The nation’s providers of civil legal assistance for the poor are closely watching Congress again this year, where another move to slash funding for the Legal Services Corp. could mean more layoffs for lawyers and may further limit the scope of their work.

Agencies depending on grants from the LSC, the largest source of funding nationwide for civil legal aid, are already reeling this year after a cut from 2011 to 2012 equal to 17 percent of their annual funding from Washington. At the same time, high unemployment rates have increased the number of people needing help.

This year, the Republican-led House has passed a bill that would cut another 6 percent from the agency’s current budget. The House proposal of $328 million, when adjusted for inflation, would be an all-time low for the 38-year-old organization, according to a recent report from the Conference of Chief Justices.

For 135 state and local legal assistance groups like the Georgia Legal Services Program, the situation is precarious.

The executive director there says more cuts could mean closing a regional office and laying off four lawyers from her staff of 60 — on top of the eight attorneys she had to let go this year. She would also continue to have to routinely turn away people seeking help on child custody matters, divorces, and housing and eviction cases.

“We have to focus on things that are critical, urgent and damaging,” executive director Phyllis Holmen said, such as filing domestic violence injunctions, and helping with unemployment compensation and food stamp applications.

Nationwide, 1,226 lawyers and support staff have lost their jobs at agencies supported by the LSC since January 2011, and 81,000 fewer low-income Americans got help they needed, according to the Conference of Chief Justices survey.

The House appropriation bill for 2013 would represent a 22 percent reduction in funding for the long-embattled LSC since a high of $420 million in 2010.

That’s not the only potential bad news the LSC and state and local providers are facing. Their funding troubles have deepened because many of the organizations are also facing reduced funding from Interest on Lawyers’ Trust Accounts, known as IOLTA funding. Interest rates are near zero right now, and these trusts have less money when the real estate market is not growing.

HOPING FOR COMPROMISE

Still, LSC leaders say they are guardedly optimistic about the possibility of a compromise that could result in a funding increase from Congress for 2013, even though the appetite for spending is low on Capitol Hill.

The Democratic-led Senate Approp­riations Committee approved the full amount of President Barack Obama’s 2013 budget request for the LSC at $402 million. That would be a 16 percent increase from the 2012 budget of $348 million, and would return funding to 2011 levels.

The two chambers are expected to hash out a deal sometime before the end of the year. Nobody knows quite when that will happen.

Last year, Congress resolved the difference between the two appropriations levels for Legal Services Corp. by essentially meeting in the middle. If that happens again this year, it would result in a $19 million increase for the agency, LSC President James Sandman said.

“I am hopeful and optimistic for an increase,” said Sandman, whose organization requested a $470 million budget next year.

The vote in the House for a $328 million budget is actually $28 million more than last year’s House bill, Sandman said, and the Senate’s $402 million proposal is $6 million more than last year.

What’s more, when the House voted on the appropriations bill this year, it rejected efforts to reduce the funding to $200 million or eliminate it altogether, Sandman said.

Legal services agencies across the country are nervously watching the battle in Congress — as they’ve been doing for decades, a phenomenon detailed last year in The National Law Journal [NLJ, 3-14-11]. They are worrying about how it could affect the growing number of Americans who used to be financially secure but are one rung closer to trouble — and more in need of free legal aid, said Tom Garrett, the executive director of the Legal Services Law Line of Vermont.

Garrett says he was able to make up for last year’s funding cuts with a grant related to the Hurricane Irene disaster. That pushed the problem forward for a year. Now, he will have to lay off one of his five lawyers or one paralegal if Congress doesn’t act.

That means about 400 fewer people would be helped. “We’re really going to be facing a loss, and I don’t know how we’re going to do it,” Garrett said.

Todd Ruger can be contacted at truger@alm.com.