[Federal Register Volume 62, Number 76 (Monday, April 21, 1997)]
[Rules and Regulations]
[Pages 19418-19420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10033]


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LEGAL SERVICES CORPORATION

45 CFR Part 1636


Client Identity and Statement of Facts

AGENCY: Legal Services Corporation.

ACTION: Final rule.

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SUMMARY: This final rule implements a restriction contained in the 
Legal Services Corporation's (``LSC'' or ``Corporation'') FY 1996 
appropriations act that is currently incorporated by reference in the 
Corporation's FY 1997 appropriations act. The rule requires LSC 
recipients to identify by name each plaintiff they represent in any 
litigation. In the case of pre-litigation negotiation, the regulation 
requires recipients to notify potential defendants of the names of 
plaintiffs represented by the recipient. The rule also requires that a 
plaintiff sign a written statement of facts on which the plaintiff's 
complaint is based before the recipient engages in litigation or before 
it undertakes pre-litigation negotiations on the plaintiff's behalf.

DATES: Effective May 21, 1997.

FOR FURTHER INFORMATION CONTACT: Victor M. Fortuno, General Counsel, 
(202) 336-8910.

SUPPLEMENTARY INFORMATION: On May 19, 1996, the Operations and 
Regulations Committee (``Committee'') of the LSC Board of Directors 
(``Board'') requested the LSC staff to prepare an interim rule to 
implement Sec. 504(a)(8), a restriction in the Corporation's FY 1996 
appropriations act which requires LSC recipients to identify the 
plaintiffs they represent and have the plaintiffs sign written 
statements of the facts underlying their claims. The Committee held 
hearings on staff proposals on July 8 and 19, 1996. An interim rule was 
adopted by the Board on July 20 and was published in the Federal 
Register on August 29, 1996 (61 FR 45740), to be effective immediately. 
The Corporation received 9 timely comments on the interim rule. The 
Committee held public hearings to discuss the written comments and to 
hear oral comments on December 13, 1996, and January 5, 1997, and made 
revisions to the interim rule. The Board adopted the Committee's 
recommended version as a final rule on January 6, 1997.

[[Page 19419]]

    The Corporation's FY 1997 appropriations act became effective on 
October 1, 1996, see Pub. L. 104-208, 110 Stat. 3009. It incorporated 
by reference the Sec. 504 condition on LSC grants included in the FY 
1996 appropriations act implemented by this rule. Accordingly, the 
preamble and text of this rule continue to refer to the applicable 
section number of the FY 1996 appropriations act.
    Generally, this rule implements Sec. 504(a)(8) of the Corporation's 
FY 1996 appropriations act, which requires recipients to identify the 
plaintiffs they represent when filing a complaint or initiating or 
participating in litigation or prior to engaging in any pre-litigation 
settlement negotiations with a prospective defendant, unless a court 
issues an order based on a finding that disclosure would cause serious 
harm to the plaintiff. In addition, the rule requires that, prior to 
entering into any pre-litigation settlement negotiations with a 
prospective defendant or prior to filing the complaint in court, each 
recipient obtain from the client being represented a signed statement 
of the facts supporting the complaint. The purpose of the rule is to 
ensure that an LSC-funded program represents eligible clients who have 
colorable claims when instituting litigation against or negotiating 
with a defendant.
    A section-by-section discussion of this interim rule is provided 
below.

Section 1636.1  Purpose

    The purpose of the rule is to ensure that during pre-litigation 
settlement negotiations with a prospective defendant and when filing a 
complaint in a court of law or otherwise participating in litigation 
against a defendant, LSC recipients identify their clients to the 
adverse party. The rule also seeks to ensure that recipients undertake 
such activities based on facts which support the complaint. This final 
rule revises the interim rule by adding language that clarifies that 
the purpose of this rule is to ensure disclosure of the plaintiff's 
identity to the defendant rather than to the public at large. Thus, 
filings in bankruptcy would not fall under this rule, because they do 
not implicate any defendant.

Section 1636.2  Requirements

    This section sets forth the requirement that recipients identity 
plaintiffs they represent in all court complaints filed and prior to 
engaging in any pre-litigation settlement negotiations. The disclosure 
of a client's identity is not required when a court of competent 
jurisdiction has entered an order protecting the client from such 
disclosure to prevent probable, serious harm the client.
    Public comments pointed out types of cases and certain situations 
they believed would not fall within the exception for probable serious 
harm but where the identities of plaintiffs should not be disclosed to 
the public in a complaint because they are protected by State law or 
court rules, or public disclosure would cause great embarrassment and 
humiliation. Comments pointed out, for example, that State law usually 
protects the identities of juveniles or persons who are mentally 
incompetent in such cases as guardianships, paternity actions, and 
juvenile court actions initiated for the protection of the child. Other 
comments stated that, in certain types of cases, the identity of the 
plaintiff is generally already known to the defendant, such as divorces 
and domestic violence cases, or where both parties have agreed to keep 
the plaintiff's identity confidential.
    In response to these comments, the Board agreed to add language to 
allow a recipient the alternative of providing notice directly to the 
defendant against whom the complaint is filed where public disclosure 
would be contrary to law or court rules or practices. This revision is 
consistent with the purpose of the underlying statutory requirement, 
which pertains only to complaints or negotiation efforts against a 
defendant or prospective defendant.
    One comment stated that the interim rule seemed to apply to 
situations where the recipient program is co-counseling with another 
attorney and, thus, the recipient would need to identify each plaintiff 
represented by all plaintiffs' attorneys to the defendants. The comment 
suggested language clarifying this point. The Board revised the rule to 
clarify that recipients need only identify clients they represent.
    One comment pointed out that it is unclear that procedures exist in 
most jurisdictions for making a motion to the court to protect the 
identity of a client prior to filing a complaint. Thus, for a client 
who is in pre-litigation settlement negotiations, it is unclear how a 
recipient would obtain a court order to protect the identity of a 
client. The comment suggested that it would require the filing of a 
separate action to obtain the protective order and requiring extra 
litigation simply to obtain a protective order goes against judicial 
efficiency.
    No revisions were made to the rule in response to this comment. 
Section 504(a)(8) applies the exception for probable serious harm to 
pre-litigation negotiations as well as to complaints filed in court. 
Therefore, the Corporation determined it has no discretion to make 
exceptions for pre-litigation negotiations, either to promote judicial 
economy or in recognition that procedures for such actions may not 
exist.
    This section also requires that prior to the recipient's entering 
into any pre-litigation settlement negotiations or prior to filing the 
complaint in court, each recipient obtain from the client being 
represented a signed statement of the facts supporting the complaint. 
The requirement does not apply to defendants represented by a recipient 
for counterclaims filed against a plaintiff. Nor does it apply to a 
recipient's delivery of advice and brief services or to attempts to 
resolve matters for a client through negotiations in which there is no 
contemplation of litigation.
    The statement of facts is to be written in English and in the 
client's language if the client does not understand English. If the 
client's language is only an oral and not a written language, such as 
the Navajo language, the statement in English should be certified to 
have been translated orally to the client prior to the client's 
signing.
    In a few emergency situations, it may be necessary for the 
recipient to negotiate with a prospective defendant or to file an 
action before the plaintiff's statement of facts can be prepared or 
signed. A recipient may proceed without a signed statement in such 
emergencies, if delay in proceeding is reasonably likely to cause harm 
to a significant interest of the client. Emergency situations might 
include threats to take the client's child out of State, to assault the 
client, or to evict the client without following the required legal 
procedures. Where a recipient proceeds on an emergency basis, a 
statement must be prepared and signed as soon as practicable.

Section 1636.3  Access to Written Statements

    This section implements the statutory provision granting a right of 
access to the statements of facts for certain specified governmental 
officials and their agents but not for adverse parties and others. 
Comments stated that the access provisions should be strengthened to 
limit any potential for abuse by parties not specifically granted 
access by this rule. The first comment suggested adding language 
stating that the access provision should not be deemed a waiver of any 
privilege. The second proposed that language be added referencing the 
rules protecting client confidentiality generally and those

[[Page 19420]]

governing the attorney-client privilege specifically.
    In response, the Board revised Sec. 1636.3(b) to limit access for 
persons and parties who are not specifically provided access under 
paragraph (a) of this section. The interim rule provided some 
protection for the statements under the discovery rule. As applied to 
those not identified in paragraph (a), the final rule has added the 
protection of other ``applicable law,'' which would include rules 
protecting client confidentiality generally and those governing the 
attorney-client privilege specifically. This language is consistent 
with the access requirements of paragraph (a) but also conforms to the 
requirement of Sec. 1006(b)(3) in the LSC Act that the Corporation 
ensure that recipient activities be carried out in a manner consistent 
with professional responsibilities.
    This section does not create any new right of access to information 
for parties to a lawsuit or for others, and the Corporation anticipates 
that, in most cases, courts will determine that statements are not 
discoverable by an adverse party in litigation. Recipients should draft 
the statements of facts, however, mindful of their local law regarding 
confidentiality.
    A copy of each statement drafted according to this section should 
be maintained separate from the client's case file.

Section 1636.4  Applicability

    This section specifies that the requirements of this part apply not 
only to cases handled by recipient staff but also to cases for which 
private attorneys are compensated by the recipient. Attorneys who are 
handling cases pro bono, however, are not subject to the requirements 
of this rule, because pro bono attorneys are uncompensated. It is the 
Corporation's judgment that the requirements of this part, especially 
the requirement for the plaintiff's statement of facts, would be a 
substantial impediment to the recruitment of pro bono lawyers. In 
addition, the fact that pro bono lawyers are volunteering their time 
serves as an additional impediment to their bringing frivolous law 
suits.
    A judicare program commented that the distinction between PAI 
attorneys who accept a reduced fee and those who provide free 
representation is an artificial distinction considering that the 
reduced fees are insignificant amounts and do not constitute any real 
incentive for private attorneys to handle PAI cases. According to the 
program, the reduced fees should not be considered compensation 
significant enough to provide an exception for judicare attorneys. The 
Board disagreed that reduced fees to judicare attorneys are too 
insignificant to be considered compensation and included no exception 
for judicare programs.

Section 1636.5  Recipient Policies, Procedures and Recordkeeping

    This section requires recipients to establish policies and 
procedures to ensure compliance with this part and to maintain records 
sufficient to document compliance with this part.

List of Subjects in 45 CFR Part 1636

    Client identity, Grant programs, Legal services.

    For reasons set forth in the preamble, 45 CFR part 1636 is revised 
as follows:

PART 1636--CLIENT IDENTIFY AND STATEMENT OF FACTS

Sec.
1636.1  Purpose.
1636.2  Requirements.
1636.3  Access to written statements.
1636.4  Applicability.
1636.5  Recipient policies, procedures and recordkeeping.

    Authority: Pub. L. 104-208, 110 Stat. 3009; Pub. L. 104-134, 110 
Stat. 1321.


Sec. 1636.1  Purpose.

    The purpose of this rule is to ensure that, when an LSC recipient 
files a complaint in a court of law or otherwise initiates or 
participates in litigation against a defendant or engages in pre-
complaint settlement negotiations, the recipient identifies the 
plaintiff it represents to the defendant and ensures that the plaintiff 
has a colorable claim.


Sec. 1636.2  Requirements.

    (a) When a recipient files a complaint in a court of law or 
otherwise initiates or participates in litigation against a defendant, 
or before a recipient engages in pre-complaint settlement negotiations 
with a prospective defendant on behalf of a client who has authorized 
it to file suit in the event that the settlement negotiations are 
unsuccessful, it shall:
    (1) Identify each plaintiff it represents by name in any complaint 
it files, or in a separate notice provided to the defendant against 
whom the complaint is filed where disclosure in the complaint would be 
contrary to law or court rules or practice, and identify each plaintiff 
it represents to prospective defendants in pre-litigation settlement 
negotiations, unless a court of competent jurisdiction has entered an 
order protecting the client from such disclosure based on a finding, 
after notice and an opportunity for a hearing on the matter, of 
probable, serious harm to the plaintiff if the disclosure is not 
prevented; and
    (2) Prepare a dated written statement signed by each plaintiff it 
represents, enumerating the particular facts supporting the complaint, 
insofar as they are known to the plaintiff when the statement is 
signed.
    (b) The statement of facts must be written in English and, if 
necessary, in a language other than English that the plaintiff 
understands.
    (c) In the event of an emergency, where the recipient reasonably 
believes that delay is likely to cause harm to a significant safety, 
property or liberty interest of the client, the recipient may proceed 
with the litigation or negotiation without a signed statement of facts, 
provided that the statement is prepared and signed as soon as possible 
thereafter.


Sec. 1636.3  Access to written statements.

    (a) Written statements of facts prepared in accordance with this 
part are to be kept on file by the recipient and made available to the 
Corporation or to any Federal department or agency auditing or 
monitoring the activities of the recipient or to any auditor or monitor 
receiving Federal funds to audit or monitor on behalf of a Federal 
department or agency or on behalf of the Corporation.
    (b) This part does not give any person or party other than those 
listed in paragraph (a) of this section any right of access to the 
plaintiff's written statement of facts, either in the lawsuit or 
through any other procedure. Access to the statement of facts by such 
other persons or parties is governed by applicable law and the 
discovery rules of the court in which the action is brought.


Sec. 1636.4  Applicability.

    This part applies to cases for which private attorneys are 
compensated by the recipient as well as to those cases initiated by the 
recipient's staff.


Sec. 1636.5  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.

    Dated: April 14, 1997.
Victor M. Fortuno,
General Counsel.
[FR Doc. 97-10033 Filed 4-18-97; 8:45 am]
BILLING CODE 7050-01-P