the type of lawsuits that you would like to see 
lifted. And could you delineate those one more time and tell us 
what new opportunities lifting those would present to LSC?
    Mr. Wells. I would be glad to. Thank you, Congressman.
    The first area is the restriction on non-Federal funds. 
There are a number of legal services providers across the 
country that generate a substantial portion of their operating 
revenues from private fundraising. And yet, despite the fact 
that those are not being raised or not being given by the 
Federal Government, they are subject to the same restrictions.
    That has led to inefficiencies that I myself have 
personally seen during my year as ABA president, traveling 
across the country and seeing providers who were forced to set 
up a parallel organization to the federally funded one in order 
that they be able to effectuate the donors' or the State 
governments' wishes, in terms of what the money could be used 
for.
    So the first is eliminating the non-Federal funding 
restriction, allow them to use those moneys as the donor or the 
State or the local person desires the monies to be used.
    The second is in statutorily authorized attorney's fees. As 
you know, Congressman, many States have statutes that, in their 
wisdom, have decided that if a particular type of case is 
brought, the plaintiff, if they prevail, should be able to get 
attorney's fees from the offending party.
    Right now, legal services attorneys are prohibited from 
asking for those statutorily mandated fees. We see that, quite 
frankly, as a violation of the concept of federalism. If the 
State decides, then why is the Federal Government saying that 
legal services lawyers shouldn't get those? It puts them at a 
negotiating disadvantage if a settlement is negotiated in those 
cases.
    And then the final one is the ability to bring class 
actions. We believe that there are appropriate instances where 
class actions would be the most effective way to handle larger 
numbers of Legal Services clients, particularly in a situation 
where you have everyone, for example, in a housing complex who 
has a claim that the landlord is not keeping it up to habitable 
standards. It makes no sense to bring 100 separate actions to 
do that. It makes a whole lot more sense to bring one 
consolidated action.
    And, quite frankly, we believe Congress has handled the 
overall issue of class actions and overall abuses of class 
actions in their overarching legislation dealing with class 
actions, such as the Class Action Fairness Act.
    Mr. Franks. All right. Well, thank you, sir.
    Ms. Ragland, given the number of weaknesses or challenges 
that the GAO found in LSC's accountability and grantee 
oversight in recent years, do you believe that LSC has proven 
that it can be trusted to use Federal funds efficiently and for 
intended purposes in the future? Or how soon can that come to 
pass?
    Ms. Ragland. As I stated in my testimony, we found that LSC 
has made progress in improving its governance, accountability, 
and grants management practices. And so the main point I would 
like to make is that it is going to be very important. It will 
continue to be important for LSC to focus on implementing the 
recommendations and continuing the efforts that it has underway 
to assure that its governance and internal controls are 
effective and that grant funds are being used as intended.
    I recognize, you know, your interest and the Committee's 
interest in safeguarding and stewardship of taxpayer dollars, 
and I think that the importance of maintaining that continuing 
focus is key going forward.
    Mr. Franks. Do they have your seal of Good Housekeeping at 
the moment? And what do you think a timeline would be before 
they could accomplish that, if not?
    Ms. Ragland. I think that they have made some progress, but 
I do think there are still risks. And as you increase funding 
to any program, the level of risk increases, so that, you know, 
the center of that LSC is able to fully implement the 
recommendations that we have made.
    We do have work going on there now, as you know. And so we 
are looking at some other areas, as well.
    Mr. Franks. Well, thank you.
    And, Mr. Chairman, I guess I would just say I sincerely 
believe that it is important for us to have a confluence about 
the last question I just asked, before we make additional 
funding increases.
    And the only other thing that--I would suggest that 
potentially class action, even though I can see positives 
there, it seems to me like that could also present an 
opportunity to magnify certain abuses. And I would just put 
that down for the record and yield back. Thank you.
    Mr. Cohen. And now I would like to recognize Mr. Watt, of 
North Carolina.
    Mr. Watt. Thank you, Mr. Chairman.
    Ms. Ragland, first, you testified that the board has 
adopted or subscribed to all of the recommendations that you 
all have made. I am wondering whether you have traced the 
failure to implement any of those recommendations to 
recalcitrance or unwillingness on the part of the board?
    Ms. Ragland. No, sir.
    Mr. Watt. Okay.
    Ms. Ragland. There are some recommendations that are not 
implemented yet that we have made to the board, but we found 
that the board, you know, has expressed cooperation and an 
incentive to want to address the issues that we have raised.
    Mr. Watt. Okay. I want to follow up on Mr. Franks' 
questions about the activities that Mr. Wells testified about, 
the three things, and particularly focusing on the first two, 
as I did with the first panel of witnesses.
    Mr. Wells has given a description of some of the problems 
that each one of those presents. The one that I think I am the 
most exercised about is the notion that government should 
restrain the use of other people's money just because it has a 
certain set of beliefs about the use of its own money. And the 
question I asked the first panel was for some practical 
examples of that and the impact that it has.
    Mr. Wells, you testified about a couple of those practical 
impacts. I am wondering whether Mr. Saunders might be able to 
amplify on some of those practical impacts of failure to allow 
the use of other funds, not government--not taxpayer money, but 
other money by the Legal Services Corporation?
    Mr. Saunders. Yes, Congressman Watt. This issue exists in 
every part of the country. If there are limited amounts of 
money, programs are unable to provide some of the critical 
services that I have outlined in my testimony, such as 
providing representation in a wide array of forum.
    In States where they have twinned, as we call it, the 
system, as Mr. Wells testified, there is enormous 
administrative duplication. That duplication exists in the city 
of Philadelphia, in New York City, in Boston, and also at the 
State level. As Mr. McKay testified, the State of Washington 
has had to duplicate two entire statewide systems, as has 
Florida, as has Ohio.
    The other thing that we hear from a number of programs is 
it limits the ability of LSC programs to maximize funding. In 
this time of real shortage, it is our view that Congress should 
not discourage auxiliary fundraising. It ought to be 
encouraging it. And, indeed, this restriction in many 
communities serves as a deterrent for certain funders.
    A lot of the money we are talking about here is 
appropriated either through the State legislature or through 
the State supreme court. It is our view that they are better 
situated than Congress to determine the best use of those 
funds.
    Mr. Watt. Well, you know, we used to have some States' 
rights advocates around this institution, but they seem to have 
disappeared. I am having more and more trouble finding them. 
Even on the Committee that used to be most known for the 
States' rights advocacy, there seems to be a lack of that.
    Let me just go to the policy implications of the attorney's 
fee restriction, because it is our understanding in a lot of 
the States that allow for attorney's fees to be assessed to the 
prevailing party, part of the policy justification for that is 
to discourage bad activity and encourage the prompt settlement 
of cases.
    Mr. Wells referred to the second aspect of that, but have 
you seen any indication of cases in which actually, because 
there is no ability to get attorney's fees assessed, the 
opposing attorneys have just drug the case out and drug the 
case out because they really don't have any real incentives to 
minimize the litigation cost on the other side? All of their 
incentive is to maximize litigation costs for which they are 
being compensated. Have you seen any examples of that?
    Mr. Saunders. Certainly, anecdotally, a number of examples 
of that. Clearly, one area where attorney's fees are often 
authorized by law would be in the consumer area, where you have 
some very bad actors in some instances we have experienced, 
certainly in the last few years, wherein the ability to attain 
fees is really a major part of the negotiation.
    That, in conjunction with the inability to bring class 
actions, it is certainly created an environment where a number 
of predatory lending abuses could have been addressed, but in 
the current situation, those tools really are a limit to 
getting to the kind of bad behavior that you were mentioning.
    Mr. Watt. Thank you, Mr. Chairman. I yield back.
    Mr. Cohen. Thank you, Mr. Watt.
    We are not going to have a second round, but I am going to 
exercise the Chairman prerogative, and that is to ask a couple 
of questions that were brought up to an extent.
    Ms. Ragland, some of the bad publicity concerning Legal 
Services I have seen has been limousines and lobster and 
pastries. Did any of that come across in your analysis? Did you 
see those circumstances?
    Ms. Ragland. We didn't see those specific circumstances, 
but we did find problems at the grantees that we visited on the 
work that we did in 2007. So we found problems at 9 of the 14 
grantees that we visited.
    Mr. Cohen. And what were the problems you found, just in 
general?
    Ms. Ragland. We found problems with insufficient supporting 
documentation of expenditures, alcohol purchases, employee----
    Mr. Cohen. Alcohol purchases? But what did----
    Ms. Ragland. Yes, sir.
    Mr. Cohen. But they purchased alcohol? Was this for like a 
Christmas party?
    Ms. Ragland. I am not sure what the purpose was, sir.
    Mr. Cohen. Yes, okay. Or a hard day. [Laughter.]
    What other things did you find?
    Ms. Ragland. We identified two instances where a grantee 
was using LSC funds to pay lobby registration fees, late fees 
for overdue goods, earnest money. We discovered an improper 
transaction at one grantee involving a sale of a building using 
both LSC and non-LSC funds.
    Mr. Cohen. Did you discover a pattern throughout LSC or 
just random violations that were not anything uniform 
throughout the corporation's agencies?
    Ms. Ragland. Well, we found, you know, that this was 
something that does require a systematic way to address it. And 
so that is why--that is the basis for the recommendation that 
we made. It is important for LSC to have a structure and 
systematic approach to assess risk of noncompliance or 
weaknesses across all the grantees.
    And we also made another recommendation to revise the 
guidelines for fiscal compliance reviews of grantees to include 
three elements which were a direct link to the results of OPP 
reviews and other audit findings, interview guidelines, and 
examples of fiscal and internal control review procedures based 
on individual risk factors.
    Mr. Cohen. In your years at GAO, have you seen these type 
of programs at other organizations, Federal agencies, as well?
    Ms. Ragland. I personally haven't, but I have seen GAO has 
seen lots of examples of things.
    Mr. Cohen. Great. Thank you so much, and I appreciate the 
Committee's indulgence.
    I would like to thank all of our witnesses for their 
testimony today. I would like, without objection, Members to 
have 5 legislative days to submit any additional written 
questions, which we will forward to you and ask you to answer 
as promptly as you can, make them part of the record.
    The record will, without objection, remain open for 5 
legislative days for the submission of any other additional 
materials.
    Thank you, everybody, for their time and patience. I 
congratulate Mr. Wells on the blocking of the field goal.
    This hearing of the Subcommittee on Commercial and 
Administrative Law is adjourned.
    [Whereupon, at 1:10 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

       Answers to Post-Hearing Questions from Michael D. McKay, 
         Vice Chairman of the Board, Legal Services Corporation











                                

      Answers to Post-Hearing Questions from Helaine M. Barnett, 
                 President, Legal Services Corporation









                                

    Answers to Post-Hearing Questions from Harrison D. McIver, III, 
       Executive Director/CEO, Memphis Area Legal Services, Inc.











                                

Answers to Post-Hearing Questions from Donald Saunders, Director of the 
    Civil Legal Services Division, National Legal Aid and Defender 
                              Association



























                                

     Answers to Post-Hearing Questions from H. Thomas Wells, Jr., 
           Immediate Past President, American Bar Association







                                

    Answers to Post-Hearing Questions from Susan Ragland, Director, 
  Financial Management and Assurance Team, Government Accountability 
                                 Office











                                

          Letter from Alan Reuther, Director, CWA-UAW Alliance





                                

Prepared Statement of Rebekah Diller, Deputy Director, Justice Program, 
    on behalf of the Brennan Center for Justice at NYU School of Law






















--------
    *The two reports noted in footnote 2 above, are not reprinted with 
this submitted statement but are on file with the Subcommittee. They 
may also be accessed at:

    http://brennan.3cdn.net/a5bf8a685cd0885f72_s8m6bevkx.pdf

    http://brennan.3cdn.net/7e05061cc505311545_75m6ivw3x.pdf
    
    
    
    
    
    

                                 
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