Fee-Generating Cases, 20444-20447 [2017-08835]

Download as PDF 20444 Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Rules and Regulations G. Protest Activities The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels. List of Subjects in 33 CFR Part 165 45 CFR Part 1609 Legal Services Corporation. Final rule. This final rule revises the Legal Services Corporation (LSC or Corporation) regulation regarding feegenerating cases. This rule clarifies the definition of ‘‘fee-generating case,’’ clarifies that brief advice is permitted by the regulation, and revises how a recipient accounts for attorneys’ fees awards. SUMMARY: 1. The authority citation for part 165 continues to read as follows: Authority: 33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Department of Homeland Security Delegation No. 0170.1. 2. Add § 165.T05–0152 to read as follows: ■ § 165.T05–0152 Security Zone; Schuylkill River; Philadelphia, PA. jstallworth on DSK7TPTVN1PROD with RULES LEGAL SERVICES CORPORATION ACTION: ■ (a) Definitions. As used in this section, designated representative means a Coast Guard Patrol Commander, including a Coast Guard petty officer, warrant or commissioned officer operating a Coast Guard vessel and a Federal, State, and local law enforcement officer designated by or assisting the Captain of the Port, Delaware Bay in the enforcement of the security zone. (b) Location. The following area is a security zone: All the waters of the Schuylkill River from the Market Street Bridge north to the Fairmount dam. (c) Regulations. (1) Under the general security zone regulations in subpart D of this part, persons may not enter the security zone described in paragraph (b) of this section unless authorized by the COTP or the COTP’s designated representative. (2) To request permission to enter the security zone, contact the COTP or the COTP’s representative on VHF–FM channel 16. All persons and vessels in the security zone must comply with all lawful orders or directions given to them by the COTP or the COTP’s designated representative. (d) Enforcement period. This section will be enforced from April 27, 2017 through April 29, 2017 from 10:00 a.m. to 6:00 p.m. each day. Jkt 241001 BILLING CODE 9110–04–P AGENCY: PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 14:38 May 01, 2017 [FR Doc. 2017–08819 Filed 4–27–17; 4:40 pm] Fee-Generating Cases Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways. For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows: VerDate Sep<11>2014 Dated: April 24, 2017. Benjamin A. Cooper, Captain, U.S. Coast Guard Captain of the Port, Delaware Bay. This final rule is effective on June 1, 2017. FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Assistant General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007; (202) 295–1563 (phone), (202) 337–6519 (fax), or sdavis@lsc.gov. SUPPLEMENTARY INFORMATION: DATES: I. Background Section 1007(b)(1) of the Legal Services Corporation Act of 1974 prohibits recipients from using LSC funds ‘‘to provide legal assistance (except in accordance with guidelines promulgated by the Corporation) with respect to any fee-generating case[.]’’ 42 U.S.C. 2996f(b)(1). LSC implemented this provision through 45 CFR part 1609. In the preamble to the original part 1609, LSC explained that the private bar is generally ‘‘eager to accept contingent fee cases and cases in which there may be an award of attorneys’ fees to be paid by the opposing party pursuant to [statute].’’ 41 FR 38505, Sept. 10, 1976. LSC therefore drafted part 1609 to ‘‘insure that recipients do not use scarce legal services resources when private attorneys are available to provide effective representation and . . . assist eligible clients to obtain appropriate and effective legal assistance.’’ 45 CFR 1609.1(a), (b). Nevertheless, LSC recognized that ‘‘there may be instances when no private attorney is willing to represent an individual, because the recovery of a fee is unlikely, the potential fee is too small, or some other reason.’’ 41 FR 38505. PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 To balance these considerations, LSC (1) defined ‘‘fee-generating case’’ to prohibit recipients from accepting cases that a private attorney would take, and (2) provided exceptions to the prohibition when adequate representation by the private bar is unavailable and contains safeguards to prevent recipients from taking cases the private bar would accept. Id. The definition of ‘‘fee-generating case’’ includes ‘‘every situation in which an attorney reasonably may expect to receive a fee for services from any source except the client.’’ Id. Specifically, LSC defined ‘‘feegenerating case’’ as ‘‘any case or matter which, if undertaken on behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client, from public funds, or from the opposing party.’’ Id. In § 1609.3, LSC established circumstances in which a recipient may use LSC funds to provide legal assistance in a feegenerating case, such as after the case has been rejected by the local lawyer referral service or by two private attorneys. 45 CFR 1609.3(a)(1). In 1996, LSC proposed two changes to clarify the meaning of ‘‘fee-generating case.’’ First, LSC proposed ‘‘[a] technical numerical change’’ to the definition of ‘‘fee-generating case’’ which was intended ‘‘to clarify that the definition includes fees from three sources: an award (1) to a client, (2) from public funds, or (3) from the opposing party.’’ 61 FR 45765, Aug. 29, 1996. This proposed change resulted in comments about whether LSC intended to make substantive changes to the definition. 62 FR 19398, Apr. 21, 1997. Because LSC did not intend to change the definition and sought to avoid confusion about its intent, the Board of Directors (‘‘Board’’) rejected the numerical changes proposed in the Notice of Proposed Rulemaking (‘‘NPRM’’). Id. Nevertheless, the Board implemented a second proposed change by adopting language that explained what is not a ‘‘fee-generating case.’’ Id. The revision excluded court appointments from the definition because such cases, even where fees are paid, are considered a professional obligation. Id. Additionally, the revision excluded situations where recipients undertake representation under a contract with a government agency or other entity and the agency or entity pays the recipient ‘‘because a contract payment does not constitute fees that come from an award to a client or attorneys’ fees that come from the losing party in a case, or from public funds.’’ Id.; see 45 CFR 1609.2(b). LSC has not made substantive changes E:\FR\FM\02MYR1.SGM 02MYR1 jstallworth on DSK7TPTVN1PROD with RULES Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Rules and Regulations to the definition of ‘‘fee-generating case’’ since this revision. When a recipient may take a feegenerating case, part 1609 also prescribes how recipients account for attorneys’ fees received in the case. Part 1609 requires the fees to be remitted to the recipient. 41 FR 38505, Sept. 10, 1976. In 1984, LSC adopted a new section, § 1609.6, that requires attorneys’ fees received by the recipient to be returned to the fund from which the resources to litigate the case came. 49 FR 19657, May 9, 1984. In other words, if the recipient funds a case half with LSC funds and half with private funds, § 1609.6 requires the recipient to allocate any attorneys’ fees received to each fund in equal proportion. Section 1609.6 also requires that fees be recorded during the accounting period in which the program receives the award. Id. In 1996, LSC’s appropriation legislation provided that no LSC funds could be used to provide financial assistance to a recipient that receives attorneys’ fees pursuant to any federal or state law. Sec. 504(a)(13), Pub. L. 104–134, 110 Stat. 1321, 1321–55; 75 FR 21507, Apr. 26, 2010. To implement this legislation, LSC created a separate rule, 45 CFR part 1642. 62 FR 25862, May 12, 1997 (final rule); 61 FR 45762, Aug. 29, 1996 (interim final rule). LSC moved § 1609.6 to part 1642 and revised the provision to require recipients to allocate fees from cases or matters supported in whole or in part with LSC funds to the LSC fund in the same proportion that the case or matter was funded with LSC funds. Id. In a departure from then-existing § 1609.6, LSC did not propose to dictate how recipients allocated remaining fees to their non-LSC accounts. Id. In 2010, Congress repealed the prohibition on accepting and retaining attorneys’ fees. Sec. 533, Pub. L. 111– 117, 123 Stat. 3034, 3157. LSC subsequently repealed part 1642 but retained two provisions relevant to accounting for attorneys’ fee awards and accepting reimbursement of costs from a client. 75 FR 6816, Feb. 11, 2010 (interim final rule); 75 FR 21506, Apr. 26, 2010 (final rule). LSC placed these two provisions in part 1609 at §§ 1609.4 and 1609.6, respectively. 75 FR 21508. LSC has made no changes to either section since then. LSC added rulemaking on part 1609 to its annual rulemaking agenda in June 2015. On July 17, 2016, the Operations and Regulations Committee (‘‘Committee’’) of the Board voted to recommend that the Board authorize rulemaking on part 1609. The Board voted to authorize rulemaking on July VerDate Sep<11>2014 14:38 May 01, 2017 Jkt 241001 18, 2016. On January 26, 2017, the Committee voted to recommend that the Board approve publication of an NPRM in the Federal Register for notice and comment. On January 28, 2017, the Board accepted the Committee’s recommendation and voted to approve publication of the NPRM. LSC published the notice of proposed rulemaking in the Federal Register on February 13, 2017. 82 FR 10446, Feb. 13, 2017. The comment period remained open for thirty days and closed on March 15, 2017. Materials regarding this rulemaking are available in the open rulemaking section of LSC’s Web site at http:// www.lsc.gov/about-lsc/laws-regulationsguidance/rulemaking. After the effective date of the rule, those materials will appear in the closed rulemaking section at http://www.lsc.gov/about-lsc/lawsregulations-guidance/rulemaking/ closed-rulemaking. II. Section-by-Section Discussion of Comments and Regulatory Provisions LSC received two comments during the public comment period. One comment was submitted by Northwest Justice Project (NJP), an LSC-funded recipient. The other comment was submitted by the National Legal Aid and Defender Association (NLADA) by its Civil Council, the elected representative body that establishes policy for the NLADA Civil Division, and its Regulations Committee. Both commenters were generally supportive of LSC’s proposed changes to part 1609. III. Proposed Changes Section 1609.1 Purpose. LSC proposed no changes to this section. LSC received no comments on this section. Section 1609.2 Definition. Recipients have repeatedly requested guidance regarding what constitutes a fee-generating case as defined in § 1609.2(a). Questions have included whether paid court appointments are fee-generating cases and whether ‘‘advice and counsel’’ or ‘‘brief services’’ are prohibited if the case may, during subsequent extended representation, develop into a fee-generating case. Recipients have also sought guidance regarding permissible sources of fees. Section 1609.2 currently provides, ‘‘Fee-generating case means any case or matter which, if undertaken on behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client, from public funds or from the opposing party.’’ 45 CFR 1609.2(a). A reader PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 20445 could interpret ‘‘award’’ as modifying only ‘‘to a client’’ and not to include an ‘‘award . . . from public funds or [an award] from the opposing party.’’ Thus, under the current definition, a recipient might accept a case that may result in an award from public funds, a result not intended by LSC. Therefore, LSC proposed removing ‘‘from public funds or from the opposing party’’ from the definition. Additionally, LSC proposed revising part 1609 to clarify that a recipient may provide brief services to an eligible client despite the possibility that the case ultimately may result in fees otherwise restricted by part 1609. In AO–2015–002, LSC considered whether a recipient may provide ‘‘advice and counsel’’ or ‘‘limited services’’ (as defined in 45 CFR 1611.2(a) and (e)) to an eligible client where the matter might constitute a fee-generating case if extended services were provided. Based on the language of § 1609.3, which prohibits recipients from using LSC funds to provide assistance in ‘‘every situation in which an attorney reasonably may expect to receive a fee[,]’’ LSC concluded an ‘‘attorney’s reasonable expectation of such fees would not typically arise until after . . . initial advice or brief services was under way or had been completed.’’ AO–2015– 002, June 17, 2015. LSC proposed incorporating this clarification into part 1609 by adding a separate paragraph to § 1609.2(b). The proposed paragraph explained that ‘‘advice and counsel’’ or ‘‘limited services’’ in matters that may later constitute fee-generating cases are not prohibited by part 1609. Finally, in response to questions regarding court appointments, current § 1609.2(b) states that a court appointment pursuant to a statute or court rule or practice that is equally applicable to all attorneys in the jurisdiction is not a fee-generating case. 45 CFR 1609.2. LSC did not propose to change this language in the NPRM. Comments: NJP ‘‘assume[d] that deletion of the source of the award to a client in proposed § 1609.2(a) is intended to denote the availability of an attorneys’ fee from funds that are paid to a lawyer from a monetary award to compensate the client for the injury or claim that is the subject to the litigation.’’ NJP continued, ‘‘As LSC notes, recipients may request, collect and retain an award of attorney fees as provided by law, so long as such a request is in the name of the recipient or the award is remitted to the recipient and accounted for pursuant to § 1609.4.’’ NJP provided no comment on proposed § 1609.2 besides its assumption. E:\FR\FM\02MYR1.SGM 02MYR1 20446 Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Rules and Regulations NLADA ‘‘fully supports’’ clarifying that advice and counsel or limited services do not fall within the meaning of fee-generating case. In NLADA’s view, ‘‘[t]he provision is beneficial to LSC eligible clients by affording them the opportunity to receive brief advice or services regarding a fee generating case. The program can provide legal advice or take limited action that can be critical to preserving the client’s rights[.]’’ Response: LSC is unsure what NJP’s assumption means. If NJP is assuming the proposed language means that a case in which a court awards fees directly to the attorney rather than awarding fees to the client is no longer a ‘‘fee-generating case’’ for purposes of part 1609, the assumption is incorrect. LSC intends part 1609 to require recipients and their attorneys to consider whether cases that may result in fee awards are ones that can be handled by the private bar before accepting such cases. LSC does not intend to permit a recipient to accept a fee-generating case without first attempting to refer the case to the private bar simply because the court may award the attorneys’ fee portion of an award directly to the recipient or its attorney instead of the client. Nevertheless, this restriction does not prohibit a recipient from accepting cases where permitted by § 1609.2(b) or § 1609.3. LSC believes the language in the proposed rule provides sufficient clarity regarding the intent of the rule and therefore adopts the proposed version in this final rule. Section 1609.3 General requirements. jstallworth on DSK7TPTVN1PROD with RULES LSC proposed a technical change to the heading of § 1609.3 to more accurately reflect the topic it addresses. Section 1609.3 briefly sets forth the general prohibition on a recipient using LSC funds to provide legal assistance in a fee-generating case. The bulk of § 1609.3, however, prescribes the circumstances and procedures under which recipients may accept feegenerating cases. To more aptly reflect the substance of § 1609.3, LSC proposed to rename § 1609.3 Authorized representation in a fee-generating case. LSC received no comments on this change and therefore adopts the proposed version in this final rule. Section 1609.4 Accounting for and use of attorneys’ fees. LSC proposed to revise part 1609’s requirement to account for receipt of attorneys’ fees. Currently, § 1609.4 requires that attorneys’ fees received in a case that the recipient used some VerDate Sep<11>2014 14:38 May 01, 2017 Jkt 241001 amount of LSC funds to handle be allocated to the LSC grant account in proportion to which the LSC funds were used. 45 CFR 1609.4(a). This language requires the accounting only for attorneys’ fees received by the recipient, which could be interpreted to mean that attorneys’ fees awarded to a staff attorney in his or her own name need not be remitted to the recipient or be subject to the accounting requirement. To clarify that attorneys’ fee awards received by either the recipient or a recipient’s staff attorney are subject to the accounting requirement, LSC proposed the following revisions to § 1609.4. First, LSC proposed to require recipients to file any petitions for attorneys’ fees in the name of the recipient and not in the name of any staff attorney. To the extent a jurisdiction may allow an attorneys’ fee petition in the recipient’s name rather than a staff attorney’s name, this change would help ensure that the court would award attorneys’ fees to the organization and not to an individual staff attorney. LSC proposed placing this addition as § 1609.4(a), and redesignating paragraphs (a) and (b) of existing § 1609.4 as paragraphs (b) and (c), respectively. Second, LSC proposed to state explicitly in § 1609.4(b) that, in the event a jurisdiction requires attorneys’ fee petitions to be made in a staff attorney’s name, the staff attorney must remit the award to the recipient, which must then allocate an award of attorneys’ fees to its LSC grant account in proportion to the amount of LSC funds used to obtain the award. LSC believed that these two changes accommodate variations in state and local rules governing the award of attorneys’ fees and help ensure that any attorneys’ fee awards supported by LSC funds are adequately credited to LSC funds. Finally, to more aptly describe the substance of § 1609.4, LSC proposed changing the heading to Requesting and receiving attorneys’ fees. Comment: NJP had no concerns about requiring fee petitions to be made in the recipient’s name to the extent permitted by law. NLADA generally supported the proposed revision clarifying that attorneys’ fees are to be awarded to the recipient. NLADA, however, relayed a recipient’s concern that state court rules may require licensed, individual attorneys to be designated on a petition for attorneys’ fees instead of an organization. This contrasts with the proposed rule, which requires petitions for attorneys’ fees to be filed in the name of the recipient ‘‘to the extent permitted by law.’’ Recognizing there PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 may be differences among statutes, court rules, and other rules, NLADA recommended that the rule be revised to state ‘‘to the extent required by law or rules in the jurisdiction.’’ Response: LSC will adopt the recommendation with one change. As NLADA noted, LSC does not intend for an attorney to violate any applicable law or any applicable rule in his or her petition for attorney fees. To clarify that the regulation requires compliance with both the law and rules, LSC will add the language recommended by NLADA, except that LSC will use the conjunction ‘‘and’’ between the phrases ‘‘to the extent permitted by law’’ and ‘‘rules in the jurisdiction.’’ Section 1609.5 Acceptance of reimbursement from a client. To create consistency in the verbs used in the headings for §§ 1609.4 and 1609.5 and more aptly describe the substance of the latter section, LSC proposed to change the heading to Receiving reimbursement from a client. LSC proposed no substantive changes to this section. LSC received no comments on this section. Consequently, LSC adopts the language proposed in the NPRM in this final rule Section 1609.6 Recipient policies, procedures and recordkeeping. LSC proposed no changes to this section. LSC received no comments on this section. List of Subjects in 45 CFR Part 1609 Administrative practice and procedure, Grant programs—law, Legal services. For the reasons set forth in the preamble, the Legal Services Corporation amends 45 CFR part 1609 as follows: PART 1609—FEE-GENERATING CASES 1. The authority citation for part 1609 is revised to read as follows: ■ Authority: 42 U.S.C. 2996g(e). 2. In § 1609.2: a. Revise the section heading and paragraph (a); ■ b. Remove ‘‘, or’’ at the end of paragraph (b)(1) and add a semicolon in its place; ■ c. Remove the period at the end of paragraph (b)(2) and add ‘‘; or’’ in its place; and ■ d. Add paragraph (b)(3). The revision and addition read as follows: ■ ■ § 1609.2 Definitions. (a) Fee-generating case means any case or matter which, if undertaken on E:\FR\FM\02MYR1.SGM 02MYR1 Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Rules and Regulations behalf of an eligible client by an attorney in private practice, reasonably may be expected to result in a fee for legal services from an award to a client. (b) * * * (3) A recipient provides only advice and counsel or limited services, as those terms are defined in 45 CFR 1611.1(a) and (e), to an eligible client. 3. Revise the heading of § 1609.3 to read as follows: ■ § 1609.3 Authorized representation in a fee-generating case. * ■ * * * (a) Any petition seeking attorneys’ fees for representation supported in whole or in part with funds provided by LSC, shall, to the extent permitted by law and rules in the jurisdiction, be filed in the name of the recipient. (b) Attorneys’ fees received by a recipient or an employee of a recipient for representation supported in whole or in part with funds provided by LSC shall be allocated to the fund in which the recipient’s LSC grant is recorded in the same proportion that the amount of LSC funds expended bears to the total amount expended by the recipient to support the representation. (c) Attorneys’ fees received shall be recorded during the accounting period in which the money from the fee award is actually received by the recipient and may be expended for any purpose permitted by the LSC Act, regulations, and other law applicable at the time the money is received. 5. Revise the heading of § 1609.5 to read as follows: ■ * Receiving reimbursement from a * * * Dated: April 26, 2017. Stefanie K. Davis, Assistant General Counsel. [FR Doc. 2017–08835 Filed 5–1–17; 8:45 am] jstallworth on DSK7TPTVN1PROD with RULES BILLING CODE 7050–01–P VerDate Sep<11>2014 14:38 May 01, 2017 50 CFR Part 635 [Docket No. 160620545–6999–02] RIN 0648–XF211 Atlantic Highly Migratory Species; Commercial Blacktip Sharks, Aggregated Large Coastal Sharks, and Hammerhead Sharks in the Western Gulf of Mexico Sub-Region; Closure National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Temporary rule; closure. § 1609.4 Requesting and receiving attorneys’ fees. * National Oceanic and Atmospheric Administration AGENCY: * 4. Revise § 1609.4 to read as follows: § 1609.5 client. DEPARTMENT OF COMMERCE Jkt 241001 NMFS is closing the commercial fishery for blacktip sharks, aggregated large coastal sharks (LCS) and hammerhead shark management groups in the western Gulf of Mexico sub-region. This action is necessary because the commercial landings of aggregated LCS in the western Gulf of Mexico sub-region for the 2017 fishing season exceeded 80 percent of the available commercial quota as of April 26, 2017, and the aggregated LCS and hammerhead shark management groups are quota-linked under the regulations. The blacktip shark fishery in the western Gulf of Mexico sub-region will be closed to minimize regulatory discards of aggregate LCS in the western Gulf of Mexico sub-region, which are often caught in conjunction with blacktip sharks in the commercial shark fisheries. This closure will affect anyone commercially fishing for sharks in the western Gulf of Mexico sub-region. DATES: The commercial fishery for blacktip sharks, aggregated LCS and hammerhead shark management groups in the western Gulf of Mexico subregion are closed effective 11:30 p.m. local time May 2, 2017 until the end of the 2017 fishing season on December 31, 2017, or until and if NMFS announces via a notice in the Federal Register that additional quota is available and the season is reopened. FOR FURTHER INFORMATION CONTACT: Lauren Latchford or Karyl BrewsterGeisz 301–427–8503; fax 301–713–1917. SUPPLEMENTARY INFORMATION: The Atlantic shark fisheries are managed under the 2006 Consolidated Highly Migratory Species (HMS) Fishery Management Plan (FMP), its amendments, and implementing regulations (50 CFR part 635) issued under authority of the MagnusonStevens Fishery Conservation and SUMMARY: PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 20447 Management Act (16 U.S.C. 1801 et seq.). Under § 635.5(b)(1), dealers must electronically submit reports on sharks that are first received from a vessel on a weekly basis through a NMFSapproved electronic reporting system. Reports must be received by no later than midnight, local time, of the first Tuesday following the end of the reporting week unless the dealer is otherwise notified by NMFS. Under § 635.28(b)(4), the quotas of certain species and/or management groups are linked. If quotas are linked, when the specified quota threshold for one management group or species is reached and that management group or species is closed, the linked management group or species closes at the same time (§ 635.28(b)(3)). The quotas for aggregated LCS and the hammerhead shark management groups in the western Gulf of Mexico sub-region are linked (§ 635.28(b)(4)(iii)). The blacktip shark quota in the western Gulf of Mexico sub-region is not linked to the aggregated LCS or hammerhead shark quotas. Regulations at § 635.28(b)(2) and § 635.28(b)(5) authorize the closure of the blacktip shark fishery in the Gulf of Mexico at a regional or sub-regional level when landings have reached or are expected to reach 80 percent of the quota or, after considering certain criteria and relevant factors, before those situations occur. Under § 635.28(b)(2) and § 635.28(b)(3), when NMFS calculates that the landings for any species and/or management group of either a nonlinked or a linked group have reached or are projected to reach a threshold of 80 percent of the available quota, NMFS will file for publication with the Office of the Federal Register a notice of closure for all of the species and/or management groups of either a nonlinked or linked group that will be effective no fewer than 5 days from date of filing. From the effective date and time of the closure until and if NMFS announces, via a notice in the Federal Register, that additional quota is available and the season is reopened, the fisheries for all linked species and/ or management groups and specified non-linked species and/or management groups are closed, even across fishing years. On November 23, 2016 (81 FR 84491), NMFS announced that for 2017, the commercial western Gulf of Mexico blacktip shark sub-regional quota was 331.6 metric tons (mt) dressed weight (dw) (730,425 lb dw), the western Gulf of Mexico aggregated LCS sub-regional quota was 72.0 mt dw (158,724 lb dw), and the western Gulf of Mexico E:\FR\FM\02MYR1.SGM 02MYR1

Agencies

[Federal Register Volume 82, Number 83 (Tuesday, May 2, 2017)]
[Rules and Regulations]
[Pages 20444-20447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08835]


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LEGAL SERVICES CORPORATION

45 CFR Part 1609


Fee-Generating Cases

AGENCY: Legal Services Corporation.

ACTION: Final rule.

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SUMMARY: This final rule revises the Legal Services Corporation (LSC or 
Corporation) regulation regarding fee-generating cases. This rule 
clarifies the definition of ``fee-generating case,'' clarifies that 
brief advice is permitted by the regulation, and revises how a 
recipient accounts for attorneys' fees awards.

DATES: This final rule is effective on June 1, 2017.

FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Assistant General 
Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 
20007; (202) 295-1563 (phone), (202) 337-6519 (fax), or sdavis@lsc.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 1007(b)(1) of the Legal Services Corporation Act of 1974 
prohibits recipients from using LSC funds ``to provide legal assistance 
(except in accordance with guidelines promulgated by the Corporation) 
with respect to any fee-generating case[.]'' 42 U.S.C. 2996f(b)(1). LSC 
implemented this provision through 45 CFR part 1609. In the preamble to 
the original part 1609, LSC explained that the private bar is generally 
``eager to accept contingent fee cases and cases in which there may be 
an award of attorneys' fees to be paid by the opposing party pursuant 
to [statute].'' 41 FR 38505, Sept. 10, 1976. LSC therefore drafted part 
1609 to ``insure that recipients do not use scarce legal services 
resources when private attorneys are available to provide effective 
representation and . . . assist eligible clients to obtain appropriate 
and effective legal assistance.'' 45 CFR 1609.1(a), (b). Nevertheless, 
LSC recognized that ``there may be instances when no private attorney 
is willing to represent an individual, because the recovery of a fee is 
unlikely, the potential fee is too small, or some other reason.'' 41 FR 
38505.
    To balance these considerations, LSC (1) defined ``fee-generating 
case'' to prohibit recipients from accepting cases that a private 
attorney would take, and (2) provided exceptions to the prohibition 
when adequate representation by the private bar is unavailable and 
contains safeguards to prevent recipients from taking cases the private 
bar would accept. Id. The definition of ``fee-generating case'' 
includes ``every situation in which an attorney reasonably may expect 
to receive a fee for services from any source except the client.'' Id. 
Specifically, LSC defined ``fee-generating case'' as ``any case or 
matter which, if undertaken on behalf of an eligible client by an 
attorney in private practice, reasonably may be expected to result in a 
fee for legal services from an award to a client, from public funds, or 
from the opposing party.'' Id. In Sec.  1609.3, LSC established 
circumstances in which a recipient may use LSC funds to provide legal 
assistance in a fee-generating case, such as after the case has been 
rejected by the local lawyer referral service or by two private 
attorneys. 45 CFR 1609.3(a)(1).
    In 1996, LSC proposed two changes to clarify the meaning of ``fee-
generating case.'' First, LSC proposed ``[a] technical numerical 
change'' to the definition of ``fee-generating case'' which was 
intended ``to clarify that the definition includes fees from three 
sources: an award (1) to a client, (2) from public funds, or (3) from 
the opposing party.'' 61 FR 45765, Aug. 29, 1996. This proposed change 
resulted in comments about whether LSC intended to make substantive 
changes to the definition. 62 FR 19398, Apr. 21, 1997. Because LSC did 
not intend to change the definition and sought to avoid confusion about 
its intent, the Board of Directors (``Board'') rejected the numerical 
changes proposed in the Notice of Proposed Rulemaking (``NPRM''). Id.
    Nevertheless, the Board implemented a second proposed change by 
adopting language that explained what is not a ``fee-generating case.'' 
Id. The revision excluded court appointments from the definition 
because such cases, even where fees are paid, are considered a 
professional obligation. Id. Additionally, the revision excluded 
situations where recipients undertake representation under a contract 
with a government agency or other entity and the agency or entity pays 
the recipient ``because a contract payment does not constitute fees 
that come from an award to a client or attorneys' fees that come from 
the losing party in a case, or from public funds.'' Id.; see 45 CFR 
1609.2(b). LSC has not made substantive changes

[[Page 20445]]

to the definition of ``fee-generating case'' since this revision.
    When a recipient may take a fee-generating case, part 1609 also 
prescribes how recipients account for attorneys' fees received in the 
case. Part 1609 requires the fees to be remitted to the recipient. 41 
FR 38505, Sept. 10, 1976. In 1984, LSC adopted a new section, Sec.  
1609.6, that requires attorneys' fees received by the recipient to be 
returned to the fund from which the resources to litigate the case 
came. 49 FR 19657, May 9, 1984. In other words, if the recipient funds 
a case half with LSC funds and half with private funds, Sec.  1609.6 
requires the recipient to allocate any attorneys' fees received to each 
fund in equal proportion. Section 1609.6 also requires that fees be 
recorded during the accounting period in which the program receives the 
award. Id.
    In 1996, LSC's appropriation legislation provided that no LSC funds 
could be used to provide financial assistance to a recipient that 
receives attorneys' fees pursuant to any federal or state law. Sec. 
504(a)(13), Pub. L. 104-134, 110 Stat. 1321, 1321-55; 75 FR 21507, Apr. 
26, 2010. To implement this legislation, LSC created a separate rule, 
45 CFR part 1642. 62 FR 25862, May 12, 1997 (final rule); 61 FR 45762, 
Aug. 29, 1996 (interim final rule). LSC moved Sec.  1609.6 to part 1642 
and revised the provision to require recipients to allocate fees from 
cases or matters supported in whole or in part with LSC funds to the 
LSC fund in the same proportion that the case or matter was funded with 
LSC funds. Id. In a departure from then-existing Sec.  1609.6, LSC did 
not propose to dictate how recipients allocated remaining fees to their 
non-LSC accounts. Id.
    In 2010, Congress repealed the prohibition on accepting and 
retaining attorneys' fees. Sec. 533, Pub. L. 111-117, 123 Stat. 3034, 
3157. LSC subsequently repealed part 1642 but retained two provisions 
relevant to accounting for attorneys' fee awards and accepting 
reimbursement of costs from a client. 75 FR 6816, Feb. 11, 2010 
(interim final rule); 75 FR 21506, Apr. 26, 2010 (final rule). LSC 
placed these two provisions in part 1609 at Sec. Sec.  1609.4 and 
1609.6, respectively. 75 FR 21508. LSC has made no changes to either 
section since then.
    LSC added rulemaking on part 1609 to its annual rulemaking agenda 
in June 2015. On July 17, 2016, the Operations and Regulations 
Committee (``Committee'') of the Board voted to recommend that the 
Board authorize rulemaking on part 1609. The Board voted to authorize 
rulemaking on July 18, 2016. On January 26, 2017, the Committee voted 
to recommend that the Board approve publication of an NPRM in the 
Federal Register for notice and comment. On January 28, 2017, the Board 
accepted the Committee's recommendation and voted to approve 
publication of the NPRM. LSC published the notice of proposed 
rulemaking in the Federal Register on February 13, 2017. 82 FR 10446, 
Feb. 13, 2017. The comment period remained open for thirty days and 
closed on March 15, 2017.
    Materials regarding this rulemaking are available in the open 
rulemaking section of LSC's Web site at http://www.lsc.gov/about-lsc/laws-regulations-guidance/rulemaking. After the effective date of the 
rule, those materials will appear in the closed rulemaking section at 
http://www.lsc.gov/about-lsc/laws-regulations-guidance/rulemaking/closed-rulemaking.

II. Section-by-Section Discussion of Comments and Regulatory Provisions

    LSC received two comments during the public comment period. One 
comment was submitted by Northwest Justice Project (NJP), an LSC-funded 
recipient. The other comment was submitted by the National Legal Aid 
and Defender Association (NLADA) by its Civil Council, the elected 
representative body that establishes policy for the NLADA Civil 
Division, and its Regulations Committee. Both commenters were generally 
supportive of LSC's proposed changes to part 1609.

III. Proposed Changes


Section 1609.1   Purpose.

    LSC proposed no changes to this section. LSC received no comments 
on this section.


Section 1609.2  Definition.

    Recipients have repeatedly requested guidance regarding what 
constitutes a fee-generating case as defined in Sec.  1609.2(a). 
Questions have included whether paid court appointments are fee-
generating cases and whether ``advice and counsel'' or ``brief 
services'' are prohibited if the case may, during subsequent extended 
representation, develop into a fee-generating case. Recipients have 
also sought guidance regarding permissible sources of fees.
    Section 1609.2 currently provides, ``Fee-generating case means any 
case or matter which, if undertaken on behalf of an eligible client by 
an attorney in private practice, reasonably may be expected to result 
in a fee for legal services from an award to a client, from public 
funds or from the opposing party.'' 45 CFR 1609.2(a). A reader could 
interpret ``award'' as modifying only ``to a client'' and not to 
include an ``award . . . from public funds or [an award] from the 
opposing party.'' Thus, under the current definition, a recipient might 
accept a case that may result in an award from public funds, a result 
not intended by LSC. Therefore, LSC proposed removing ``from public 
funds or from the opposing party'' from the definition.
    Additionally, LSC proposed revising part 1609 to clarify that a 
recipient may provide brief services to an eligible client despite the 
possibility that the case ultimately may result in fees otherwise 
restricted by part 1609. In AO-2015-002, LSC considered whether a 
recipient may provide ``advice and counsel'' or ``limited services'' 
(as defined in 45 CFR 1611.2(a) and (e)) to an eligible client where 
the matter might constitute a fee-generating case if extended services 
were provided. Based on the language of Sec.  1609.3, which prohibits 
recipients from using LSC funds to provide assistance in ``every 
situation in which an attorney reasonably may expect to receive a 
fee[,]'' LSC concluded an ``attorney's reasonable expectation of such 
fees would not typically arise until after . . . initial advice or 
brief services was under way or had been completed.'' AO-2015-002, June 
17, 2015. LSC proposed incorporating this clarification into part 1609 
by adding a separate paragraph to Sec.  1609.2(b). The proposed 
paragraph explained that ``advice and counsel'' or ``limited services'' 
in matters that may later constitute fee-generating cases are not 
prohibited by part 1609.
    Finally, in response to questions regarding court appointments, 
current Sec.  1609.2(b) states that a court appointment pursuant to a 
statute or court rule or practice that is equally applicable to all 
attorneys in the jurisdiction is not a fee-generating case. 45 CFR 
1609.2. LSC did not propose to change this language in the NPRM.
    Comments: NJP ``assume[d] that deletion of the source of the award 
to a client in proposed Sec.  1609.2(a) is intended to denote the 
availability of an attorneys' fee from funds that are paid to a lawyer 
from a monetary award to compensate the client for the injury or claim 
that is the subject to the litigation.'' NJP continued, ``As LSC notes, 
recipients may request, collect and retain an award of attorney fees as 
provided by law, so long as such a request is in the name of the 
recipient or the award is remitted to the recipient and accounted for 
pursuant to Sec.  1609.4.'' NJP provided no comment on proposed Sec.  
1609.2 besides its assumption.

[[Page 20446]]

    NLADA ``fully supports'' clarifying that advice and counsel or 
limited services do not fall within the meaning of fee-generating case. 
In NLADA's view, ``[t]he provision is beneficial to LSC eligible 
clients by affording them the opportunity to receive brief advice or 
services regarding a fee generating case. The program can provide legal 
advice or take limited action that can be critical to preserving the 
client's rights[.]''
    Response: LSC is unsure what NJP's assumption means. If NJP is 
assuming the proposed language means that a case in which a court 
awards fees directly to the attorney rather than awarding fees to the 
client is no longer a ``fee-generating case'' for purposes of part 
1609, the assumption is incorrect.
    LSC intends part 1609 to require recipients and their attorneys to 
consider whether cases that may result in fee awards are ones that can 
be handled by the private bar before accepting such cases. LSC does not 
intend to permit a recipient to accept a fee-generating case without 
first attempting to refer the case to the private bar simply because 
the court may award the attorneys' fee portion of an award directly to 
the recipient or its attorney instead of the client. Nevertheless, this 
restriction does not prohibit a recipient from accepting cases where 
permitted by Sec.  1609.2(b) or Sec.  1609.3.
    LSC believes the language in the proposed rule provides sufficient 
clarity regarding the intent of the rule and therefore adopts the 
proposed version in this final rule.


Section 1609.3  General requirements.

    LSC proposed a technical change to the heading of Sec.  1609.3 to 
more accurately reflect the topic it addresses. Section 1609.3 briefly 
sets forth the general prohibition on a recipient using LSC funds to 
provide legal assistance in a fee-generating case. The bulk of Sec.  
1609.3, however, prescribes the circumstances and procedures under 
which recipients may accept fee-generating cases. To more aptly reflect 
the substance of Sec.  1609.3, LSC proposed to rename Sec.  1609.3 
Authorized representation in a fee-generating case. LSC received no 
comments on this change and therefore adopts the proposed version in 
this final rule.


Section 1609.4  Accounting for and use of attorneys' fees.

    LSC proposed to revise part 1609's requirement to account for 
receipt of attorneys' fees. Currently, Sec.  1609.4 requires that 
attorneys' fees received in a case that the recipient used some amount 
of LSC funds to handle be allocated to the LSC grant account in 
proportion to which the LSC funds were used. 45 CFR 1609.4(a). This 
language requires the accounting only for attorneys' fees received by 
the recipient, which could be interpreted to mean that attorneys' fees 
awarded to a staff attorney in his or her own name need not be remitted 
to the recipient or be subject to the accounting requirement.
    To clarify that attorneys' fee awards received by either the 
recipient or a recipient's staff attorney are subject to the accounting 
requirement, LSC proposed the following revisions to Sec.  1609.4. 
First, LSC proposed to require recipients to file any petitions for 
attorneys' fees in the name of the recipient and not in the name of any 
staff attorney. To the extent a jurisdiction may allow an attorneys' 
fee petition in the recipient's name rather than a staff attorney's 
name, this change would help ensure that the court would award 
attorneys' fees to the organization and not to an individual staff 
attorney. LSC proposed placing this addition as Sec.  1609.4(a), and 
redesignating paragraphs (a) and (b) of existing Sec.  1609.4 as 
paragraphs (b) and (c), respectively.
    Second, LSC proposed to state explicitly in Sec.  1609.4(b) that, 
in the event a jurisdiction requires attorneys' fee petitions to be 
made in a staff attorney's name, the staff attorney must remit the 
award to the recipient, which must then allocate an award of attorneys' 
fees to its LSC grant account in proportion to the amount of LSC funds 
used to obtain the award. LSC believed that these two changes 
accommodate variations in state and local rules governing the award of 
attorneys' fees and help ensure that any attorneys' fee awards 
supported by LSC funds are adequately credited to LSC funds.
    Finally, to more aptly describe the substance of Sec.  1609.4, LSC 
proposed changing the heading to Requesting and receiving attorneys' 
fees.
    Comment: NJP had no concerns about requiring fee petitions to be 
made in the recipient's name to the extent permitted by law. NLADA 
generally supported the proposed revision clarifying that attorneys' 
fees are to be awarded to the recipient. NLADA, however, relayed a 
recipient's concern that state court rules may require licensed, 
individual attorneys to be designated on a petition for attorneys' fees 
instead of an organization. This contrasts with the proposed rule, 
which requires petitions for attorneys' fees to be filed in the name of 
the recipient ``to the extent permitted by law.'' Recognizing there may 
be differences among statutes, court rules, and other rules, NLADA 
recommended that the rule be revised to state ``to the extent required 
by law or rules in the jurisdiction.''
    Response: LSC will adopt the recommendation with one change. As 
NLADA noted, LSC does not intend for an attorney to violate any 
applicable law or any applicable rule in his or her petition for 
attorney fees. To clarify that the regulation requires compliance with 
both the law and rules, LSC will add the language recommended by NLADA, 
except that LSC will use the conjunction ``and'' between the phrases 
``to the extent permitted by law'' and ``rules in the jurisdiction.''


Section 1609.5   Acceptance of reimbursement from a client.

    To create consistency in the verbs used in the headings for 
Sec. Sec.  1609.4 and 1609.5 and more aptly describe the substance of 
the latter section, LSC proposed to change the heading to Receiving 
reimbursement from a client. LSC proposed no substantive changes to 
this section. LSC received no comments on this section. Consequently, 
LSC adopts the language proposed in the NPRM in this final rule


Section 1609.6  Recipient policies, procedures and recordkeeping.

    LSC proposed no changes to this section. LSC received no comments 
on this section.

List of Subjects in 45 CFR Part 1609

    Administrative practice and procedure, Grant programs--law, Legal 
services.

    For the reasons set forth in the preamble, the Legal Services 
Corporation amends 45 CFR part 1609 as follows:

PART 1609--FEE-GENERATING CASES

0
1. The authority citation for part 1609 is revised to read as follows:

    Authority: 42 U.S.C. 2996g(e).

0
2. In Sec.  1609.2:
0
a. Revise the section heading and paragraph (a);
0
b. Remove ``, or'' at the end of paragraph (b)(1) and add a semicolon 
in its place;
0
c. Remove the period at the end of paragraph (b)(2) and add ``; or'' in 
its place; and
0
d. Add paragraph (b)(3).
    The revision and addition read as follows:


Sec.  1609.2   Definitions.

    (a) Fee-generating case means any case or matter which, if 
undertaken on

[[Page 20447]]

behalf of an eligible client by an attorney in private practice, 
reasonably may be expected to result in a fee for legal services from 
an award to a client.
    (b) * * *
    (3) A recipient provides only advice and counsel or limited 
services, as those terms are defined in 45 CFR 1611.1(a) and (e), to an 
eligible client.

0
3. Revise the heading of Sec.  1609.3 to read as follows:


Sec.  1609.3  Authorized representation in a fee-generating case.

* * * * *

0
4. Revise Sec.  1609.4 to read as follows:


Sec.  1609.4  Requesting and receiving attorneys' fees.

    (a) Any petition seeking attorneys' fees for representation 
supported in whole or in part with funds provided by LSC, shall, to the 
extent permitted by law and rules in the jurisdiction, be filed in the 
name of the recipient.
    (b) Attorneys' fees received by a recipient or an employee of a 
recipient for representation supported in whole or in part with funds 
provided by LSC shall be allocated to the fund in which the recipient's 
LSC grant is recorded in the same proportion that the amount of LSC 
funds expended bears to the total amount expended by the recipient to 
support the representation.
    (c) Attorneys' fees received shall be recorded during the 
accounting period in which the money from the fee award is actually 
received by the recipient and may be expended for any purpose permitted 
by the LSC Act, regulations, and other law applicable at the time the 
money is received.

0
5. Revise the heading of Sec.  1609.5 to read as follows:


Sec.  1609.5   Receiving reimbursement from a client.

* * * * *

    Dated: April 26, 2017.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2017-08835 Filed 5-1-17; 8:45 am]
 BILLING CODE 7050-01-P