[Federal Register Volume 59, Number 115 (Thursday, June 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14566]

[[Page Unknown]]

[Federal Register: June 16, 1994]



45 CFR Part 1607


Governing Bodies

AGENCY: Legal Services Corporation.

ACTION: Notice of proposed rulemaking.


SUMMARY: This proposed regulation would amend the Legal Services 
Corporation's (``LSC'' or ``Corporation'') regulations, relating to 
governing bodies of recipients of LSC funds. Many of the revisions are 
simply intended to clarify current Corporation policy or to interrelate 
this part to other LSC regulations. However, a number of the proposed 
revisions represent changes in Corporation policy or interpretations 
with respect to issues that arise under the regulation. The proposal 
also includes a number of technical revisions to make the rule easier 
to apply and use.

DATES: Comments should be received by August 15, 1994.

ADDRESSES: Comments should be submitted to the Office of the General 
Counsel, Legal Services Corporation, 750 First Street, NE., 11th Floor, 
Washington, DC 20002-4250.

FOR FURTHER INFORMATION CONTACT: Victor Fortuno, General Counsel, 
Office of the General Counsel (202) 336-8810.

SUPPLEMENTARY INFORMATION: The Operations and Regulations Committee of 
the LSC Board of Directors (``Committee'') held public hearings on 
April 15, 1994, in Washington, DC and on May 13, 1994, in Atlanta, 
Georgia, to consider drafts of proposed revisions to 45 CFR part 1607, 
LSC's regulation on recipient governing bodies. At the meeting in 
Atlanta, the Committee approved a draft to be published in the Federal 
Register as a proposed rule for public comment.
    The Corporation is extending the customary 30-day comment period to 
60 days in order to allow bar associations and other organizations with 
a specific interest in this rule sufficient time to comment. Bar 
associations play a substantial role in the appointment of recipient 
board members, and the Committee encourages their involvement in this 
rulemaking process.
    The Committee recognizes that reauthorization of the Corporation is 
presently under consideration by Congress. Whenever Congress does 
reauthorize the Corporation, the Corporation's regulations will be 
revisited and revised accordingly.
    This proposed rule is intended to amend 45 CFR part 1607 and to 
supersede part 1607's interpretive guideline published at 48 FR 36820 
(August 15, 1983).

Section 1607.1  Purpose

    No change is proposed for this section.

Section 1607.2  Definitions

    Most of the changes proposed for this section are technical and 
clarifying in nature. The section was reordered to put the definitions 
in alphabetical order. Also, definitions found in other parts of the 
regulations, but applicable to this part are included here for easier 
reference. In addition, language found in other sections of this part 
that, in fact, constitute definitions of terms are included here both 
for easier reference and to treat similar terms similarly. Some of the 
language has been clarified to make it consistent with past and current 
LSC interpretations.
    Section 1607.2(a). The definition of attorney member was added to 
make it clear that national support center board members do not have to 
be admitted to practice in a state where the center actually provides 
legal assistance.
    Section 1607.2(c). The definition of eligible client member has 
been changed in two principal ways. First, the language has been 
revised to make it clear that client board members must be eligible at 
the time of their appointment to each term of office. Thus, a client 
member who is financially eligible for services when first appointed to 
a recipient's board may not be reappointed to a second or subsequent 
term if, at the time of reappointment, the client board member is no 
longer financially eligible for LSC-funded services. However, nothing 
in the rule would require a client board member to resign during the 
course of a term if the client became ineligible subsequent to 
appointment. Second, language was added to deal with two additional, 
distinct issues. The proposed rule now makes it clear that the 
recipient should decide how client board member eligibility is 
determined. The proposed rule also makes it clear that the recipient 
should decide whether it or a particular group should make the 
determination, and that the recipient could decide, for some groups, 
the recipient will make the determination and for others it will leave 
the determination up to the appointing group.
    The Committee considered and decided not to expand the definition 
of eligible client member to include individuals who are eligible for 
non-LSC-funded services provided by the recipient, because it wished to 
insure that the focus of the legal services program remains on the poor 
    Section 1607.2(d). The proposal revises the definition of governing 
body to clarify that, in addition to the governing bodies of recipients 
who have as a primary purpose the provision of legal assistance to 
eligible clients, it also applies to the governing bodies or policy 
boards created pursuant to Sec. 1607.6(e).
    Section 1607.2(e). This definition of recipient appears in 45 CFR 
part 1600, but is repeated here for clarity in interpreting this part.

Section 1607.3  Composition

    Section 1607.3(a). The proposal includes general language, 
applicable to all categories of board membership, that requires board 
members to be supportive of the purposes of the LSC Act, and to be 
interested in and knowledgeable about the delivery of quality legal 
services to the poor. The current regulation does not include any 
similar requirement for client board members, but does include similar, 
although not identical, requirements for attorney and ``other'' board 
members. The proposal removes the reference to the board reflecting 
``the characteristics'' of the client community, in part because it is 
not clear what that language means and in part because it could be 
construed to be inconsistent with diversity requirements that are 
included later in the rule for each category of board membership.
    Section 1607.3(b). With respect to attorney board members, the 
proposal revises the language of the rule that is based on the 
requirements of the McCollum Amendment, which require a majority of the 
board members to be appointed by state, county and municipal bar 
associations. The revision clarifies that the appointments can be made 
by one or more such bar associations, so long as those bar associations 
collectively represent a majority of attorneys practicing law in the 
recipient's service area. If there are minority or gender-based bar 
associations that represent attorneys practicing in a particular 
locality, those bar associations may be included in the mix of bar 
associations that make appointments of attorneys to a recipient's 
board, especially if their inclusion would help to insure that there is 
appropriate diversity among the attorney members of the board. In 
addition, although the rule, consistent with the language of the 
McCollum Amendment, states that the appointments are to be made by the 
``governing bodies'' of the bar associations, the Committee recognizes 
that different bar associations should be free to exercise their 
appointment responsibility in a manner consistent with their own 
policies, procedures and practices. The McCollum Amendment does not 
direct LSC to impose any particular method of appointment on a bar 
    The proposed rule also adds language which is based on part of the 
McCollum amendment that makes it clear that national support centers 
are not required to use the American Bar Association (``ABA'') or a 
collection of all state bars to appoint their attorney members, simply 
because they provide service nationally. The proposed rule also 
recognizes that some recipients, especially Native-American or migrant 
programs, may have offices in one state, but also provide services in 
one or more adjacent or nearby states. The language is intended to 
permit those programs, if they so decide, to have the bar associations 
of the other states in which they provide service make appointments as 
well as the bar of the state in which their principal office is 
    In addition, the proposed rule explicitly states what is implicit 
in the language of the current regulation, i.e., that the additional 
ten percent of the board members who must be attorneys, but who are not 
covered by the McCollum amendment, may be selected by the recipient's 
governing body, if it so chooses. The proposed rule does change current 
law with respect to the additional ten percent of attorney board 
members in one respect, however. Under the current regulation, the 
additional attorneys must be representatives of bar associations or 
other legal organizations, e.g., law schools. This requirement is not 
contained in the LSC Act. Under the proposed regulation, the recipient 
may select attorneys who are not representatives of any particular bar 
or legal organization, or may select attorneys who are affiliated with 
non-legal organizations, as long as they are admitted to practice in a 
state within the recipient's service area, and as long as the 
organization has an interest in the delivery of legal services to the 
poor. Thus, the recipient would be able to select lawyers who represent 
the business community or the United Way and may be helpful in 
fundraising, or lawyers who provide substantial pro bono services to 
the client community and may be helpful in designing a recipient's 
private attorney involvement program.
    Finally, the proposed regulation revises and relocates the section 
that relates to diversity among attorney board members. This provision 
is a variation of the language previously found in Sec. 1607.3(c). It 
is revised to incorporate a more current statement of the concerns 
addressed by that subsection, but no substantive change is intended. 
While the language of the proposed rule specifically mentions race, 
ethnicity and gender, it also includes a reference to other factors 
that may be relevant in a particular legal community and population of 
the area served by the recipient, including, for example, age, physical 
abilities and religious belief.
    Section 1607.3(c). The proposal includes a number of changes in the 
language that relates to client board members. The principal revision 
addresses an issue that has remained ambiguous under the language of 
the current regulation and has caused problems for some LSC recipients. 
The proposed revision would codify the current LSC interpretation of 
the language to require that client board members be selected by client 
groups that have been designated by the recipient. This proposal also 
adds language that more accurately reflects the kind of groups or 
organizations that would be appropriate client groups for purposes of 
eligible client member selection. In addition, the proposal adds a 
diversity goal for client board members that is similar to the 
requirement for attorney board members.
    Section 1607.3(d). With respect to the ``other'' board members, 
i.e., those that are neither attorney members nor eligible client 
members, the proposal makes it clear that recipient boards are 
permitted to fill the remaining ``other'' slots. This gives recipients 
flexibility to include board members who can help them with 
fundraising, community relations, coordination with other social 
service providers, or any other locally identified need. Law school 
professors who cannot count as ``attorney members'' because they are 
not admitted to practice in a state within the recipient's service 
area, could be selected for this category of membership. Although there 
is no comparable language in the current regulation, this provision is 
consistent with longstanding LSC interpretations. In addition, the 
proposal includes language that makes it clear that ``other'' board 
members should be selected with the goals of diversity in mind.
    Section 1607.3(e). This proposal adds language to the 
``domination'' provision in the current regulation to make it clear 
that the provision was not intended to prevent recipients from 
designating a single regional or statewide client council as the 
appointing organization for client board members, so long as that 
client council represents numerous smaller client groups.
    Section 1607.3(f). The proposal deletes language which could be 
incorrectly interpreted to give LSC authority to veto particular 
methods of selecting local board members. In addition, the proposal 
states affirmatively that recipients may recommend names to and consult 
with bar associations and other appointing groups to insure that 
appropriate appointments are made. This revision recognizes that bar 
associations or other groups may request information on who would make 
a good legal services program board member and may rely on input from 
the recipients in making the appointments.
    Section 1607.3(g). The proposed rule includes a new provision that 
is intended to establish standards for dealing with recipient board 
vacancies. It establishes a standard of reasonable and good faith 
efforts to insure that governing body vacancies are filled promptly, 
but recognizes that recipients often have no control over the 
appointment process other than to change the groups that they have 
designated to make the appointments if a particular group fails to make 
an appointment in a timely manner. In order to avoid the creation of 
vacancies, recipients, through their own by-laws or board policies, 
could take a number of actions when appointing organizations are slow 
in making appointments, refuse to make them, or are unable to make them 
for whatever reason. For example, a recipient's board could permit its 
members to hold over until replacements are appointed, or could make 
short-term interim appointments, if necessary, until regular 
appointments can be made.
    Section 1607.3(h). The proposed regulation includes a new provision 
that grants the recipient the authority to reject an appointment of a 
board member when the recipient determines that the person who has been 
appointed does not meet the criteria set out in the regulation, 
including financial eligibility for client board members, or where the 
person appointed has a significant individual or institutional conflict 
of interest with the recipient or its client community. The ABA's 
Standards for Providers of Legal Services to the Poor states, in 
Standard 7.2-5, that ``governing body members should not knowingly 
attempt to influence any decisions in which they have a conflict of 
interest with provider clients'' and Standard 7.2-6 states that 
``members should not be selected by * * * any institution or agency 
which is in conflict with the provider or its clients.'' The Commentary 
to those standards contains discussions of both institutional and 
individual conflicts of interest and suggests that when such conflicts 
arise with respect to a sitting board member, the member and the 
recipient should be guided by laws of the jurisdiction regarding 
disclosure and recusal. While the Standards state an absolute rule 
prohibiting appointments by institutions or agencies that have a 
conflict with the recipient or its clients (e.g. a welfare department 
or county attorney's office should not make appointments to a 
recipient's board), they also note that:

    If a person is employed by or is otherwise significantly 
connected with an institution that is in conflict with the 
provider's clients, generally that person should not serve on the 
governing body. That person may serve, however, if there is evidence 
* * * that the particular individual is not in actual conflict * * 

    Thus, the question of whether it is appropriate for government 
attorneys or other public employees or elected officials, or attorneys 
representing finance companies or real estate developers, to serve on 
recipient governing bodies as members appointed by a bar association as 
its representative is a factual issue. The Commentary recognizes that:

    (c)onflicts may arise in the representation by attorney board 
members of institutions or individuals who are in conflict with 
provider clients. Concern about the risks associated with conflicts 
should not exclude from the governing body every person identified 
with an institution or individual with an adverse interest. A strict 
rule could exclude persons with skills and experience of benefit to 
the provider and could inhibit development of an effective 
relationship between the provider and the private bar. In rural 
areas particularly, where the pool of potential members is 
relatively small, it may be impossible to avoid all conflicts. The 
provider, however, should assure that the presence of members with 
potential conflicts does not inhibit forceful representation of 

    The proposed provision suggests a way that, under appropriate 
circumstances, the recipient can assure that individuals with clear and 
substantial conflicts of interest do not serve on its governing body, 
while permitting it to seat other individuals who may have a less 
substantial or merely potential conflict, and leaving it to the 
guidance of the applicable rules of professional responsibility when 
actual conflicts arise.

Section 1607.4  Functions of a Governing Body

    Section 1607.4(a). This proposal deletes the requirement for 
``effective'' prior public notice, which has proven to be a difficult 
concept to enforce and may be very fact-specific. The Committee felt 
that truly effective public notice is virtually impossible to achieve, 
even if a recipient spent huge amounts of money on advertising. The 
Corporation does not wish to promote such wasteful expenditures or 
assume that the efforts were not ``effective'' simply because few 
members of the public showed up at a board meeting. Instead, the 
standard should be that of ``reasonable'' prior public notice, so that 
recipients would only be required to do what is reasonable under the 
specific local circumstances.
    The Committee also considered whether it should include within the 
regulation specific guidance as to what kinds of matters were properly 
discussed in executive session. Instead, it decided to recommend that 
recipients look to the kinds of matters described in the LSC bylaws and 
Sunshine Act regulation (45 CFR part 1622), state Sunshine Act 
provisions, or other provisions in state non-profit corporation law for 
guidance as to the kinds of matters that should appropriately be 
discussed out of the public eye. A recipient should determine, based on 
that review and local circumstances, how it should conduct its 
    Section 1607.4(b). The proposed regulation includes new language to 
make it clear that recipient governing bodies have, in addition to the 
specific functions described in the regulation, the authority and 
responsibility inherent in their status as boards of non-profit 
corporations. The Committee felt that the current regulatory language 
did not grant the governing body the general authority, for example, to 
hire and fire a program's executive director, and there should be 
language that granted such authority.
    In addition, there is new language that was added to make the 
section consistent with ABA opinions on the role of governing bodies of 
legal assistance programs under the Model Rules, especially with 
respect to the governing bodies' interference with an attorney's 
representation of a client or with the conduct of any ongoing 
representation. The Committee wished to make clear that while Board 
members were prohibited from such interference, the Board as a whole 
should be encouraged to adopt policies to guide the executive 
director's actions when he or she discovers that the recipient has 
undertaken representation in a case that is inappropriate under the 
restrictions of the LSC Act or regulations.
    Section 1607.4(c). This new provision is intended to make it clear 
that it is up to recipients to design their own bylaws. The Corporation 
would have authority to review a program's bylaws, as well as any 
revisions that are made in them, for the purpose of ensuring that they 
comply with the LSC Act and regulations.

Section 1607.5  Compensation

    Section 1607.5(a). The proposed regulation makes two significant 
changes in the current rule dealing with recipient board member 
compensation. First, since the provision of the LSC Act that prohibits 
compensation applies only to attorney board members, it would be 
consistent with the Act to permit a recipient to pay compensation to a 
client or other non-attorney board member for board service or other 
service to the recipient. The regulation was revised to make it 
consistent with the restriction in the Act.
    Second, this proposal reverses the policy decision made by the LSC 
Board in 1988, which interpreted the language of the LSC Act to 
prohibit a recipient board member from receiving compensation from any 
recipient, not just the one on whose board the member sat. The effect 
of the 1988 revision was to prohibit field program staff from sitting 
on state and national support center boards, and vice versa. It 
prevented support centers from being accountable through their boards 
to the programs that they were intended to serve. This proposed 
language restores and clarifies the prior LSC policy that was in 
existence from 1975 to 1988 and which reflects the intent of Congress. 
Both the Legal Services Corporation Reauthorization bill that passed 
the House in 1992 (H.R. 2039) and the bill that was approved by the 
Senate Committee on Labor and Human Resources the same year (S. 2870) 
would have amended the LSC Act in a manner consistent with the proposed 
    In addition, the proposal clarifies that all board members may 
receive a per diem payment for expenses in lieu of actual expense 
reimbursements, so long as such a payment is reasonable in light of 
actual average costs. Such a per diem may be easier for programs to 
administer and may encourage board members to save money on items such 
as meals and lodging by setting the per diem at a relatively low rate. 
The last phrase of the sentence was deleted to make it clear that 
reimbursement could be made for expenses incurred by recipient board 
members, on the same terms and conditions that are applicable to non-
board members when such board members are involved in other program 
activities not directly related to their board membership or service, 
e.g., attorney board members who volunteered to drive a program client 
to a meeting or a hearing could receive reimbursement for automobile 
expenses, or attorney board members who did pro bono work on behalf of 
the program could receive reimbursement for travel expenses for 
attending an out-of-town settlement conference.
    Sections 1607.5 (b) and (c). The proposal includes two new 
provisions that clarify how the compensation prohibition relates to a 
recipient's private attorney involvement program. One provision makes 
it clear that the Corporation could partially waive the compensation 
prohibition for those rural programs that operate in areas where there 
are so few attorneys that it is difficult or impossible to find 
attorneys willing to serve on program boards if that means that their 
partners and associates are barred from participating in judicare or 
other compensated PAI activities. The second provision was added to 
clarify that attorney board members can receive referrals of fee-
generating cases and participate freely in the recipient's pro bono PAI 
programs on the same terms as any other attorney. This is particularly 
important for rural areas where there are few private attorneys.

Section 1607.6  Waiver

    Section 1607.6(a). There is no change in this waiver provision 
which was designed to cover those programs, primarily reservation-based 
Native-American programs, that existed prior to the creation of the 
Corporation and had nonattorney majorities on their boards. In lieu of 
attorneys, most of those programs include tribal advocates who practice 
in tribal courts.
    Section 1607.6(b). This new provision was added to permit the 
Corporation president the discretion to waive the requirement of one-
third client membership when the president has determined that a 
recipient, like the National Clearinghouse for Legal Services or the 
Food Research & Action Center (``FRAC''), does not have as a primary 
purpose the provision of legal assistance to clients. The waiver 
provision requires a specific determination by the Corporation 
president, rather than a self-determination by the recipient, and does 
not permit waiver of the client board member requirement so long as the 
recipient has as a primary purpose the provision of legal assistance to 
clients. Such a waiver does not conflict with the statutory provision 
governing client membership because that provision applies only to 
those recipients that are organized ``solely for the provision of legal 
assistance to eligible clients.'' It is anticipated that this waiver 
will be used sparingly for exceptional circumstances.
    Section 1607.6(c). This provision was revised to clarify that the 
Corporation president could waive any provisions of the regulation, as 
long as the waiver conforms with applicable law. It also allows partial 
waivers to be granted. In addition, language was added to make it clear 
that the nature of the legal community could be considered as a basis 
for a waiver, as well as requirements of state law. The Committee 
recognized that there may be programs, especially in rural areas, where 
there are peculiar problems or situations within the legal community 
that may make it necessary or desirable to permit the recipient to have 
a governing board that varies from the normal. An example would be for 
those programs that serve native-American populations and practice in 
tribal courts. The president, through the waiver authority, could 
permit the recipient to substitute one or more tribal advocates for 
attorney board members. In addition, this provision could be used as 
authority for partial waiver of the compensation prohibition, to permit 
a recipient to adopt policies that would allow partners or associates 
of a board member to participate in compensated PAI activities 
supported by the recipient.
    Section 1607.6(d). The only change made in this subsection was a 
reference to the previous subsection.
    Section 1607.6(e). This new provision was added to permit the LSC 
president to require an organization that is not principally a legal 
assistance organization but gets an LSC grant for legal assistance 
activities, to set up a policy board, similar to those established for 
several of the Delivery Systems Study programs during the late 1970's, 
to govern the activities covered by the LSC grant.

Deletion of Section 1607.7  Compliance

    The compliance section of the current regulation is no longer 
applicable, since it refers to the changes that were made in the 
regulation in 1983. None of the proposed revisions would require 
programs to change anything about their board structures in order to 
come into compliance, although they would permit programs to make 
numerous changes and still remain in compliance with the regulation. 
Therefore the Committee proposal deletes the provisions on compliance. 
The Corporation should insure compliance with the new regulation in the 
same manner as it insures compliance with the other regulations.

List of Subjects in 45 CFR Part 1607

    Legal services.

    For the reasons set forth in the preamble, LSC proposes to amend 45 
CFR part 1607 as follows:


    1. The authority citation for part 1607 is revised to read as 

    Authority: 42 U.S.C. 2996f(c).

    2. Section 1607.1 is revised to read as follows:

Sec. 1607.1  Purpose.

    This part is designed to insure that the governing body of a 
recipient will be well qualified to guide a recipient in its efforts to 
provide high-quality legal assistance to those who otherwise would be 
unable to obtain adequate legal counsel, and to insure that the 
recipient is accountable to its clients.

    3. Section 1607.2 is revised to read as follows:

Sec. 1607.2  Definitions.

    (a) Attorney member as used in this part means a board member who 
is an attorney admitted to practice in a State within the recipient's 
service area.
    (b) Board member refers to a member of a recipient's governing 
    (c) Eligible client member as used in this part means a person who 
is eligible to receive legal assistance under the Act at the time of 
appointment to each term of office to the recipient's governing body, 
without regard to whether the person actually has received or is 
receiving legal assistance at that time. Eligibility of client members 
shall be determined by the recipient or, if the recipient so chooses, 
by the appointing organization(s) or group(s), in accordance with 
policies adopted by the recipient.
    (d) Governing body refers to the board of directors or other 
governing policy board or body of a recipient receiving funds under 
section 1006(a)(1)(A) of the Act.
    (e) Recipient refers to any grantee or contractor receiving 
financial assistance from the Corporation under section 1006(a)(1)(A) 
of the Act.

    4. Section 1607.3 is revised to read as follows:

Sec. 1607.3  Composition.

    (a) A recipient shall be incorporated in a State in which it 
provides legal assistance, and shall have a governing body that 
reasonably reflects the interests of the eligible clients in the area 
served and consists of members, each of whom is supportive of the 
purposes of the Act and has an interest in, and knowledge of, the 
delivery of quality legal services to the poor.
    (b) At least sixty percent (60%) of a governing body shall be 
attorney members.
    (1) A majority of the members of the governing body shall be 
attorney members appointed by the governing body(ies) of one or more 
State, county or municipal bar associations, the membership of which 
represents a majority of attorneys practicing law in the localities in 
which the recipient provides legal assistance.
    (i) Appointments may be made either by the bar association which 
represents a majority of attorneys in the recipient's service area or 
by bar associations which collectively represent a majority of the 
attorneys practicing law in the recipient's service area.
    (ii) Recipients that provide legal assistance in more than one 
State may provide that appointments of attorney members be made by the 
appropriate bar association(s) in the State(s) or locality(ies) in 
which the recipient's principal office is located or in which the 
recipient provides legal assistance.
    (2) Any additional attorney members may be selected by the 
recipient's governing body or may be appointed by other organizations 
that are designated by the recipient and have an interest in the 
delivery of legal services to the poor.
    (3) Appointments shall be made so as to insure that the attorney 
members reasonably reflect the diversity of the legal community and the 
population of the areas served by the recipient, including race, 
ethnicity, gender and other factors.
    (c) At least one-third of the members of a recipient's governing 
body shall be eligible clients when appointed. The members who are 
eligible clients shall be appointed by a variety of appropriate groups 
designated by the recipient that may include, but are not limited to, 
client and neighborhood associations and community-based organizations 
which advocate for or deliver services or resources to the client 
community served by the recipient. Recipients shall designate groups in 
a manner that reflects, to the extent possible, the variety of 
interests within the client community, and eligible client members 
should be selected so that they reasonably reflect the diversity of the 
eligible client population served by the recipient, including race, 
gender, ethnicity and other factors.
    (d) The remaining members of a governing body may be appointed by 
the recipient's governing body or selected in a manner described in the 
recipient's bylaws or policies, and the appointment or selection shall 
be made so that the governing body as a whole reasonably reflects the 
diversity of the areas served by the recipient, including race, 
ethnicity, gender and other factors.
    (e) The nonattorney members of a governing body shall not be 
dominated by persons serving as the representatives of a single 
association, group or organization, except that eligible client members 
may be selected from client organizations that are composed of 
coalitions of numerous smaller or regionally based client groups.
    (f) Members of a governing body may be selected by appointment, 
election, or other means consistent with this part and with applicable 
State law. Recipients may recommend candidates for governing body 
membership to the appropriate bar associations or other appointing 
groups and may consult with appointing organizations to insure that 
appointments are made consistent with the provisions of this part.
    (g) Recipients shall make reasonable and good faith efforts to 
insure that governing body vacancies are filled as promptly as 
    (h) A recipient may reject the appointment of a board member if the 
recipient determines that:
    (1) The person does not meet the criteria for board membership set 
out in this part, including financial eligibility for persons appointed 
as eligible client members, or
    (2) The person has an actual and significant individual or 
institutional conflict of interest with the recipient or the 
recipient's client community that could influence the person's ability 
to exercise independent judgment as a member of the recipient's 
governing body.

    5. Section 1607.4 is revised to read as follows:

Sec. 1607.4  Functions of a governing body.

    (a) A governing body shall have at least four meetings a year. A 
recipient shall give timely and reasonable prior public notice of all 
meetings, and all meetings shall be public except for those concerned 
with matters properly discussed in executive session.
    (b) In addition to other powers and responsibilities that may be 
provided for by state law, a governing body shall establish and enforce 
broad policies governing the operation of a recipient, but neither the 
governing body nor any member thereof shall interfere with any 
attorney's professional responsibilities to a client or obligations as 
a member of the profession or interfere with the conduct of any ongoing 
    (c) A governing body shall adopt bylaws which are consistent with 
State law and the requirements of this part. Recipients shall submit a 
copy of such bylaws to the Corporation and shall give the Corporation 
timely notice of any changes in such bylaws.

    6. Section 1607.5 is revised to read as follows:

Sec. 1607.5  Compensation.

    (a) While serving on the governing body of a recipient, no attorney 
member shall receive compensation from that recipient, but any member 
may receive a reasonable per diem expense payment or reimbursement for 
actual expenses for normal travel and other reasonable out-of-pocket 
    (b) Pursuant to a waiver granted under Sec. 1607.6(c)(1), a 
recipient may adopt policies that would permit partners or associates 
of attorney members to participate in any compensated private attorney 
involvement activities supported by the recipient.
    (c) A recipient may adopt policies that permit attorney members, 
subject to terms and conditions applicable to other attorneys in the 
service area, (1) to accept referrals of fee-generating cases under 
part 1609 of this chapter, (2) to participate in any uncompensated 
private attorney involvement activities supported by the recipient, (3) 
to seek and accept attorneys' fees awarded by a court or administrative 
body or included in a settlement in cases undertaken pursuant to 
paragraphs (c)(1) and (2) of this section, and (4) to receive 
reimbursement from the recipient for out-of-pocket expenses incurred by 
the attorney member as part of the activities undertaken pursuant to 
paragraph (c)(2) of this section.

    7. Section 1607.6 is revised to read as follows:

Sec. 1607.6  Waiver.

    (a) Upon application, the president shall waive the requirements of 
this part to permit a recipient that was funded under section 222(a)(3) 
of the Economic Opportunity Act of 1964 and, on July 25, 1974, had a 
majority of persons who were not attorneys on its governing body, to 
continue such nonattorney majority.
    (b) Upon application, the president may waive Sec. 1607.3(c) for 
those recipients which the president has determined do not have as a 
primary purpose the provision of legal assistance to clients.
    (c) Upon application, the president may grant any waivers of the 
requirements of this part which are permitted by applicable law if a 
recipient demonstrates that it cannot comply with them because of (1) 
the nature of the population, legal community or area served, or (2) 
special circumstances, including but not limited to, conflicting 
requirements of the recipient's other major funding source(s) or State 
    (d) A recipient seeking a waiver under paragraph (c) of this 
section shall demonstrate that it has made diligent efforts to comply 
with the requirements of this part.
    (e) As a condition of granting a waiver under paragraph (c) of this 
section, the president may require that a recipient establish a policy 
board or body, whose membership is selected consistent with the 
requirements of Sec. 1607.3, to establish and enforce policy, 
consistent with the provisions of Sec. 1607.4, with respect to the 
services provided under any grant or contract made under the LSC Act.

    Dated: June 10, 1994.
Victor M. Fortuno,
General Counsel.
[FR Doc. 94-14566 Filed 6-15-94; 8:45 am]