The U.S. Supreme Court case Legal Services Corporation v. Carmen Velazquez, et al., 2000 revolved around the constitutionality of restrictions placed on legal aid organizations receiving federal funding from the Legal Services Corporation (LSC). The LSC had imposed regulations prohibiting these organizations from challenging existing welfare laws or representing clients seeking to amend such laws. A group of indigent clients and their lawyers challenged this restriction, arguing that it violated their First Amendment rights by limiting what they could say in court proceedings and inhibiting effective representation for low-income individuals. In a 5-4 decision, the Supreme Court ruled in favor of Velazquez and her co-petitioners, finding that the restrictions did indeed infringe upon free speech rights protected under the First Amendment. The majority opinion held that government cannot regulate speech when it subsidizes it as much as when it penalizes it; thus deeming LSC's limitations unconstitutional because they distorted public debate about welfare reform rather than maintaining viewpoint neutrality.

In the dissenting opinion for Legal Services Corporation v. Carmen Velazquez, et al., Justice Antonin Scalia argued that Congress has the right to appropriate public funds for certain purposes and not others. He believed that there was no constitutional violation in restricting legal aid lawyers from challenging or seeking to amend existing welfare laws while using federal funding. According to him, such restrictions do not infringe upon free speech rights because they apply only when government money is used; attorneys are still free to challenge these laws if they secure alternative sources of funding. He also pointed out that similar limitations have been upheld by courts in other contexts like school curricula and family planning services funded by the government.