But while the Feb. 28 ruling in LSC v. Velazquez upheld a key principle, the victory was a narrow one: The court’s 5-4 decision did not strike down other sweeping restrictions Congress has imposed on LSC recipients. The high court declined to consider challenges to LSC restrictions that bar its grantees from filing class actions or lobbying for legislation or rulemaking relevant to their clients. (The full text of the opinion is available as a pdf file at www.nlada.org.)

The limited victory will have no effect on New Hampshire, though, where the largest legal services agency, NH Legal Assistance, has gone without LSC funding since the restrictions were first imposed in the mid-1990s.

Instead, NHLA is continuing to diversify its funding sources and rebuilding its ranks, which were drastically cut when its LSC funding ended. NHLA currently receives support from 25 sources. The majority of its income comes from the New Hampshire Bar Foundation’s Interest on Lawyers Trust Accounts (IOLTA) program ($967,000 last year), but the agency also receives funding from 10 local United Way campaigns, targeted federal grants, state funding for elderly services, and from direct fundraising in the legal community. NHLA has even succeeded in securing a state appropriation and this year is seeking to more than double that amount. Four years ago, NHLA succeeded in persuading legislators that providing representation to disadvantaged and elderly people in the North Country was a crucial unmet need. For the first time, NHLA became the recipient of a state appropriation, amounting to $200,000 per year, and the appropriation was renewed without significant debate in the second budget cycle.

This year, a bill sponsored by Sen. Debora Pignatelli (D-Nashua), would provide an additional $315,000 to NHLA to open an office in Nashua, staffed by three lawyers. The office also would support a satellite office in Salem. Currently, NHLA has offices in Manchester, Claremont, Littleton and Portsmouth.

"We have a twofold effort—to hang onto the appropriation we’ve had for four years for our Littleton office and to open a similar office in Nashua," said John L. Tobin Jr., NHLA’s executive director. "Nashua is a critical area for us to service—it is the state’s second largest city with a severe housing shortage and a growing elderly and immigrant population," Tobin said.

Tobin said NHLA has survived its withdrawal from LSC’s largesse, which had been its predominant funding source until 1995, by building strong ties with other entities—legal and social services organizations and government agencies. At the same time, NHLA has not abandoned its use of class action litigation and lobbying to advocate for the poor and vulnerable. Last year, NHLA scored a major victory, winning a settlement of a class action filed in federal court against the Department of Health and Human Services. The accord requires DHHS to refund money and correct longtime practices it followed to recover compensation from surviving spouses of Medicaid recipients for nursing home expenses paid by the state.

Tobin’s reaction to Velazquez did not have him rushing for an LSC grant application. "It is a good decision, but a narrow one," he said. "It allows LSC lawyers, if they take an individual case, access to the same remedies as any other lawyer. But it does not expand the scope of LSC-funded advocates’ work. It doesn’t restrict Congress from having broad limitations. It is not going to change the LSC landscape," said Tobin.

The only LSC direct grantee in NH is the Legal Advice & Referral Center, which conforms to the LSC restrictions, providing advice on and limited representation in family law, public benefits, consumer and housing matters. LARC also conducts eligibility screening and refers clients to NHLA and the Bar’s Pro Bono Referral Program. LARC’s executive director, Connie Boyles Lane, said Velazquez wouldn’t have any effect on LARC. "Under our configuration, we would send those cases (welfare law challenges) to NHLA. They are not bound by LSC rules so would be free to bring any claims they thought relevant."

In Velazquez, the Supreme Court affirmed the Second Circuit’s opinion in the case and invalidated a provision permitting representation in individual welfare cases only when the cases do not involve a challenge to existing law. The court found that the provision violated the First Amendment because it represented unlawful viewpoint-based discrimination. Justice Kennedy, who was joined by Justices Stevens, Souter, Ginsburg and Breyer, authored the majority opinion. Justice Scalia wrote the dissent, joined by Chief Justice Rehnquist and Justices O’Connor and Thomas.

Underscoring the limits of Velazquez, the court also denied petition for certiorari filed by the Velazquez plaintiffs seeking review of other limits of the LSC Appropriations Act, enacted in 1995. The National Legal Aid & Defender Association, representing legal services agencies nationwide, conceded that the favorable ruling in Velazquez was a limited victory: "Although the Velazquez case is clearly a victory for legal services clients and their attorneys, it does not, by any means, constitute wholesale rejection of the LSC Appropriations Act restrictions, nor does it guarantee that LSC recipients will be permitted to represent their clients unfettered by Congressional control and oversight."

The Supreme Court declined to address the issue of severability, in effect confirming the Second Circuit’s conclusion that it was permissible to strike down the provision, while leaving intact the statute’s general restrictions on lobbying, rulemaking and litigation on welfare reform, but permitting unrestricted individual representation in welfare cases.

The Supreme Court distinguished the Velazquez case from Rust v. Sullivan, upon which LSC relied. In Rust, the Supreme Court had upheld regulations prohibiting doctors funded under the program from counseling patients with regard to abortion. The court in the Velazquez decision noted that the abortion counseling activities at issue in Rust involved limitations on speech funded to convey a government message, which Congress has wide latitude to restrict. In contrast, Velazquez involved a subsidized program to facilitate private speech by LSC attorneys on behalf of their clients in their claims against the government in welfare cases. The court determined that the provision limiting welfare representation to cases where existing law was not challenged impermissibly imposed viewpoint-based discrimination that violated the First Amendment, and distorted the legal system by limiting the arguments that legal services lawyers can make and altering the traditional role of attorneys as advocates for their clients’ interests. "By seeking to prohibit the analysis of certain legal issues and truncate presentation to the courts, the enactment under review prohibits speech and expression upon which courts must depend for the proper exercise of judicial power," the court said.

The court also acknowledged that indigent clients generally have no alternative channels for expression of the views prohibited by the provision at issue. If legal services attorneys are forced to limit their advocacy on behalf of their clients or to withdraw from representation if it is necessary to challenge the constitutionality of an existing welfare statute or legality of an existing welfare regulation, eligible clients are often left without alternative advocacy. The court said, "The Constitution does not permit the government to confine litigants and their attorneys in this manner. We must be vigilant when Congress imposes rules and conditions that in effect insulate its own laws from legitimate judicial challenge.

In his strongly worded dissent, Justice Scalia argued that Velazquez is indistinguishable from Rust, and denigrates the holdings of the majority on a variety of issues. Justice Scalia concludes his discussion of the majority opinion by making "...a point that is embarrassingly simple."

"The LSC subsidy neither prevents anyone from speaking nor coerces anyone to change speech, and is indistinguishable in all relevant respects from the subsidy upheld in Rust v. Sullivan," Scalia wrote.