What do the daily articles reporting federal agencies being radically downsized mean to eDiscovery professionals? Federal enforcement activity is down 37% in the first half of 2025. Will that create a compliance free-for-all and take the wind out of corporate governance initiatives? Will states step in to protect businesses and consumers?

This is my chosen “2025 eDiscovery Trend” for my 3 minutes of fame on David Horrigan’s “The e-Discovery State of the Union” panel next week at Relativity Fest 2025. Even I cannot talk fast enough to do justice to this trend, no matter what court reporters have accused me of. So I pulled together my research material and added some take-away opinions for you. My active client matters have left me little time for blogging and research, so my thanks to Relativity for giving me a nudge to publish. If you are going and want to talk shop, show my your latest tech or have an eDiscovery bonfire grab a time slot here. (yes, the prior link was bad so there are still slots open).

The downsizing mandates include the “10-to-1” deregulatory initiative, which mandates the elimination of 10 existing regulations for every new regulation implemented as well as the “Ensuring Lawful Governance” executive order directs agencies to prioritize the repeal of regulations potentially in conflict with a specific list of recent Supreme Court decisions that have restricted the power of regulatory agencies. It is clear that federal agency and regulator scope and authority will be pushed back for at least the near future.

Staff and funding reductions in Federal regulatory agencies

Agency Personnel Reduction Guideline/Rule Rollbacks Affected Corporate Verticals Potential Impact Primary Source Link
SEC (Securities and Exchange Commission) ↓ 15% staff (5,000 → 4,200); ↓ contractors (2,000 → 1,700) Staff reassigned from enforcement to contract review Financial services, investment firms, public companies Reduced enforcement may increase compliance risk and investor losses; regulatory cost cap aims for net savings https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-prosperity-through-deregulation/
IRS (Internal Revenue Service) Up to ↓ 50% enforcement staff; ↓ 20% overall Treasury staff Reduced audit and enforcement capacity Tax advisory, accounting, high-net-worth individuals Electronic refund transition expected to cut costs and improve efficiency; enforcement cuts may reduce revenue collection https://www.irs.gov/newsroom/irs-to-phase-out-paper-tax-refund-checks-starting-with-individual-taxpayers
FDA (Food and Drug Administration) Significant staff attrition; leadership resignations Delays in drug/device reviews, missed meetings Biotech, pharma, medical devices Funding instability and review delays may slow innovation and increase costs for biotech firms https://www.congress.gov/committee-report/119th-congress/house-report/272/1
DOL (Department of Labor) Staff reductions not quantified; rule repeals ongoing Repeal of 60+ workplace rules (OSHA, FMLA, DEI, wage protections) Manufacturing, healthcare, service industries Rollback of protections may reduce compliance costs but increase worker risk and litigation https://www.govinfo.gov/content/pkg/FR-2025-09-04/pdf/2025-16920.pdf
CFPB (Consumer Financial Protection Bureau) Budget cut to $249M; staff reductions implied Withdrawal of 67 guidance documents; rollback of nonbank oversight Fintech, crypto, credit reporting, lending Overdraft rule expected to save consumers $5B annually; reduced oversight may increase financial risk https://www.consumerfinance.gov/about-us/newsroom/cfpb-closes-overdraft-loophole-to-save-americans-billions-in-fees/
FTC (Federal Trade Commission) ↓ 10% workforce (approx. 1,100 employees); 94 departures earlier in year Deferred rule compliance deadlines; cuts focus on deceptive billing, robocalls, AI fraud, labor market abuses Consumer protection, digital platforms, AI, labor markets Budget constraints; reduced capacity for rulemaking and compliance oversight https://www.allaboutadvertisinglaw.com/2025/05/cut-to-the-chase-ftc-trims-staff-but-keeps-enforcement-focus.html
DOJ (Department of Justice) ↓ 5,093 positions (4,500 vacant + 1,500 from FBI); ATF ↓ $468M; DEA ↓ $112M Withdrew 16 published and 38 planned rulemakings; terminated 373 grants worth $820M Law enforcement, criminal justice, immigration, firearms, community programs Loss of $500M in grant balances; reduced enforcement and regulatory capacity https://tfppwire.com/doj-eliminates-4500-jobs-plans-to-cut-1500-from-the-fbi/

🏦 Financial Institution Oversight Reductions

Source: SBS CyberSecurity – The Real Impact of Downsizing Financial Regulators

  • Agencies Affected: FDIC, NCUA, OCC, Federal Reserve.
  • Staff Reductions:
    • FDIC: ↓ 9% workforce.
    • NCUA: Considering ↓ 16%.
    • OCC: Laid off 75+ probationary employees.

Impact on Federal regulatory enforcement

The sudden plunge in regulatory enforcement in 2025 cannot be overstated. Beyond the numbers, eDJ has spoken with counsel and practitioners who have seen aggressive inquiries wither on the vine. Previously, such public findings of malfeasance would have been seen as zealously upholding public trust. Off the record, some regulators have expressed reluctance to make regulatory enforcement announcements that may impact important companies. “Don’t be the nail that sticks out,” seems to be a common response to the changes.

🏛️ Federal Enforcement Decline

Source: Wolters Kluwer Regulatory Violations Intelligence Index

  • Key Findings:
    • Federal enforcement actions dropped 37% in H1 2025.
    • Competition-related penalties fell 97% in dollar value.
    • Consumer protection violations down 22%.
    • Financial offenses dropped 53% in volume and 24% in penalties.
    • Despite cuts, the FTC continues to prioritize enforcement over rulemaking.
    • FTC focus areas include:
      • Deceptive billing and cancellation practices (e.g., action against Uber).
      • Robocall fraud: 180 actions under Operation Stop Scam Calls.
      • Consumer protection for elderly, servicemembers, and veterans.
      • AI-related fraud: Enforcement under Operation AI Comply.
      • Children’s privacy and digital harms.
      • Made in USA labeling violations.
      • Labor market abuses via a new cross-agency Labor Task Force.

Rise in State enforcement and civil litigation

Many states may respond with increased enforcement actions. They cannot replace the common federal regulatory framework, resources or jurisdiction. That leaves companies facing a patchwork of divergent state regulations, response requirements and production formats. Instead of a single partner managing a particular compliance docket, companies may have to resort to state level representation.

Companies and individuals may lose confidence in federal agencies and elect direct litigation for perceived violators. That may be good for law firms and discovery providers, but it will raise legal overhead and oversight complexity. The uncertainty adds ‘friction’ to compliance efforts in a very real sense. Courts now rely more on statutory interpretation, opening new legal strategies and increasing litigation risk for financial institutions.

State enforcement actions:

“ State Antitrust Enforcement Venue Act 28 U.S.C. § 1407 (2022) (“Act”) has enabled state attorneys general to fight to keep antitrust cases on their own turf, forcing companies to defend against antitrust lawsuits based on very similar facts in multiple jurisdictions. States have been successful under the Act thus far.”

  • State Attorneys General (AGs) have significantly increased enforcement in areas traditionally overseen by federal agencies, including:
    • Consumer protection
    • Antitrust
    • Environmental regulation
    • Artificial intelligence (AI)
    • Privacy and data security
    • Healthcare and financial services
  • States like California, New York, and Texas are leading the charge, often forming multi-state coalitions to pursue coordinated actions

eDiscovery planning in an uncertain regulatory environment

GC’s will be tempted to let off the gas on regulatory compliance and response initiatives. Practitioners should track relevant state and international enforcements to provide realistic impact assessments to support monitoring and discovery capabilities. Companies facing reorganization or RIFs should review employee change workflows to preserve data and key institutional knowledge. No one wants to tell a regulator that you do not have requested answers because you just cut senior management.

  • Corporate legal impact:
    • Regulated verticals now face a patchwork of state-level enforcement, increasing compliance complexity.
    • Companies must invest in agile regulatory change management systems to adapt.
    • Longer gaps between examinations increase risk exposure.
    • Reduced IT and compliance spending may weaken cybersecurity.
    • External audits become critical for maintaining oversight and stakeholder confidence.
    • Perception of reduced compliance needs may cut eDiscovery and Cybersecurity prioritization and budgets.
    • The rollback of federal oversight is increasing scrutiny on litigation finance, raising concerns about funder influence and disclosure mandates.
  • Norton Rose Fulbright – 2025 Annual Litigation Trends Survey (Sept 2024) Findings:
    • 73% of legal professionals expected greater uncertainty in regulated industries post-Chevron.
    • Regulatory proceedings had doubled year-over-year up through 2024.
    • 56% say pre-trial settlements are harder to reach due to aggressive plaintiffs and unclear enforcement standards.
    • Legal departments are expanding, litigation budgets are rising, and AI tools are increasingly used to manage risk.

References

[1] SEC Buyout Program and Other Initiatives Lead To Drop in Enforcement …

[2] Treasury plans to cut up to 50% of IRS enforcement staff, 20% of other …

[3] Measuring the Impact of FDA Personnel Cuts in 2025

[4] U.S. Department of Labor’s July 2025 Regulatory Rollback: Implications …

[5] June 2025 Regulatory Update: CFPB’s Historic Rollback & More

[6] Legal & Regulatory Compliance – Harvard Business Law Review (HBLR)

[7] 2025 Annual Litigation Trends Survey … – Norton Rose Fulbright

[8] Regulatory Rollback: CFPB’s Withdrawal of Informal Guidance Sparks New …

[9] eDiscovery Statistics By Market Size and Facts (2025)

[10] Compliance rollbacks and state actions on regulations: Navigating the …

[11] Legal & Regulatory Compliance – Harvard Business Law Review (HBLR)

[12] 2025 Annual Litigation Trends Survey … – Norton Rose Fulbright

[13] Regulatory Rollback: CFPB’s Withdrawal of Informal Guidance Sparks New …

[14] eDiscovery Statistics By Market Size and Facts (2025)

[15] Cut to the Chase: FTC Trims Staff but Keeps Enforcement Focus

[16] DOJ Eliminates 4,500 Jobs, Plans to Cut 1,500 From The FBI

[17] DOJ Funding Update: A Deeper Look at the Cuts – Council on Criminal Justice

[18] Department of Justice; Withdrawal of Rulemaking Actions – Federal Register

[19] 2025 Mid-Year Review: State AGs in a New Era | Regulatory Oversight

[20] The State AG Surge: The Future of Enforcement | FTI

[21] Wolters Kluwer analysis reveals federal regulatory enforcement plummets …

[22] States Ramping Up Regulations Amid Federal Pullback – Forbes

[23] Compliance rollbacks and state actions on regulations: Navigating the …

Greg Buckles wants your feedback, questions or project inquiries at Greg@eDJGroupInc.com. Book a free 15 minute ‘Good Karma’ call if he has availability. He solves problems and creates eDiscovery solutions for enterprise and law firm clients.

Greg’s blog perspectives are personal opinions and should not be interpreted as a professional judgment or advice. Greg is no longer an investigative journalist and all perspectives are based on best public information. Blog content is neither approved nor reviewed by any providers prior to being published. Do you want to share your own perspective? Greg is looking for practical, professional informative perspectives free of marketing fluff, hidden agendas or personal/product bias. Outside blogs will clearly indicate the author, company and any relevant affiliations. 

Greg’s latest nature, art and diving photographs on Instagram.

Greg Buckles wants your feedback, questions or project inquiries at Greg@eDJGroupInc.com. Book a free 15 minute ‘Good Karma’ call if he has availability. He solves problems and creates eDiscovery solutions for enterprise and law firm clients.

Greg’s blog perspectives are personal opinions and should not be interpreted as a professional judgment or advice. Greg is no longer an investigative journalist and all perspectives are based on best public information. Blog content is neither approved nor reviewed by any providers prior to being published. Do you want to share your own perspective? Greg is looking for practical, professional informative perspectives free of marketing fluff, hidden agendas or personal/product bias. Outside blogs will clearly indicate the author, company and any relevant affiliations. 

Greg’s latest nature, art and diving photographs on Instagram.

 

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