Mr. KASTENMEIER. This morning I am very pleased to greet two important witnesses: Mr. Thomas Ehrlich, president of the Legal Services Corp.; and Mr. Robert G. Begam, past president of the Association of Trial Lawyers of America, who will be representing that organization.

So we are once again very pleased to greet Mr. Tom Ehrlich. I invite him to proceed and to please identify his colleagues.

TESTIMONY OF THOMAS EHRLICH, PRESIDENT, NATIONAL LEGAL SERVICES CORP., ACCOMPANIED BY JAMES E. COLEMAN, JR., ASSISTANT GENERAL COUNSEL, NLSC, AND ALAN HOUSEMAN, DIRECTOR, RESEARCH INSTITUTE, NLSC

Mr. EHRLICH. Thank you very much, Mr. Chairman, Congressman Drinan, Congressman Railsback, members of the subcommittee staff. I am pleased to accept your invitation to testify on behalf of the staff of the Legal Services Corp. regarding bills that would expand the jurisdiction of Federal magistrates, and bills that would reduce or eliminate the diversity jurisdiction of the Federal courts.

James Coleman of the general counsel's office of the corporation and Alan Houseman, who is director of our research institute, are here with me.

We have previously testified, as you know, in support of legislation that would seek to expand the jurisdiction of magistrates when the forerunner of S. 1613 was before the Senate. We support the current version of S. 1613. In our view, it includes several important improvements compared to H.R. 7493. We believe, however, that the bill could be further strengthened in several respects. We also support section 2 of H.R. 7811. That provision would assure that indigent litigants could appeal decisions by magistrates without incurring inhibiting

costs.

I should also emphasize at the outset that a number of Legal Services attorneys do have varying views on these matters. I know you have a letter from Mr. Dennis Sweeney from the Baltimore program, and I hope their views would receive a full airing.

Several bills, as you said, are also before the committee that would reduce or eliminate diversity jurisdiction in the Federal courts. Based on discussions we've had with Legal Services attorneys, it doesn't appear that any of these bills would substantially adversely affect the practice of those attorneys.

My own personal view is that diversity jurisdiction should be eliminated as one step in relieving some of the congestion in the Federal judicial system. At the very least, I believe the availability of that jurisdiction should be greatly limited.

My prepared comments, Mr. Chairman, address first, our basic interests and concerns; second, the provisions of the magistrates bills; and third, the provisions of the diversity bills.

Given the subcommittee's knowledge and background of the corporation and our interests, I hope I may submit that prepared statement for the record and simply summarize the points we would like to make on the particular bills.

Mr. KASTENMEIER. Without obiection, your statement in its entirety will be accepted for the record. And you may continue as you wish. [The prepared statement of Thomas Ehrlich follows:]

STATEMENT OF THOMAS EHRLICH, PRESIDENT, LEGAL SERVICES CORP. Mr. Chairman and members of the subcommittee, I am pleased to accept your invitation to testify on behalf of the Legal Services Corporation staff regarding bills that would expand the jurisdiction of federal magistrates and bills that would reduce or eliminate the diversity jurisdiction of the federal courts.

We have previously testified in support of legislation seeking to expand the jurisdiction of magistrates when the forerunner of S. 1613 was before the Senate. We support the current version of S. 1613. In our view, it includes several important improvements compared to H.R. 7493. We believe, however, that the bill could be further strengthened in several respects. We also support Section 2 of H.R. 7811. That provision would assure that indigent litigants could appeal decisions by magistrates without incurring inhibiting costs.

Several bills are before the commitee that would reduce or eliminate diversity jurisdiction in the federal courts. Based on discussions we have had with legal services attorneys, it does not appear that any of these bills would substantially affect the practice of those attorneys. My personal view is that diversity jurisdiction should be eliminated as one step in relieving some of the congestion in the federal judicial syystem. At the very least, I believe the availability of that jurisdiction should be greatly limited.

My comments will address: first, our basic interests and concerns; second, the provisions of the magistrates bills; and third, the provisions of the diversity bills.

I.

The subcommittee members know the background of the Legal Services Corporation. My testimony last June at your hearings on "The State of the Judiciary and Access to Justice" spelled out that background, as well as our current aims. A brief summary may, however, be helpful for the record.

The Legal Services Corporation is a private, non-profit corporation created by Congress in 1974 to support legal assistance for those unable to afford an attorney. This program is essential, the Congress declared, "to provide access to the system of justice in our nation for individuals who seek redress of grievances . . . .

To carry out that mandate, the Corporation now makes grants to 315 independent legal services programs located in each of the 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, and the Trust Territory of the Pacific Islands (Micronesia). There remain, however, nearly 16 million poor people who are entirely without access to legal services when they face a legal problem-either because they live in areas where no legal services programs exist, or because the programs in their areas are so severely underfunded that their access to those programs is only theoretical. For these persons, justice is beyond reach and the fundamental promises of equal access to the legal system and equal justice under law have not been kept.

To help correct that grim reality, the Corporation has established a minimum short-term goal of providing the equivalent of at least two lawyers for each 10,000 poor people nationwide by 1979. With adequate funding, we are confident we can reach that goal.

We are, moreover, taking steps to ensure that the legal services available to poor people are of the highest quality. The Corporation offers substantial training and technical support to each program that it funds, and we are undertaking a national recruiting effort to attract the most able lawyers to legal services work. We are also conducting a Congressionally-mandated study of legal services delivery that will enable us to provide service in the most economical and effective ways possible.

Providing a minimum level of high-quality legal assistance to those in our society least able to afford that assistance is the most pressing of the Corporation's priorities. This Subcommittee helped immensely in reaching that goal with strong support for our appropriation request and our authorization bill, H.R. 6666. Personally, and on behalf of all those in legal services, we are most appreciative.

As I reviewed last June when I testified before this Subcommittee, the federal courts have historically provided the most effective forum for the poor to enforce their federal constitutional and statutory rights. The federal courts have often been the last hope for vindication of the rights of the indigent. Denial of access to that system deprives the poor of justice; delay in obtaining relief and the

inability of overloaded courts to give sufficient attention to cases important to the poor may result in equally serious deprivations. It is essential, therefore, to solve the current problems of access and congestion in the federal courts.

Most of the legal problems encountered by poor persons do not lead to litigation in the Federal courts. The cases brought by legal services lawyers in those courts, however, are of enormous importance, not only to the individuals involved but to the poor generally and to the public at large. A large share concerns the wide range of administrative benefits established under federal law. Judicial review of decisions by federal administrative agencies is important to the vindication of individual rights and to the supervision of the procedures and rules of the agences themselves. Scores of landmark cases in this and other areas have been brought throughout the Federal judicial system by legal services lawyers. We are seriously concerned that important rights of poor people are being jeopardized because of restrictions on access to federal courts. Those rights are also threatened because federal litigation is too costly and too slow. The effect on the poor of delay and high costs is devasting. If the poor must wait months— even years to be heard at the trial level, they may be without the very means to exist: food, shelter, and clothing.

As I testified before, we believe that the problems faced by the poor in seeking access to and justice in-the Federal courts will not be resolved without careful analysis and thorough examination of the judicial system as a whole. A comprehensive approach is needed. That approach should begin with a major study of the problems of access to the Federal courts, the causes of congestion, the costs to the litigants, the effects on the entire judicial system of proposed changes, and the impact of those changes on the vital role of judicial review.

As a first step, a detailed statistical analysis is needed of various categories of cases in the Federal courts, and the actual judicial time and resources spent in each category by each court throughout the federal system. It is not enough simply to consider the number of new filings. Only by a full-scale review can the real problems be isolated and a comprehensive approach developed. Currently, insofar as we are aware, no such analysis exists or is underway.

The comprehensive study we suggest should, of course, recognize the vital role that the Federal courts play in vindicating the rights of all citizens and in assuring the rule of law in the operation of other branches of government. For the poor this role is essential; their lives are governed extensively by government agencies and their access to those making decisions is often limited.

Faced with so many burdens on our legal system, the temptation of many is to favor disenfranchising from the legal system those without muscle to pushparticularly the poor and minorities. That temptation must be resisted. Changes that single out one group or class for disparate treatment must be avoided, and reform must be applied equally to all classes of litigants and to all types of cases. The problems of the poor are as important and deserving of judicial attention as the problems of other groups.

II.

This Subcommittee is currently considering several proposed revisions of magistrate jurisdiction and authority. In our view, the bill passed by the SenateS. 1613-is the soundest proposal. It would give litigants an opportunity to choose, through their mutual consent, a forum in which speedier and less costly resolution of disputes may be possible.

The impact of any of the measures would, of course, depend ultimately on the number of parties who consent, the quality of decisions of magistrates, the staff support for magistrates, the backlogs and congestion they face, the number of parties who appeal, and the appeal choices made by litigants appearing before magistrates. Without the type of study we have suggested, we cannot even estimate what effect the expansion disposition authority will have. Our own view is that S. 1613 would have a reasonable chance of easing congestions in the federal courts, particularly because it would give the alternative of adjudication before a magistrate to all federal litigants regardless of the subject matter of their claims.

In our view, four points deserve particular emphasis in considering ways to encourage litigants to choose adjudication before magistrates. First, we do not think that a limit should be imposed-as a section 2(c) of H.R. 7493-on the opportunity for appeal to United States Court of Appeals and for review by the Supreme Court. Even if leave under H.R. 7493 is freely granted, parties are

likely to view the lack of an unfettered right of appeal to the Court of Appeals as a substantial penalty for choosing trial before a magistrate. In addition, the restrictions could result in the anomalous situation that-since under H.R. 7493 district courts would not need to adopt the recommended procedures-parties raising similar claims in different circuits, or even within the same circuit or state, would have different rights depending on the district where they resided. Subsections 2(c) (2) and (3) of S. 1613 provide that the Supreme Court's review shall not be limited and that, at the time of the reference to a magistrate, the parties can choose a direct appellate route, thus bypassing the district court. Several problems remain. It is not clear how a party who opts for district-court review would seek review by the Supreme Court and on what issues if the Circuit Court denied leave to appeal. The new system might also create confusion and inconsistency between districts and judges within circuits. Perhaps most serious, because the choice of appellate route would have to be made at the time of the reference to a magistrate, it would be less informed than if it were made after the magistrates decision.

Based on these concerns, we believe that the right of appeal to a circuit court should be retained for all litigants. We think this will improve the effectiveness of S. 1613 and will further reduce congestion in federal courts. Without retention of this right to appeal, the dual-track approach does not assure equal treatment for all parties.

A second concern we have with S. 1613, as well as the other bills before the Subcommittee, relates to the selection of magistrates. We believe that procedures should be adopted to ensure that federal magistrates are of the highest quality. All of the bills recognize that need and contain proposals to meet it. Standards would be set by the judicial conference, the council for each circuit would certify a list of qualified candidates, and the district judges of the district would select magistrates.

Appointment by judges may have been appropriate when magistrates were officials of district judges' staffs, but it seems to us inappropriate when magistrates are given case-dispositive authority. Instead, we believe that magistrates should be appointed by the President of the United States, with the aid of advisory panels as those recently established to help select judges of the Courts of Appeals. In our view, Congress should set the standards that are to be used in selecting persons to fill the office. The criteria used should encourage the recruitment of minorities and women and those involved in public interest and public service work.

Third, magistrates should be provided with law clerks to aid them in reaching decisions, and opinions written by magistrates should be reported and given precedential value. The latter points are especially important for legal services lawyers for whom litigation in federal court is often necessary to change widespread improper practices in federal agencies. Such reform would be extremely difficult if favorable decisions do not receive the respect and authority that normally attaches to decisions by a United States District Judge.

We understand that policies along these lines are being considered, and we have offered to cooperate in efforts to establish them. None of the bills before the subcommittee, however, contain any provisions to secure their implementation, and the Senate Committee Report (No. 95-344) makes no mention of the problem. The extent to which parties avail themselves of the opportunity to be heard by a magistrate will also, in our opinion, depend in major part on the establishment of such policies.

Our final concern relates to the special designation and consent provisions. In May, the Corporation held a seminar to discuss problems of access to the federal courts for poor people. A variety of topics and legislative proposals were discussed, including H.R. 7493.

Many of the persons attending-all of whom are lawyers with extensive federal litigation experience in representing poor people expressed concern that some judges might use the procedures in the bill to relieve themselves of cases that they did not want to hear without regard to the appropriateness of those cases for magistrate jurisdiction. Litigants in individual cases might feel pressured to consent to magistrate jurisdiction, or, more likely, a court might issue a rule designating magistrates to try only certain types of cases.

This possibility seems heightened by a footnote reference in the release dated May 26, 1977, by the Department of Justice on H.R. 7493. That reference states, "The Court might promulgate a rule designating certain cases for magistrate determination." We are troubled by this approach. In such circumstances there would be a risk that a decision to use the procedures of the bills might be based

on the desire to avoid offending a district judge rather than on a desire to resolve a dispute promptly.

Section 2(c) (4) of S. 1613 attempts to address some of these concerns. We applaud this legislative restriction on a common practice that litigants routinely face in their negotiations with district judges. A judge should never attempt to persuade or induce any party to consent to trial before a magistrate. This is particularly important for civil litigants who are not represented by counsel. To protect litigants' rights fully, however, and to assure a voluntary consent procedure, we urge the Subcommittee to include a specific statement in its report on the bill that would preclude designation by district judges of classes of cases for trial by magistrates and would proscribe any indication by a district court of its consent to trial of a case before a magistrate until a desire to waive has been made on the record by both parties.

III.

The elimination of cases that do not properly belong in the federal courts is another way to relieve some of the congestion in those courts. In my own view, diversity cases are in this category. Several bills are now pending before this Subcommittee that would reduce or eliminate diversity jurisdiction. Although I am not prepared to speak on behalf of legal services attorneys or clients on this issue, my personal preference is to eliminate diversity jurisdiction altogether.

Based on discussions I have had with legal services attorneys, it does not appear that the elimination of diversity jurisdiction would have any seriously adverse impact on the ability of legal services programs to provide legal assistance to the poor. A computer search of the reported cases brought by legal services programs in the last year revealed that only five were diversity cases. On the other hand, elimination of diversity cases could relieve some of the congestion in Federal courts and give those courts more time to deal with cases within their special competence-those involving questions of federal law.

Nearly one-quarter of the civil cases filed in federal court in fiscal year 1976 were based on diversity jurisdiction. These were actions that involved either contract, tort, or real property issues. This caseload requires about 400 Federal judges to apply state law in order to settle disputes over which approximately 4,000 state judges also have jurisdiction. In my personal view, there is no good reason why these kinds of cases should not be handled by those state judges.

The traditional justification for Federal diversity jurisdiction concurrent with the jurisdiction of state courts is that state courts would be prejudiced against citizens of other states who appeared before them. Whatever validity that apprehension had in the 18th and 19th centuries, it does not seem wellfounded today.

IV.

It is well to end this presentation by stressing again that any further major change in Federal jurisdiction or shift in responsibilities within the Federal judiciary should be preceded by a careful study of the causes of court congestion and the types of changes that are possible without harming the litigants or undermining the role of judicial review. Such a study would provide the basis for comprehensive reform of the Federal judicial system, and for making the goal of equal justice a reality. We also hope that you will solicit the views of legal services lawyers who are involved in daily representation in federal courts and before magistrates. Their clients will be directly affected by any changes in the Federal judicial system.

Mr. EHRLICH. I appreciate that, Mr. Chairman. I do want to reemphasize, as we did when we testified last June, the importance in our view of a comprehensive review of the entire operations of the entire Federal judicial system that would recognize the vital role that Federal courts play and must play in vindicating the rights of all citizens, and assuring the rule of law in the operations of all branches of our Government. For the poor, as I've said before, that rule is absolutely essential; their lives are extensively governed by Government agencies, their access to those making decisions is too often limited.

And we have come to see that, faced with so many burdens on our legal system, the temptation of many is to favor disenfrancising from