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A U.S. judge in Washington, D.C., last week ordered Legal Services for New York City (LSNY) to turn over information required by federal auditors, putting $11 million of the agency’s annual funding in jeopardy. LSNY, which provides civil legal services to about 20,000 poor New Yorkers each year, had resisted a subpoena issued by its federal funding agency, the Legal Services Corporation. The New York group contends that supplying auditors with both the names of their clients and a description of the clients’ legal problems would violate the attorney-client privilege and their ethical obligations. Legal Services New York was backed in that contention by three well known ethics professors in New York State, one of whom, Bruce Green, was the head of the New York State Bar Association’s Ethics Committee last year. But U.S. District Judge James Robertson rejected the experts’ views, finding that disclosure of a client’s name together with a code indicating the nature of the client’s legal problem, did not violate a lawyer’s duty to protect client secrets. Andrew Scherer, the new deputy executive director of LSNY, said the agency will “probably appeal the decision.” In March, the LSC had threatened to cut off the New York group’s federal funding if it did not supply information requested by the auditors. It since agreed to hold off on any fiscal sanction pending a ruling by Robertson on its action to enforce its subpoenas in U.S. v. Legal Services for New York City, 00-0242. LSNY, which receives $11 million of its $28 million annual budget from the federal government, was one of 30 agencies selected at random by the Legal Services Corp. (LSC) to be audited in 1999. The auditing decision was made in the wake of a 1998 audit conducted by the LSC, which found that legal services organizations in Miami and San Diego had significantly overstated the number of cases they had handled in 1997, LSC Inspector General Edouard R. Quatrevaux said in an interview Friday. LSC auditors discovered an overreporting of 22,000 cases in Miami, which was about 68 percent of the total reported by the program there, Quatrevaux reported. Similarly, the Miami program overreported the cases it had handled in 1997 by 15,500, or 76 percent, he said. Many of the problems uncovered in the earlier audits, Quatrevaux explained, stemmed from the improper counting as cases telephone inquiries in which the callers were referred to other agencies. Also the double counting of some cases was detected, as was the failure to have any case name on some files, he added. One aim of linking client names and problem codes was to identify possible cases that had been reported more than once, Quatrevaux explained. To determine whether those cases were overreported would require auditors in the field to examine the files in question. Identifying client information would be removed from those files, he added. Scherer, the LSC official, explained that there had been some confusion in programs across the country in determining when a client had a new case for reporting purposes. As an example, he cited the case of a woman who comes in with a complaint of spousal abuse, but decides after being given legal advice not to start a court proceeding. If that woman were to come back several months later, after sustaining more beatings, and begin a lawsuit, there was uncertainty, until clarifying regulations were recently issued, as to whether the two episodes should be considered one or two cases, he explained. LSC contended that though it was not required to do so, it had structured the audit in a manner to meet client confidentiality concerns. It had asked the 30 agencies first to supply a list of case file numbers linked to the code for the legal problem that had brought the client to the agency. A second list correlated the case numbers with client names. To protect confidentiality, LSC pledged to maintain a “Chinese” wall between the two lists — both in terms of the personnel with access to them and keeping them physically separated, whether in electronic or printed form. LSNY and a second legal services agency, the Legal Aid Bureau of Baltimore, turned over the list of case numbers and client problem codes, but balked at turning over the second list, claiming that client confidentiality would be breached if clients’ names could be linked with their legal problems. Three prominent New York ethics experts — Green, who is an ethics professor at Fordham University School of Law, and Professors Stephen Gillers, of New York University School of Law, and Monroe H. Freedman, of Hofstra University Law School — all submitted opinions stating that LSC’s creation of a Chinese wall was not enough to protect the lawyers from a potential ethics violation charge. Legal Services New York, however, offered to submit the second list, using a unique client identifier, rather than the client’s name. But that approach was rejected by LSC. Robertson found the approach proposed by the New York group to “appear to be less problematic, and even more cost-effective” than LSC’s Chinese wall. But he refused to order LSC to use that approach, finding that the second list, which included client names, was not protected either as a privileged attorney-client communication or as a secret that an attorney would be forbidden to disclose. Since the law does not “ordinarily” protect the client’s name and a general description of the legal work performed, Robertson rejected LSNY’s assertion of a “blanket” privilege for the name and client code of all its case files. With regard to attorneys’ ethical obligations, Robertson concluded that in approving LSC’s budget in 1995, Congress had specifically provided that legal services grantees had to supply client names to LSC auditors, even if in doing so they violated their ethical obligations under state law. Robertson rejected the New York group’s argument that the 1995 budget bill did not authorize LSC to demand both client names and problem codes. The legislative mandate requiring the turning over of client names was “unambiguous” and not limited “by context,” he concluded. Assistant Attorneys General William Alvarado Rivera and David Mendel of the U.S. Justice Department represented the Legal Services Corp. Legal Services for New York City was represented by Carl Riehl and John S. Kiernan of Debevoise & Plimpton. The Legal Aid Bureau of Baltimore was represented by John F. Cooney and Mitchell Y. Mirvies of Venable, Baetjer, Howard & Civiletti.

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