Is the letter from the Ausländerbehörde making a standard request for you to produce a passport as part of the application process? If so, you should point out to them that it is not possible for you to obtain a passport and make reference to the letter from the embassy.
If, however, they make reference to your specific situation and are requesting a passport, then you may need to obtain a new letter from the embassy. It is difficult for me to assess without having any information on the request of the Ausländerbehörde but I presume they wish to see if you are now able to obtain a passport. Is it possible that the reasons you were unable to obtain a passport in 2019 have changed? For example, changes in the country’s administration or technical ability to produce passports for their citizens residing in Germany? Then the Ausländerbehörde would need current confirmation from the embassy that they still cannot issue you with a passport.
I cannot advise you on whether to contact a lawyer or not. But I advise you first to clarify the above.