The Launceston Community Legal Centre is running "on the smell of an oily rag" and could be forced to cut a staff member if the federal funding shortfall for the state's legal assistance sector continues beyond 2020.
Launceston CLC chief executive Nicky Snare's comments come after the Law Society of Tasmania expressed dismay at the state of the sector, saying it was experiencing "a real crisis".
The National Partnership Agreement provides funding for legal assistance organisations - such as legal aid commissions and CLCs - in each state and territory.
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But when the NPA was introduced in 2015, Tasmania was one of two states to wear a funding cut, the other being South Australia.
Since then, the Hodgman government has been making up the shortfall with year-to-year funding of its own.
But with the NPA due for review before July 1, 2020, the state's legal assistance sector is mounting a fight-back against the federal government.
Ms Snare said the NPA had seen legal assistance services in Tasmania "totally slashed".
"It's just such short-sightedness [from the federal government]," Ms Snare said. "You can prevent a lot of stuff from even going to court if people get assistance early on."
She said the Launceston CLC was in need of an additional solicitor but instead was facing the prospect of having to cut a frontline position.
"If [the federal government] reduces [funding] again, it will be catastrophic in my view."
A spokesperson for acting federal Attorney-General Greg Hunt has said the new national mechanism for legal assistance funding would provide "ongoing support" post-2020 - but has not confirmed whether Tasmania's funding would be restored to previous levels.
State Attorney-General Elise Archer said the Hodgman government was a "strong supporter" of the legal assistance sector and would "work with the Commonwealth toward a positive outcome for the sector as a matter of priority".
"In addition to covering the shortfall in Commonwealth funding, the current [state] budget commits an additional $2 million over four years to the Legal Aid Commission to meet an increased demand on their services," Ms Archer said.
"In fact, due to our government's continual and additional commitments, the Legal Aid Commission's revenue remains higher than it has been for many years."
Tasmanian Labor senator Helen Polley said four Tasmanians were being turned away from frontline legal aid services each day over the last four years "because of a lack of federal and state funding".
"The legal system in Tasmania is suffering and unable to operate at the level required to ensure the majority of Tasmanians have the opportunity to seek fair and reputable legal advice," she said.
"This just is not fair."
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