This includes the "program integrity regulation," which requires physical separation between LSC-funded recipients and any organizations that engage in these restricted activities. (See 45 C.F.R. 1610)

In December four legal service programs in New York City, a private charity and pro bono attorney filed suit against the Legal Services Corporation challenging the constitutionality of these restrictions. It also challenged the bar on programs' collecting attorneys fees in successful cases. The suit, Dobbins v. Legal Services Corporation, follows the 2001 Supreme Court ruling in Velazquez v. Legal Services Corporation, which invalidated a restriction barring legal aid lawyers from challenging welfare reform laws. The plaintiffs are being represented by the Brennan Center for Justice, whose legal director said, "The federal government should be encouraging, not thwarting, the generosity of communities working for equal justice for low-income people. This is a disastrous and mean-spirited policy. We are urging the court to find these laws unconstitutional and strike them down."

The LSC Task Force identified two high priority areas for the LSC Board's review: regulations governing the make-up of LSC grantee boards that make it difficult to have diverse backgrounds on them, and more flexible sanction procedures that apply to LSC grantees accused of violating LSC regulations. Low priority was given to the issue of a private co-counsel's "applications for fees."