[Federal Register Volume 60, Number 183 (Thursday, September 21, 1995)]
[Proposed Rules]
[Pages 48956-48957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23489]



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LEGAL SERVICES CORPORATION
45 CFR Part 1635


Timekeeping Requirement

AGENCY: Legal Services Corporation.

ACTION: Proposed rule.

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SUMMARY: This proposed rule requires all recipients of Legal Services 
Corporation (``LSC'' or ``Corporation'') funds to account for the time 
spent on all cases, matters and other activities by their attorneys and 
paralegals, whether funded by the Corporation or by other sources.

DATES: Comments must be submitted on or before October 23, 1995.

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 M. Fortuno, General Counsel, at 
(202) 336-8810.

SUPPLEMENTARY INFORMATION: On June 25, 1995, in order to improve the 
accountability of recipients for their Corporation funds, and in 
response to concerns expressed during congressional hearings, the LSC 
Board of Directors (``Board'') adopted a resolution requiring 
Corporation staff to prepare a regulation specifying a time and 
recordkeeping system for implementation by LSC recipients. On September 
8, 1995, the Board's Operations and Regulations Committee 
(``Committee'') held public hearings on proposed 45 CFR part 1635. 
After adopting several changes to the proposed rule, the Committee 
voted to publish the proposed rule in the Federal Register for notice 
and comment.
    This proposed rule requires recipients to account for the time 
spent on all cases, matters and other activities by their attorneys and 
paralegals. These requirements apply whether the case, matter or 
activity is funded by the Corporation or by other sources. Such 
timekeeping is not now required under 45 C.F.R. part 1630.
    Perhaps a quarter of current Corporation recipients already 
maintain time records that meet most or all of the conditions of the 
proposed rule. They are already able to avail themselves of the 
potential benefits of timekeeping to recipients, such as improved 
supervisory information, better cost estimation in bidding for other 
funds, enhanced control of priority implementation by their local 
boards of directors and more informative reports to grantors and the 
public.
    The Corporation is mindful of the costs which this regulation will 
impose 

[[Page 48957]]
on its recipients, especially those who currently do not have the 
capacity to maintain the time records required by this proposed rule. 
Timekeeping is time consuming, and record keeping systems have real 
costs. Nevertheless, despite the possibility that implementation of 
this proposed rule will reduce a recipient's LSC-funded capacity for 
client services by one- or two-percent or more, the Corporation has 
concluded that timekeeping by attorneys and paralegals will materially 
improve recipient accountability for Corporation funds.
    If adopted, this part shall be effective January 1, 1996.
    A section-by-section discussion of the proposed rule is provided 
below.

Section 1635.1  Purpose

    This section sets out the purpose of the proposed rule: to improve 
recipient accountability for the use of funds provided by the 
Corporation. This section also sets out the manner in which the 
proposed rule achieves its stated purpose: by assuring supporting 
documentation of allocations of expenditures of Corporation funds, by 
enhancing recipients' ability to determine costs, and by increasing the 
information available to the Corporation for assuring recipient 
compliance.

Section 1635.2  Definitions

    This section defines ``case'', ``matter'' and ``activity,'' the 
functions of a program for which time records are required to be kept. 
The definitions are formulated so as to cover all allocations of 
recipients. Some examples of ``matters'' are education of eligible 
clients and development of written materials explaining legal rights 
and responsibilities. ``Administrative and general'' is a catchall 
category within ``activity.'' It is designed to encompass everything 
that does not fall within cases or matters or fund-raising activities, 
and would include, for example, skills training and professional 
activities.

Section 1635.3  Timekeeping Requirement

    This section sets out the timekeeping requirement. It is intended 
to require all recipients to account for the time spent on all cases, 
matters and other activities by their attorneys and paralegals, whether 
funded by the Corporation or by other sources. Recipients must account 
for one hundred percent of attorney and paralegal time spent in the 
course of their employment, even if the time is spent outside normal 
business hours. Allocation of costs based on time and other records 
continues to be governed by 45 C.F.R. part 1630, which requires a 
reasonable basis for allocations of expenses to all funds.
    The Corporation does not prescribe either manual or automated 
timekeeping systems, nor specific report formats or contents. Each 
recipient will need to determine the appropriate matters and activities 
for which time will be kept, keeping in mind its particular service 
patterns. In order to assist recipients, the Corporation plans to make 
available this fall a manual of forms and operating systems already in 
use by some recipients.

Section 1635.4  Administrative Provisions

    This section advises recipients of the Corporation's access to the 
time records required by this part. Since these records will be 
available for examination by auditors and representatives of the 
Corporation, they should be maintained in a manner consistent with the 
attorney-client privilege and all applicable rules of professional 
responsibility. As a practical matter, this may mean that client names 
should not appear in time records.

List of Subjects in 45 CFR Part 1635

    Legal services, Reporting and recordkeeping requirements.

    For reasons set forth in the preamble, LSC proposes to amend 45 CFR 
chapter XVI by adding part 1635 as follows:

PART 1635--TIMEKEEPING REQUIREMENT

Sec.
1635.1  Purpose.
1635.2  Definitions.
1635.3  Timekeeping Requirement.
1635.4  Administrative Provisions.

    Authority: 42 U.S.C. 2996e(b)(1)(A), 2996g(a), 2996g(b), 
2996g(e).


Sec. 1635.1  Purpose.

    This part is intended to improve recipient accountability for the 
use of funds provided by the Corporation by:
    (a) assuring that allocations of expenditures of Corporation funds 
pursuant to 45 C.F.R. part 1630 are supported by accurate and 
contemporaneous records of the cases, matters and activities for which 
the funds have been expended;
    (b) enhancing the ability of recipients to determine the cost of 
specific functions; and
    (c) increasing the information available to the Corporation for 
assuring recipient compliance with federal law and Corporation rules 
and regulations.


Sec. 1635.2  Definitions.

    As used in this part--
    (a) ``Activity'' means all other actions of or by a recipient, 
including fund-raising and administrative and general, which are not 
cases or matters.
    (b) ``Case'' means the provision of advice to representation of one 
or more clients.
    (c) ``Matter'' means the provision of other program services that 
do not involve advice to or representation of one or more clients.


Sec. 1635.3  Timekeeping Requirement.

    (a) All expenditures of funds for recipient actions are, by 
definition, for cases, matters or activities. The allocation of all 
expenditures must be carried out in accordance with 45 C.F.R. part 
1630.
    (b) Time spent by attorneys and paralegals must be documented by 
time records which record the amount of time spent on each case, matter 
or activity. Time records must be created contemporaneously and must 
account for time in increments not greater than one-quarter of an hour 
which aggregate to all of the efforts of the attorneys and paralegals 
for which compensation is paid.


Sec. 1635.4  Administrative Provisions.

    Time records required by this section shall be available for 
examination by auditors and representatives of the Corporation, and 
should be maintained in a manner consistent with the attorney-client 
privilege and the rules of professional responsibility applicable in 
the local jurisdiction.

    Dated: September 18, 1995.
Suzanne B. Glasow,
Senior Counsel for Operations & Regulations.
[FR Doc. 95-23489 Filed 9-20-95; 8:45 am]
BILLING CODE 7050-01-P