When President Reagan failed to veto the $308 million appropriation for the Legal Services Corporation last month, many critics of that agency were deeply disappointed. It was particularly painful since the bill was $58 million over the president's budget and did not contain reforms the president himself had demanded.

What that means is that Legal Services has survived an eight-year effort by the president to phase it out of business. But the agency's troubles are not over. Its role and activities are certain to be brought up by critics in the new Congress next year.Legal Services Corporation (LSC) is a quasi-independent government agency established in 1974 to provide legal help to poor people in tenant-landlord disputes, divorces, and other such problems.

Despite rules confining LSC to dealing with individual poor people, many of the agency's radical lawyers immediately began to operate as if Legal Services were an engine for social reform.

They used tax money to push many political and social causes including abortion, rent strikes, boycotts, illegal picketing, and suing other federal agencies. They organized people into political pressure groups, and backed programs to redistribute income and oppose capitalism.

Utah's Sen. Orrin Hatch, after a study of LSC, said it has "systematically violated the law which prohibits the use of federal funds for partisan political activities and which bars their involvement in orchestrating grass roots campaigns."

Although President Reagan has appointed the Legal Services director and most of its board of directors, agency members have lobbied Congress to override budget and other recommendations by LSC's own officers. Congress has looked the other way on abuses by Legal Services.

Enough Democrats and Republicans in Congress have been upset by the agency that they would have upheld a veto of the LSC budget, even though they were outnumbered in the simple majority vote on the issue.

The reforms sought by President Reagan were not unreasonable. They would have required: (1) competitive bidding for grants to force local legal-aid agencies to prove they are really serving poor people's legal needs; (2) careful record keeping by grantees, who would have to keep track of their activities and demonstrate compliance with restrictions on the use of LSC funds; and (3) elimination of "middleman" programs that focus on political activities and lobbying instead of direct legal help for the poor.

These reforms should be brought back in the next Congress and the agency be made to comply with the law - despite the views of some lawmakers who don't mind seeing Legal Services on their side of socio-economic issues even if the law is being violated.