Oregon State Bar Bulletin — JUNE 2010
Leveling the Field, By Janine Robben

Imagine having a prospective client come to your office — no conflict of interest, great facts, meaningful issue —and telling him, “Sorry, but I can’t represent you because of who you are.” Or “because of what your issue is, even though I’m well versed in that issue.” Or “because of the services you’ll need to address that issue, even though I am capable of providing those services.”

Tom Matsuda, director of Legal Aid Services of Oregon (LASO), one of the most-highly federally regulated law firms in the state, can imagine it all too well: He and his staff live it every day.

“Since its creation in 1974, the Legal Services Corporation (LSC) has helped many people who could not otherwise afford lawyers, but has evoked fierce opposition,” says law professor John Leubsdorf in a 2008 law review article on the creeping federal regulation of the practice of law. “As a result, it has been grossly underfunded and subjected to numerous Congressional restrictions.” He concludes: “…forbidding [LSC] lawyers to accept many kinds of cases and clients might not look like professional regulation, but it is.”

Matsuda gets that.

“It affects many aspects of our work,” he says of the restrictions on the services legal aid lawyers may provide. “As a person, as a professional, as a lawyer, it’s frustrating. Many of our clients are in very severe crisis and yet we don’t have some tools every other lawyer in the state has. The other lawyers may choose not to use those tools, but it is illegal for us to use them.”

It didn’t start out this way.

In the 1930s, the Multnomah Bar Association and the Legal Aid Committee of the Oregon State Bar established Oregon’s first legal aid program, staffed by volunteers and operated out of the county courthouse.

“It was the earliest version of what became the Portland office of LASO,” says Matsuda.

In 1966, the federal Office of Economic Opportunity provided funding to support staffed legal aid programs in Multnomah, Marion, Lane and, later, Clackamas and Washington counties.

But then in 1974, Congress created the federal LSC to fund civil legal aid programs in all 50 states, and, writes Leubsdorf, “promptly began to supervise” the activities of lawyers paid with LSC dollars.

This “supervision,” says Leubsdorf, has taken two forms: cutbacks in federal funding for these lawyers’ work, and restrictions on what that work can be.

Of the two, says Leubsdorf, “Underfunding is the more serious problem.”

“In 1982 and again in 1996,” he writes, “Congress drastically reduced the funding the [LSC] received, forcing legal services organizations to terminate representation of many clients. The American Bar Association Ethics Committee struggled to find ways in which these terminations could be reconciled with professional rules. In reality, the rules on termination of services had changed for legal services lawyers.”

The 1996 cut — 30 percent — forced cutbacks in Oregon, including the closing of LASO’s Klamath Falls office, although it was able to re-open in 2007.

“In 1981, LSC funding was $400 million nationwide” says Matsuda, who has been LASO’s director for 10 years. “Adjusted for inflation, that would be about $765 million in 2010 dollars. The 2010 LSC appropriation is $420 million.”

Matsuda says that even though the actual dollar amount of federal funding has risen in recent years, it hasn’t kept up with inflation and the higher poverty rate caused by the recession, and that studies show that less than 20 percent of the civil legal needs of Oregon’s poor are being met.

But, while Leubsdorf calls underfunding the federal government’s biggest hammer, Matsuda says that it was a federal restriction that forced legal aid in Oregon to split in two in 1996.

“That particular regulation says that if an organization receives money from the LSC and from other sources, private or public, all of those other funds are subject to the same federal restrictions, even if the local funder disagrees,” Matsuda explains.

Those federal restrictions are no small matter.

One class of Congressional restrictions, writes Leubsdorf, “is based not on the client or the nature of the case, but on the services a legal services lawyer may provide. There it regulates how lawyers may practice law, forbidding certain otherwise-lawful means of representing clients.”

“The Supreme Court struck down one such restriction,” Leubsdorf goes on, “reasoning that to allow legal services lawyers to represent clients seeking welfare rights while prohibiting them from trying to change or challenge existing law in the process was an infringement of free speech. However, prohibitions on class actions, legislative representation and participation in agency rulemaking remain on the books.”

In addition, says Leubsdorf, over the years Congress has imposed “restrictions [that] bar legal aid lawyers from representing prisoners and most illegal aliens, even though they have long been considered especially in need of help. Others may not receive services in matters of abortion, desegregation, redistricting, certain evictions of people with drug records from public housing, or assisted suicide.”

“Note that the first three of these categories concern Constitutional rights,” he points out. “If a state’s ethics rules were to impose such restrictions on part of the bar, it would be considered a radical innovation.”

Matsuda says that because of the regulation that applies all federal restrictions to nonfederal funds, “Low-income people would be going to court without some of the critical legal tools that everyone else has.” In 1996, he says, lawyers in Oregon said, ‘We can’t allow that to happen.”

The legal community therefore seized upon a separate part of that regulation — which says that if restricted work is to be done, it has to be through a physically and legally separate entity — and founded the Oregon Law Center.

“Oregon was probably one of the first states to set things up this way,” Matsuda says of the federally funded LASO and the law center, which gets no federal LSC money and is funded through state court filing fees, IOLTA money and private donations. “Not every state has enough nonfederal money to create another entity,” says Matsuda. “That’s one way in which Oregon is really fortunate.”

Meanwhile, Matsuda hopes to see the day when federal regulations don’t keep him and his staff from seeing clients, taking issues and providing services just like other lawyers.

“The rule against our seeking attorney’s fees for our clients was just overturned by Congress, so that’s one bright spot,” he says. “We and other plaintiffs filed federal lawsuits challenging the constitutionality of some of the regulations on First Amendment grounds. The initial decision was against us, but we’re hopeful about the appeal. We continue to be hopeful that there will be a level playing field.”


© 2010 Janine Robben
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