United States. Congress. Senate. Committee on Labo.

Oversight of the Legal Services Corporation, 1984 : hearing before the Committee on Labor and Human Resources, United States Senate, Ninety-eighth Congress, second session, on review of the Corporation's documents to ascertain whether there are any problems with the agency's policies that need to be online

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Online LibraryUnited States. Congress. Senate. Committee on LaboOversight of the Legal Services Corporation, 1984 : hearing before the Committee on Labor and Human Resources, United States Senate, Ninety-eighth Congress, second session, on review of the Corporation's documents to ascertain whether there are any problems with the agency's policies that need to be → online text (page 1 of 42)
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S. Hrg. 98-1022

OVERSIGHT OF THE LEGAL SERVICES
CORPORATION, 1984



HEARING

BEFORE THE

COMMITTEE ON

LABOR AND HUMAN RESOURCES

UNITED STATES SENATE

NINETY-EIGHTH CONGRESS

SECOND SESSION

ON

REVIEW OF THE CORPORATION'S DOCUMENTS TO ASCERTAIN
WHETHER THERE ARE ANY PROBLEMS WITH THE AGENCY'S POLICIES

THAT NEED TO BE ADDRESSED



APRIL 11, 1984




S. Hrg. 98-1022

OVERSIGHT OF THE LEGAL SERVICES
CORPORATION, 1984



HEARING

BEFORE THE

COMMITTEE ON

LABOR AND HUMAN RESOURCES

UNITED STATES SENATE

NINETY-EIGHTH CONGRESS

SECOND SESSION

ON

REVIEW OF THE CORPORATION'S DOCUMENTS TO ASCERTAIN
WHETHER THERE ARE ANY PROBLEMS WITH THE AGENCY'S POLICIES

THAT NEED TO BE ADDRESSED



APRIL 11, 1984




Printed for the use of the Committee on Labor and Human Resources



U.S. GOVERNMENT PRINTING OFFICE
37-965 WASHINGTON : 1984



COMMITTEE ON LABOR AND HUMAN RESOURCES



ORRIN G. HATCH
ROBERT T. STAFFORD, Vermont
DAN QUAYLE, Indiana
DON NICKLES, Oklahoma
JEREMIAH DENTON, Alabama
LOWELL P. WEICKER, Jr., Connecticut
CHARLES E. GRASSLEY, Iowa
JOHN P. EAST, North Carolina
PAULA HAWKINS, Florida
STROM THURMOND, South Carolina



Utah, Chairman

EDWARD M. KENNEDY, Massachusetts
JENNINGS RANDOLPH, West Virginia
CLAIBORNE PELL, Rhode Island
THOMAS F. EAGLETON, Missouri
DONALD W. RIEGLE, Jr., Michigan
HOWARD M. METZENBAUM, Ohio
SPARK M. MATSUNAGA, Hawaii
CHRISTOPHER J. DODD, Connecticut



Ronald F. Docksai, Staff Director
Kathryn O'L. Higgins, Minority Staff Director



^

I
(S



3



(II)



CONTENTS



STATEMENTS
Wednesday, April 11, 1984

Page

Bogard, Donald P., President, Legal Services Corporation; accompanied by

Thomas Opsut, Director, Office of Compliance and Review; James Norell,

consultant. Office of Government Relations; Gene Potack, Acting Director,

Office of Field Services; Joel Thimell, consultant, Office of Government

Relations; and Pete Webber, consultant. Office of Field Service 102

Prepared statement 106

Curtis, Franklin A., Associate Director, Human Resources Division, U.S. Gen-
eral Accounting Office, accompanied by Jonnie E. Lupton; George D. Peck;

and John C. Hansen 62

Prepared statement 65

Denton, Hon. Jeremiah, a U.S. Senator from the State of Alabama 55

Prepared statement 57

McKee, Clarence V., former Vice Chairman, Board of Directors, Legal Serv-
ices Corporation, and former Chairman, Boards Special Committee on

Grants and Contract Procedures 280

Prepared statement (with attachments) 283

Thurmond, Hon. Strom, a U.S. Senator from the State of South Carolina,
prepared statement 61

ADDITIONAL MATERIAL

Articles, publications, etc.:

GAO's evaluation of comments from David A. Gilbert, Director, Legal

Services Corporation's Denver regional office 378

GAO opinion and relevant portions of the report on the study of the

National Client's Council, September 19, 1983 4

In the matter of review of the preliminary determination by Legal Serv-
ices Corporation to deny refunding to the Western Center on Law and
Poverty, Inc. — request for review by the president of presiding officer's

recommended decision — final decision 116

LSC projects report, April 11, 1984 359

Communications to:

Bogard, Donald P., President, Legal Services Corporation, from Benjamin
Lerner, president. National Legal Aid and Defender Association, March

14, 1984 172

Curtis, Franklin A., Director, Human Resources Division, U.S. General
Accounting Office, from David A. Gilbert, Regional Director, Legal

Services Corporation, Denver, CO, May 7, 1984 384

Hatch, Hon. Orrin, a U.S. Senator from the State of Utah, from:

Rhudy, Robert J., executive director. Coalition for Legal Services,

Inc., April 13, 1984 351

Schoor, Kenneth L., executive director, North Central Texas Legal

Services Foundation, Inc., April 12, 1984 352

Streeter, James R., Director, Office of Government Relations, Legal

Services Corporation, August 17, 1984 387

Lerner, Benjamin, president. National Legal Aid and Defender Asso-
ciation (with attachments) 413

Holly, Nelwynne, chairperson, board of directors. National Clients Coun-
cil, Inc., from Donald P. Bogard, President, Legal Services Corporation,
January 4, 1984 356

(HI)



IV

Page

Communications to — Continued

Lyons, Clint, executive director, National Legal Aid and Defender Asso-
ciation, from:
Potack, Gene M., Manager, Substantive Research and Support Unit,
Office of Field Services, Legal Services Corporation:

January 27, 1984 156

February 7, 1984 160

February 10, 1984 164

February 27, 1984 168

March 14, 1984 171

February 10, 1984 371

February 27, 1984 373

Potack, Gene M., Esq., manager, Substantive Research and Support Unit,
Legal Services Corporation, from:
Lyons, Clint, executive director. National Legal Aid and Defender
Association:

February 9, 1984 161

February 16, 1984 166

May 15, 1984 (with enclosures) exhibits 1 through 14 421

Pressel, Wayne M., director, management project. National Legal Aid
and Defender Association, from Hulett H. Askew, deputy director,

Office of Field Services, March 24, 1982 176

Documents:

Curtis documents:

Nos. 1 and 2 81

Bogard documents:

No. 2 180

Nos. 3 and 4 219

Nos. 5, 6, and 7 252

No. 8 272

Questions and answers:

Responses of the General Accounting Office to questions submitted by
Senator Eagleton 99



OVERSIGHT OF THE LEGAL SERVICES
CORPORATION, 1984



WEDNESDAY, APRIL 11, 1984

U.S. Senate,
Committee on Labor and Human Resources,

Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m. in room 430,
Dirksen Senate Office Building, Senator Orrin G. Hatch (chairman
of the committee) presiding.

Present: Senators Hatch and Denton.

OPENING STATEMENT OF SENATOR HATCH

The Chairman. Today we continue our hearings on the Legal
Services Corporation which we began last year. During our earlier
hearings the committee heard a great deal of testimony and re-
ceived literally thousands of documents which indicated that in the
early 1980's, the Corporation has engaged in a variety of lobbying
efforts in flagrant violation of the law. Moreover, the committee
learned that some Corporation officials and members of the staff of
Corporation grantees tried to get around these prohibitions and
then attempted to cover up their involvement in activities prohibit-
ed by law.

The evidence presented before our committee was so serious and
so voluminous that Senator Denton and I asked the General Ac-
counting Office to provide the committee with an independent
analysis of the materials that we had accumulated, and attempt to
determine whether or not the law has been broken.

I also instructed my staff to continue reviewing Corporation doc-
uments to ascertain whether there are any more problems with the
agency's policies which need to be addressed.

We now will see some of the results of this effort. For example,
the committee assembled, for the first time last year, documenta-
tion indicating that the Corporation's top officials held a regional
meeting in Denver, CO, in 1981. This meeting was designed to en-
courage grantees to engage in political activities.

The committee also found documentation that Corporation offi-
cials used their resources to finance a political campaign to defeat
a State ballot measure in California. The campaign was run by a
Legal Services grantee, the Western Center on Law and Poverty.

In a preliminary opinion released on September 19, 1983, the
GAO found that both of these activities violated specific congres-
sional prohibitions. Last year, the committee also found evidence
that officials of the National Clients' Council had used funds pro-
CD



vided by the Corporation for their own personal benefit. The coun-
cil was set up to help the poor participate in Legal Services' pro-
grams.

Recently, the Corporation released a document entitled "Report
on the Study of the National Clients' Council" which questions not
only the financial practices of the Council, but also its work prod-
uct. According to a report, Mr. Bernard Vesey, the executive direc-
tor of the council, used council funds to pay for the travel of his
family, repeatedly stayed in hotel rooms that cost well in excess of
$100 per night, billed the council for more than $10,000 to cover
the cost of his commute from his home in suburban Maryland to
his office in Washington, DC, and received more than $6,000 in
salary advances which have not yet been repaid.

The report also raises serious questions about just what the coun-
cil has been doing with its annual budget of $500,000. Apparently,
the council was not in any routine contact with its members and,
in fact, did not even have an accurate idea of the size of its mem-
bership. After reading the entire report, one comes away with the
feeling that the National Clients' Council has become a kind of
ghost organization whose purpose is no longer clear and whose
services are not documented.

I believe that the allegations against the National Clients' Coun-
cil are serious, and I would have preferred to have covered them
during today's hearing, but I understand that the Corporation has
requested that we not ask any questions about the council until the
current defunding procedures against that organization have been
completed. I intend to respect their request.

Today, the General Accounting Office will be testifying about its
investigation of other instances of Corporation involvement in
what has come to be known as the "Survival Campaign." Also tes-
tifying will be Donald Bogard, the current President of the Legal
Services Corporation, and Clarence McKee, who has served as the
Presidential recess appointee to the Corporation's Board of Direc-
tors.

Among other things this morning, we hope to review the Corpo-
ration's recent defunding of the Western Center on Law and Pover-
ty, certain grant arrangements made between the Corporation and
the National Legal Aid and Defender Association, the reasons
behind the Corporation's inability to determine just what those
million-dollar grants are funding, and the status and purpose
behind Corporation grants that were administered by Rio Grande
Associates of New Mexico.

I have noted before that the debate over Legal Services has suf-
fered because of the lack of information. I believe the committee's
hearings last year and the effort this year will enable this commit-
tee and the Senate to discuss and resolve the issues surrounding
the Corporation from an informed basis.

Moreover, these hearings have helped to ensure that Federal
funds are being spent in the direct delivery of legal services to the
poor, and that Federal funds are not being spent on the political
agenda of staff attorneys, the whims of some Corporation officials,
or the hopes of the legal services institutions that the Corporation
underwrites. We have helped to ensure that the good programs are
encouraged and those that are breaking the law are stopped.



The hearings have also demonstrated that Legal Services can
have a positive impact and can provide a needed service for the
Nation's poor. In my own State of Utah, the local Legal Services
program is doing a good job because they are taking care of the
legal needs of the poor. In fiscal year 1983 they resolved approxi-
mately 3,000 cases, handled a case load of more than 250 cases per
attorney, and processed over 8,000 phone requests. These totals
were achieved despite the fact that on a per capita basis, they are
one of the lowest-funded programs in the United States. And that
program made it clear that they could have helped more people if
they had had more funds.

We should remember that every time Federal Legal Services
funds are misused or spent on an illegal activity, are wasted on
meetings, needless reports or are squandered on financial irregu-
larity, a poor person probably has been deprived of his or her
chance to obtain free legal representation.

So it is my sincere hope that much of the abuse that we have
uncovered during these hearings can be stopped so that in the
future the moneys that are being wasted on illegal activities can be
directed back where they belong, to the provision of legal help to
the poor.

At this point I would like to place into the record the September
19, 1983, GAO opinion and relevant portions of the report on the
study of the National Clients' Council.

[Material supplied follows:]




COMI'THOLLER GENERAL OF IHE UNITED STATES
WASHINGTON DC. 20548

B-210338/B-202n6 Septenberl9, 1983



The Honorable Orrin G. Hatch

Chairir.an, Coinmittee on Labor and Human Resources

United States Senate

Dear Mr. Chairman:

This is in response to your recent letters requesting
this Office to render a legal opinion concerning whether any
of the docuFTients and other materials that you recently
obtained from the Legal Services Corporation (LSC) files and
turned over to this Office, contain evidence of violations
of certain restrictions in the Legal Services Corporation
Act of 1974 (42 U.S.C. § 2996).

BACKGROUND

At the end of 1980, Representative Sensenbrenner pro-
vided this Office with certain internal memoranda he had
obtained from the LSC and requested an opinion on whether
these documents indicated that the Corporation had violated
Federal apti-lobbying laws. We rendered our opinion in
60 Comp. Gen. 423 on May 1, 1981, holding that the material
in the memoranda indicated that LSC had itself engaged and
allowed its grant recipients to engage in lobbying activi-
ties prohibited by Federal law. You have now provided us
with several hundred additional internal memoranda and other
materials from the LSC headquarters and regional office
files covering primarily the 1981 calendar year period and
have requested a determination concerning whether these
materials contain evidence indicating that LSC or its fund
recipients violated statutory restrictions on its training
and coalition building activities as well as restrictions on
advocating or opposing ballot measures, initiatives and
ref erendums.

It would require several months for us to review the
enormous volume of material you have supplied and we plan to
accomplish this task in connection with our investigation of
the LSC survival plan that you requested. However, in order
to comply with the short time frame of your request to pro-
vide you with a response regarding the issues referred to
above by mid-September 1983, we have selected certain mate-
rial, that in our opinion, indicate violations of restric-
tions you mentioned.



B-210338/B-202n6



TRAINING SESSION ' '

One piece of documentary evidence we reviewed was a
video cassette recording of a training session at a Denver
Regional Project Directors meeting conducted by the Corpora-
tion and certain grantees beginning on January 12, 1981, at
the Hilton Harvest House in Boulder, Colorado. Similar
meetings were held at the other regional offices during
December and January 1981. Several officials from the Cor-
poration headquarters in Washington and from grantee organi-
zations located in the Western region of the country were
present at the session and made presentations.- These offi-
cials included Dan Bradley, President of the Corporation, ~
Jeanne Connolly, Assistant Director of the Corporation's
Government Relations Office, Alan Houseman, Director of the
LSC Research Institute, Jonathan Asher, Executive Director
of the Legal Aid Society of Metropolitan Denver, Alan Rader,
Staff attorney with the Western Center on Law and Poverty in
Los Angeles, a Corporation-funded California State Support
Center and Don Wharton from the Oregon Legal Services Corpo-
ration, a Corporation-funded Oregon State Support Center.
The session was attended by approximately 100 persons,
including program officials and staff attorneys from states
comprising the Denver region and representatives of outside
organizations.

We have summarized and in some cases quoted from the
presentations of the above-mentioned speakers. This mate-
rial is included as Appendix I. In analyzing the content of
the first day presentations contained on the recording, we
must conclude that the remarks of the speakers provide evi-
dence of violations of statutory restrictions on the use of
Corporation funds for certain activities which we shall



explain below.



TRAINING PROHIBITION



The training prohibition is contained in 42 U.S.C.
2996f(b)(6) and reads as follows:

"(b) No funds made available by the Corpora-
tion under this subchapter, either by grant or
contract, may be used-"



B-210338/B-2021 16



"(6) to support or conduct tr-aining programs
for the purpose of advocating particular public
policies or encouraging political activities,
lal3or or antilabor activities, boycotts, picket-
ing, strikes and demonstrations, as distinguished
from the dissemination of information about such
policies or activities, except that this provision
shall not be construed to prohibit the training of
attorneys or paralegal personnel necessary to pre-
pare them to provide adequate legal assistance to
eligible clients;"

This provision restricts grantees and contractors from
using funds provided by the Corporation to support or con-
duct training programs for the purpose of advocating parti-
cular public policies or encouraging political activities as
distinguished from the dissemination of information about
such policies or activities.

The legislative history contained in the House Com-
mittee on Education and Labor Report to accompany H.R. 7824,
The Legal Services Corporation Act of 1974 {H. Rep. 93-247,
93rd Cong.-, 1st Sess. 11) is instructive regarding the
intent of Congress concerning this provision. The section-
by-section analysis explains the provision as follows:

"The Committee would like to assure that the
legal services provided to eligible clients are of
the highest quality. Although a recipient, there-
fore, should be funded to carry out an appropriate
training program, the Committee expects that no
grantee — under the guise of fulfilling program
training functions — will advocate any political
action including, but not limited to, boycott,
demonstrations, strikes or picketing. Training
programs should seek to fully inform attorneys and
their clients about indigents' legal rights and
how such rights can be implemented, but the train -
ing sessions should not be organized to advocate
particular political actions . Moreover, while
information is disseminated about public policies
that affect poor people's lives, and while train-
ing programs should set forth relevant information



B-210338/B-202n6



concerning alternative means that can be utilized
to enforce poor people's rights, the training
sessions should not be organized to advocate any
particular political actions. The provision,
setting forth the responsibilities of training
programs, is not intended to prohibit attorneys,
who are paid for by corporation funds, from pro-
viding legal advice to eligible clients and their
organizations." [Emphasis added]

It is clear from the legislative history that grantees
and contractors are restricted from using funds provided by _
the Corporation for training programs that advocate parti-
cular public policies or encourage political activities, but
are allowed to provide information about public policies and
how they may affect clients. During training programs for
attorneys and other staff personnel, grantees and contrac-
tors, may legitimately disseminate information about such
public policies that impact on poor people and discuss legal
remedies that may be attempted on behalf of such clients.
However, they are prohibited from advocating specific public
policies or urging the use of political activities in con-
nection with training programs. Grantees and contractors
may neither directly conduct such training programs nor pro-
vide support to other organizations that are conducting such
programs where such support involves the use of funds pro-
vided by the Corporation.

The January 1981 Denver Regional Project Directors
Meeting was an official Corporation sponsored training func-
tion. Numerous grantee organizations within the boundaries
of the multi-state Denver region, and some from without,
sent representatives to the session and paid their salaries,
travel and transportation expenses from funds provided by
the Corporation. A meeting agenda and participants' list
was published which we assume was provided to participants
in advance (See Appendix II). The agenda characterized many
of the presentations in such descriptive terms as to put
participants on notice that the presentations would almost
surely constitute violations of statutory restrictions on
the use of corporate funds. For example, some of the pre-
sentations by grantees were listed as: "Mobilization and
Coalition Building Case Studies - The California Prop. 9 and
Oregon Experiences"; "Strategy Workshops in Network Building



8



B-210338/B-2021 16



Skills"; "Client and Community Organization Networking"; and
"Mobilization and Coalition Building", During the session,
speakers from the Corporation and grantee organizations
advocated particular public policies and encouraged politi-
cal activities. Some speakers advocated a policy of resis-
tance to Reagan administration announced objectives to
reduce the budget for, and scale down, all social benefit
programs. For example, Mr. Houseman described the nature of
the threat by stating:

"What is at stake is not solely the survival
of the Legal Services program. What is at stake
is the survival of many social benefits — entitle-
ment programs that we struggled, since 1965, to
make real for poor people. We have struggled
since 1965 to bring into the belt federal, state
and local benefits. What is at stake is a number
of other kinds of programs like affirmative
action, civil rights programs. That, in the end,
is what is at stake in this battle. Those, in the
end, are far more important than legal services.
Legal services is a tool to get them. Both of
those kinds of things, both of those problems —
legal services, social benefits, entitlement pro-
grams, civil rights. Those are what are at stake
in this battle."

Don Wharton stated that his group decided that it would
be a kind of malpractice if his grantee organization failed
to fight for all those programs of social benefits that
people had worked so hard for over the past decade.
Mr. Houseman's presentation was entitled "Strategies for the
Future" and advocated a policy that the budget, structure
and authority of the Legal Services Corporation be preserved
at then current, or near then current, levels in the face of
the threat that the Reagan Administration might adopt a
policy to significantly reduce the budget and curtail the
operations of the Corporation. Mr. Houseman analyzed spe-
cific proposals that might be adopted by the Reagan Adminis-
tration and discussed some counter strategies. He pointed
out that Reagan could appoint many new directors to LSC ' s
Board who might be hostile to aggressive legal services and
the staff attorney system. The counter strategy was to
attempt to persuade moderate Reagan supporters such as



B-210338/B-2021 16



former Senator Ed Brooke to apply for appointment to the LSC
Board. Mr. Houseman also anticipated opponents would
attempt to impose additional restrictions on legislative
representation and cases that involve suits against the
Government, aliens, education and abortion. He anticipated
major efforts to eliminate the National and State Support
Center System and recovery of attorney's fees in suits
against the Government. His coUnter to these threats" was
to establish a massive nationwide grass roots lobbying
effort in order to influence Congress to vote against any
legislation designed to implement any of these measures.
Most of the speakers encouraged those in attendance to _
engage in political activities. These activities included
building coalitions and networks with other organizations
with shared interests, such as elderly groups, private
attorneys, League of Women Voters chapters, labor unions,
church groups and community organizations to establish a
grass-roots lobbying campaign to lobby Congress in support
of Legal Services and other social benefit and entitlement
programs and in opposition to Reagan Administration pro-
posals to curtail these programs. For example, Mr. Wharton
told grantees that they were in a political campaign and
urged them to build coalitions with groups such as unions,
attorneys and minority groups to be effective. For another



Online LibraryUnited States. Congress. Senate. Committee on LaboOversight of the Legal Services Corporation, 1984 : hearing before the Committee on Labor and Human Resources, United States Senate, Ninety-eighth Congress, second session, on review of the Corporation's documents to ascertain whether there are any problems with the agency's policies that need to be → online text (page 1 of 42)