The legal Services Corp. threaten yesterday to cut off a crucial $420,720 grant to the embattled Antioch School of Law here unless the school's governing body is given back its authority to run the institution and the two fired codeans are restored to their jobs.

The school's parent institution, Anitoch University of Yellow Springs, Ohio, has offered to renew the authority of the law school's board of governors. But the university's president, William M. Birenbaum, said yesterday that the fired husband-and-wife codeans, Edgar and Jean Cahn, will not be rehired.

Legal Services, a private corporation established by Congress in 1974, provides $300 million in legal aid for the poor in 319 programs throughout the country.

Legal Services said it would extend the $35,060-a-month grant, which was schedulted to expire today, until Feb. 29, giving the university another four weeks to try to negotiate conditions to continue the grant.

The grant represents 19 percent of the law school's $2.2-million annual budget. But its chief significance lies in the fact that it finances the program that makes Antioch the nation's foremost practitioner of a clinical legal education, where students routinely assist their professor's in providing legal aid for D.C. indigents.

Although the university has pledged to continue the unusual form of legal education the Cahns and several students at the Northwest Washington school have voiced fears that an end to the Legal Services grant also would mean an end to legal aid for the poor.

Legal Services said in a letter to the law school's acting dean, Joseph Meng, that if the governing body is not given back its authority and the Cahns are not rehired, then "the corporation will strongly consider ending our relationship."

The university trustees fired the Cahns earlier this month and limited the law school's governing board to fund-raising activities after the Cahns refused to turn over money from the law school operation to the university's central treasury in Yellow Springs.

The firings came shortly after the Cahns lost a lawsuit questioning the university's authority over the law school and its 422 students. The Cahns have contended that the financially troubled university would divert money intended for the law school's use to solve financial problems involving the whole university.

Clint Lyons, the Legal Services offical who wrote the letter to Meng, said that with the Cahn's firing and the curbs placed on the governing board the law school's "substance, indeed its very essence, has been gutted" by the university.

"It seems therefore that the only thing the university brings to this relationship is the liability of its financial status." the letter said.

Birenhaum said that for an outside group to require the rehiring of the Cahns "would be an unprecedented breach of the traditions of higher education in our country," he said the reference to the school's financial status "sounds like a gratuitous remark" and noted that an anonymous donor recently established a $2-million trust fund for Antiochs use.

Edgar Cahn said the Legal Services' demands were "the kind of principled action we'd hoped they'd take." He added that now "its really a matter of whether the university wants to save the law school" by acceding to Legal Services' stipulations.