Litigation challenging the constitutionality of limitations on the advocacy rights of government-funded nonprofit legal services groups advanced recently with oral arguments before a federal appeals court. On Nov. 2, the U.S. Court of Appeals for the Second Circuit heard oral argument in Velazquez v. Legal Services Corporation (LSC), a lawsuit brought on behalf of a coalition of lawyers, indigent clients and New York City officeholders, arguing the government has no business regulating the privately funded, constitutionally protected activities of legal service programs. The current challenge, also known as the Dobbins case, addresses the constitutionality of two key provisions of LSC regulations: (1) the restrictions prohibiting LSC grantees from using their non-federal dollars for class action litigation, legislative advocacy and community education; and (2) the "program integrity regulation," which requires physical separation between LSC grant recipients and any organization that engages in these restricted activities. In Dec. 2004, a federal district judge ordered LSC to cease enforcing the separation rule in the case of the three programs in question because it "unduly burdened" their First Amendment rights. At the oral argument the Brennan Center for Justice, represented by Burt Neuborne, argued for the legal services organizations. He urged the court to uphold the lower court ruling that found government-imposed restrictions on the ability of the organizations to use their own non-federal funds to be unconstitutional. Neuborne said the district court correctly applied an undue burden standard to the facts, and that this standard was established by the Supreme Court's decisions in several cases, including Regan v. Taxation With Representation, FCC v. League of Women Voters, and United States v. American Library Association. Applying these standards, according to Neuborne, leads to the conclusion that the government has no business regulating constitutionally protected activities by legal services programs. Stephen Ascher, of Kronish, Lieb, Weiner and Hellman LLP, arguing for LSC, contended that the plaintiff's case was not yet ripe for judicial determination. Because federal courts only have constitutional authority to resolve actual disputes, legal actions cannot be brought before the challenged law or government action has produced a direct threat to the party suing, when the matter is said to be "ripe" for judicial resolution. He insisted that the plaintiffs should have either submitted a proposal to LSC or set up an affiliate and waited for LSC to conduct an audit, before pursuing the case. Ascher also argued that the plaintiffs were calculating the costs of LSC's separation rule too strictly. He stated that the plaintiffs had wrongly assumed that LSC permits no sharing between LSC grantees and other non-LSC programs that engage in restricted activities. He stated that it would be constitutionally acceptable for LSC and non-LSC programs to share all employees, space and equipment - according to the level of separation required by LSC's rule. However, it is the extreme level of separation required that is at issue in the case. Matthew Collette, arguing for the Department of Justice, focused on the proper test the court should use to determine whether the LSC's separation requirement violates the Constitution. He argued that the court should examine whether the requirement "effectively prohibits" the plaintiffs from using their private funds to engage in the activities. In response to Judge Richard Cardamone's questioning as to whether the LSC would inevitably lose under the "undue burden" test applied by the district court, Collette stated that the "district court had failed to acknowledge an important government interest underlying the separation requirement: the interest in having legal services programs focus exclusively on the categories of case the government chooses to fund." Collette's statement cuts to the heart of why the outcome of this case is important to the nonprofit sector. If the federal court upholds the LSC restrictions on the use of the private funds of nonprofit legal services programs, the Velazquez case could open the door for an attempt by Congress to limit the use of the private funds of a wide variety of federal grantees, restricting whatever it deems threatening or out of line with its intentions. The suit, far from being solely concerned with legal services or access to the courts, seeks to protect the broad array of public-private partnerships. Public-private partnerships work, at least in part, because of the many advantages of collaboration. The rule and the possibility that it will be upheld pose a significant threat to the viability of these partnerships in a wide variety of settings and across the full political spectrum. When government seeks to limit free expression under the very programs it deems beneficial to underserved communities and individuals -- whether it involves legal representation for the poor or civic engagement for affordable housing recipients -- government exerts a level of control antithetic to our democracy. Whether government can exert this questionable form of control by proxy in public-private partnerships is at the heart of what the case will decide.