Funding for Courts Runs Out, Limiting Operations

Action: The Federal judiciary announced on October 17 that it had run out of funding because of the government shutdown and has ceased most operations except for those “. . . necessary to perform constitutional functions under Article III, activities necessary for the safety of human life and protection of property, and activities otherwise authorized by federal law.” Staff performing these functions will not be paid during the shutdown. The judicial branch has approximately 30,000 employees.

Trusted Insights for What's Ahead^®

• The level of judicial operations during the shutdown will vary across courts. A Supreme Court spokesperson stated that it will continue to hear oral arguments, process case filings, and issue opinions and orders.
• According to press reports, the Justice Department has, in several cases, asked judges to pause cases involving the government because of a reduction in Department resources during the shutdown, which judges have granted in some cases. (However, a large number of Department attorneys are still working during the shutdown.)
• Some observers have noted that the uncertainty may lead some litigants to settle cases involving the government rather than deal with the ambiguity. This could also apply to suits between private parties. However, entering these private agreements in court and formally ending or dismissing the cases could also be delayed given reduced judicial operations.
• The Federal judicial branch receives annual appropriations from Congress, which in fiscal year (FY) 2025 totaled about $9.4 billion. Most funds ($8.3 billion in FY 2025) support the operations of the twelve regional courts of appeals and the 94 district courts. Additional funds support the US Supreme Court, US Court of Appeals for the Federal Circuit, US Court of International Trade, and other functions. The judiciary also receives funds from payment of court costs in certain cases.
• What this means for business: CEOs should expect delays in legal proceedings, which could be significant and may impact business operations. These delays will likely continue even after the shutdown concludes as courts address a backlog of cases. CEOs should proactively assess legal exposure, communicate potential delays to stakeholders, evaluate any brand and financial repercussions, and adjust timelines or strategies to mitigate risks from stalled court and regulatory actions.