Attorneys, clients feel impacts of government shutdown

For some attorneys who regularly interact with federal agencies, the federal government shutdown has made it harder to get answers on issues involving permits, tax issues and funding.

Jarrod Lodholt, a partner in Ice Miller’s Government Affairs & Regulatory Law Group, said the shutdown is affecting every contractor, city, county and transportation authority that has dealings with a federal agency.

“When the government shuts down, the people you interact with aren’t there,” Loadholt said.

The nonpartisan Congressional Budget Office issued a report Oct. 29 that estimated possible economic outcomes from the shutdown, depending on its length.

The CBO estimated that under the lapse in appropriations, about 600,000 employees would be forced to work without pay and about 650,000 employees would be furloughed, on average. Politico reported the Trump administration has actually placed about 750,000 federal workers on furlough.

So, depending on the federal agency an attorney is calling or emailing, there may be limited staff members available to pick up the phone or respond to emails.

Kendall Schnurpel, an attorney with Krieg DeVault, said the shutdown has significantly impacted him, with most of his government interactions involving communication with the Internal Revenue Service.

“We’re all in the same boat,” Schnurpel said of he and his colleagues.

Already down

The nation’s longest government shutdown occurred during President Donald Trump’s first term, a 35-day stoppage that started in December 2018 and stretched into early 2019, over his demands to build a U.S.-Mexico border wall.

Schnurpel said if there’s a bright side to this as an attorney, it’s that he went through that 2018-2019 shutdown and at least had some reference point on what happened and an understanding of the importance of planning ahead with clients.

He acknowledged that a key difference this time is that there had been staffing cuts leading up to the shutdown and resulting furloughs.

“We were already dealing with frustrations. This just hiked it up big time,” Schnurpel said.

The cuts have occurred across multiple federal agencies, both through DOGE efforts and targeted reductions in force announced after the shutdown began Oct. 1.

The nonpartisan Partnership for Public Service has tracked those staffing cuts.

The organization announced that, as of Oct. 23, its data indicated that more than 211,000 civil servants had left the workforce since January.

That number includes the nearly 4,000 terminated through reductions-in-force initiated during the shutdown, which the Office of Management and Budget announced in October.

“Across the Cabinet agencies, the departments of Defense, Agriculture and the Treasury have seen the largest workforce reductions in terms of scale, each having seen more than 20,000 reductions since the beginning of the year. This rapid loss of institutional knowledge and operational capacity has already begun to affect how, and how well, the government functions,” Partnership for Public Service said on its website.

The American Federation of Government Employees represents federal workers and is suing the Trump administration over the firings.

Schnurpel said one issue he’s run into is having difficulty reaching someone on the IRS tax practitioner hotline.

Loadholt noted there had already been a number of disruptions to government grant funding programs for clients, as well as reductions in the federal workforce this year in the months before the shutdown.

He said if the shutdown drags on, it’s possible some furloughed federal employees won’t come back to their jobs.

Less impact

As an environmental attorney, Will Gardner typically deals with the U.S. Environmental Protection Agency the most and occasionally with the Department of Energy

Gardner, an Indianapolis partner in Taft Stettinius & Hollister LLP’s Environmental Practice Group, said the shutdown has not had a huge effect on him so far.

While some individual project meetings with the EPA have been pushed back, Gardner said he has still been able to interact with the agency, depending on the issue that requires discussion.

He acknowledged that it’s important for attorneys to be able to communicate with federal agencies and critical for their practices and clients’ projects.

Given the uncertainty on how long the shutdown will last, it does cause problems for the private sector when there are projects that require EPA approval, Gardner said.

The Taft attorney said part of his work involves permitting for large-scale energy and manufacturing projects.

“Permits can take months, years, to obtain,” Gardner said, adding “Those permitting timelines are already very lengthy.”

Larry Tomlin, a partner at Amundsen Davis, said he deals with the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency, all agencies that are not funded through congressional appropriations.

“As far as those agencies, it’s largely been business as usual,” Tomlin said, adding that his practice has been largely unaffected so far by the shutdown.

Tomlin also interacts with the Department of Justice, which is funded through Congress and has furloughed some non-essential staff members.

Return to normalcy?

The government shutdown will end at some point and federal employees that were furloughed will be able to return to their positions.

When that happens, it remains to be seen how quickly each agency can handle their work backlogs.

Gardner said after the 2018-2019 shutdown ended, there was about a month’s delay for projects as the EPA worked to deal with its backlog.

He said several months of delays could alter investments and projects his clients depend on.

Schnurpel said he thinks everyone is aware of the government shutdown and what it entails.

But he conceded that his firm’s clients don’t live in the world he does as an attorney.

“It’s incumbent on us to communicate and set expectations,” Schnurpel said.

Loadholt said if there’s not movement to end the shutdown during the first week of November, it’s possible it could drag out until the Thanksgiving holiday.

“I think we’ll see the impacts go beyond lawyers like me that work with the government,” Loadholt said.•