Norman S. Rosenberg still winces when he hears the word "deinstitutionalization."

The policy, viewed by much of the public as a sort of mindless emptying of the nation's mental hospitals and frequently blamed for the increase in the number of homeless "street people," is, at least in part, the result of his work as director of the Mental Health Law Project.

But Rosenberg won't accept the blame. The problem, he says, is that only half of MHLP's courtroom victory has been translated into effective action.

"We won two things in our 1974 lawsuit against St. Elizabeths Hospital," he said last Wednesday after winning a $2 million grant from the MacArthur Foundation. "The first was a ruling that the mentally ill had the right to be treated in 'the least restrictive setting.' The other was that the District of Columbia and the federal government had to provide services in the community to meet the needs of these people. It's clear that they haven't done all they should do, and we continue to push for them to do more."

But Rosenberg expects that much of that push will now be outside the courtroom. "Shifts in the nation's political and economic climate have diminished the effectiveness of class-action lawsuits as a means of achieving reform," he said. "We must pursue initiatives that combine legal action with other strategies."

The MacArthur grant -- not one of its famous no-strings "genius" awards -- cited MHLP's work on behalf of people who "not only are prisoners of their mental illness {but} also isolated by society's prejudices" against the mentally ill.

Rosenberg says his project's new emphases will include advocacy, education and "efforts to translate courtroom victories into systematic reform."

He particularly cited the work of Washington's Green Door, and even brought that project's director, Judith Johnson, along for the interview.

The Green Door, at 1623 16th St. NW, is a client-run advocacy center, training school and "social club" for mental patients who do not need to be kept in hospitals but who are not yet ready to function on their own.

"What frustrates me is that people decide that the choices are between St. Elizabeths and the streets," said Johnson, who described her agency as an alternative to homelessness. "We take people who are ready to leave St. Elizabeths but who may need help keeping on their medication or otherwise adjusting to life on the outside. We give them vocational training and help them find jobs.

"We also go to the shelters and see if there are people who could use our help. We have brought in 50 people from the shelters so far this year and gotten them jobs."

The Green Door will not benefit from MHLP's MacArthur grant, except as it benefits from the general advocacy on behalf of the mentally ill. But Rosenberg says it is precisely the sort of agency that is needed to make deinstitutionalization work.

"So much of the media understandably focuses on deinstitutionalization having failed," he said. "You get a sort of chicken-and-egg situation. We say the community services should be there, and people say if they're not there, what makes us think they'll ever be there.

"Well, the kind of dynamic you have at the Green Door shows that it really is do-able if you take a small fraction of the $85,000 per patient we're spending at St. Elizabeths and shift it into the community-based programs, you could easily provide adequate services for these people. Public institutions take 75 to 85 percent of the public mental health dollars spent in this country and serve about 20 percent of the people who rely on public sector services.

"Green Door clients are clients of St. Elizabeths Hospital. If the Green Door weren't servicing them at $6,000 a head, they'd be at St. Elizabeths for $85,000 a head.