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To: All Executive Directors
From: Ronald S. Flagg, President
Date: April 29, 2024
 

The purpose of this program letter is to provide guidance about the statutory change to the requirements for grant recipient governing body composition. On March 9, 2024, President Biden signed the Consolidated Appropriations Act, 2024, into law, Pub. L. 118-42. The statute contained language changing two requirements pertaining to grant recipient governing bodies: the percentage of attorneys required for compliance with LSC’s governing statute and the requirement for bar associations to appoint the majority of the attorneys. This Program Letter will explain (1) the legislative changes; (2) the practical effect of the changes for LSC grant recipients; (3) the steps grant recipients should take to address the changes; and (4) the steps LSC is taking to address the changes.

A. Legislative Changes

Since 1974, the LSC Act has required LSC to ensure that “any recipient organized solely for the purpose of providing legal assistance to eligible clients is governed by a body at least 60 percent of which consists of attorneys who are members of the bar of a State in which the legal assistance is to be provided[.]” 42 U.S.C. § 2996f(c). Beginning in 1983, Congress imposed through annual appropriations a requirement that a majority of each recipient’s governing body be composed of attorneys appointed by state or local bar associations. Pub. L. 97-276; see also e.g., § 502, Pub. L. 104-134, 110 Stat. 1321 (LSC’s Fiscal Year 1996 appropriation); § 502, Pub. L. 105-119, 111 Stat. 2440 (LSC’s Fiscal Year 1998 appropriation, incorporated by reference annually thereafter); Pub. L. 118-42 (2024). LSC amended its regulation pertaining to recipient governing bodies, 45 C.F.R. Part 1607, to incorporate this requirement. 48 Fed. Reg. 1971 (Jan. 17, 1983). This majority appointment requirement is commonly known as the “McCollum Amendment,” after its chief sponsor. The relevant section of the regulation, § 1607.3(b)(1), has remained unchanged since its promulgation in 1983.

LSC’s Fiscal Year 2024 appropriation contains the following language:

None of the funds appropriated in this Act to the Legal Services Corporation shall be expended for any purpose prohibited or limited by, or contrary to any of the provisions of, sections 501, 502, 503, 504, 505, and 506 of Public Law 105-119, and all funds appropriated in this Act to the Legal Services Corporation shall be subject to the same terms and conditions set forth in such sections [. . .] Provided, That for the purposes of applications of such sections 501 and 502, any requirement relating to the proportion of attorneys serving on the governing body of an entity providing legal assistance shall be deemed to be satisfied if at least 33 percent of such governing body is composed of attorneys otherwise meeting the criteria established by section 1007(c) of the Legal Services Corporation Act (42 U.S.C. 2996f(c)), and section 502(2)(b)(ii) of Public Law 104–134 shall not apply.

Pub. L. 118-42, Div. C, Title IV, p. 141 (2024) (emphasis in original).

The language does not amend the provision of the LSC Act requiring grantee governing bodies to be composed of at least one-third members who are eligible clients at the time of selection.

B. Practical Effect of the Changes

Recipients do not need to take any steps immediately to respond to the change in legislation. The legislation does not impose additional requirements on recipients. Rather, the changes to the governing body requirements provide LSC grant recipients with considerably more flexibility to recruit and select governing body members with varied expertise:

• Independence from bar associations— Recipients are no longer required to accept appointments from state, local, or specialty bar associations representing the majority of attorneys licensed in their service areas. Recipients may now recruit and select any attorneys licensed in their service areas. Recipients may continue to accept recommendations or appointments from bar associations if those arrangements are beneficial to them and lead to appointments of qualified attorneys.
• More capacity to recruit community members with needed expertise—Recipient governing bodies may now be composed of up to 34% of members who are neither attorneys nor client-eligible members. This increased capacity will allow recipients to identify skills and experience needed to enhance their governing bodies’ oversight and functional capabilities. Examples of relevant skills and experience include accounting, fundraising, technology, knowledge of community resources, and nonprofit governance.

C. What Should Recipients Do Now?

LSC encourages grant recipients to take this opportunity to evaluate the size, structure, and collective experience of their governing bodies and assess what expertise the board could benefit from. Recipients should consider taking any or all the following actions:

• Assess the diversity of expertise and skills on the current governing body and identify any missing expertise and skills;
• Identify community groups and employers that may be sources of new members who have the expertise and skills needed to fill any gaps in governing body knowledge;
• Evaluate the current and upcoming attorney vacancies on the governing body to determine how to fill them, including whether to continue accepting appointments from bar associations;
• Consider restructuring the governing body to include a wider range of experience and skills;
• Consider whether to expand or contract board size to better accomplish the recipient’s programmatic goals;
  Review bylaws and other documents related to governing body composition and recruitment to determine what changes may be needed; and
• Develop a timeline to implement the new structure, including time to recruit candidates for new openings and to make needed changes to governing documents.

LSC encourages recipients to reach out to their assigned program counsel to discuss options for increasing diversity of experience and skills on their governing bodies without revising the organization’s bylaws.

D. What Is LSC Doing Now?

LSC is taking several steps to address the legislative changes. First, LSC currently is not enforcing the existing version of Section 1607.3, including the paragraphs related to client-eligible member selection and appointment. This means that LSC will close any open Special Grant Conditions (SGC) related to board composition requirements. LSC will not issue any new SGCs in the 2025 grant year related to board composition. LSC will return to monitoring the board composition requirements of the new § 1607.3 in the 2026 grant year, which begins on January 1, 2026. Second, LSC published a notice of proposed rulemaking to revise Part 1607 in the Federal Register on April 12, 2024. The comment period on the proposed rule is open for 30 days and will close on May 13, 2024. Third, LSC is reviewing and preparing to revise Performance Area Four of the LSC Performance Criteria to include best practices for increasing diversity of experience and skills on recipient governing bodies. Fourth, LSC is developing an FAQ page as part of its technical assistance activities around these statutory and regulatory changes.

LSC will schedule trainings and issue additional guidance once the changes to Part 1607 is final. LSC encourages recipients to send questions and tell LSC what technical assistance they may need moving forward.