Agency Backlog Can Slow a Deal, But It Doesn’t Have to Derail It

As agencies spend more time on transaction review and approval requirements, backlogs are becoming more common. Across federal, state, and local agencies, attorneys increasingly face extended processing times for licenses, approvals, filings, and adjudications that are critical to client transactions and operations.

Attorneys can’t eliminate agency backlogs, but they can meaningfully reduce risk and improve outcomes through deliberate strategy and advance preparations and with practical, attorney-driven tactics for managing agency delay.

Backlogs as Risk

Agency backlogs create more than scheduling inconvenience. They can jeopardize deal timelines, endanger financing, delay market entry, trigger contractual defaults, and expose clients to compliance risk when approvals don’t arrive on schedule.

Accordingly, attorneys should approach agency backlogs as a form of regulatory risk that requires active management. That mindset informs the following tactics:

Negotiate realistic inside and outside dates. Counsel should allow for delays common to the jurisdiction and license at issue when negotiating inside and outside dates in purchase agreements and other transaction documents.

Attorneys must balance advocating for a client’s preferred timing with acknowledging the practical realities of regulatory delay. Local knowledge can be pivotal in these circumstances. When attorneys are acting for a larger, even national, buyer and negotiating with seller’s local counsel, they should evaluate local counsel’s view of potential delays closely.

Counsel should tie inside dates to milestones that the parties can control—such as submission of complete applications—rather than optimistic assumptions about agency turnaround. Outside dates, meanwhile, should provide sufficient runway to account for foreseeable delays. consider referencing information from knowledgeable local sources while preserving leverage if approvals become unreasonably protracted.

Counsel can further protect clients by negotiating automatic extensions tied to agency inaction, clear cooperation covenants regarding follow-ups with regulators, and targeted termination rights that allocate delay risk in a commercially sensible way.

Use proactive communication ahead of deadlines. Effective attorneys can leverage agency contacts, or local contacts with agency contacts, to enhance proactive communications and hopefully shorten agency response times.

One of the most effective tools for managing agency delays is early, proactive engagement with known contacts, well before statutory or contractual deadlines loom.

Client cost concerns may cause important applications to be handled “in-house” and rising to outside counsel’s attention only when they’ve been languishing in regulatory limbo well past their due time. At that point, it may be too late to leverage contacts to expedite review.

Proactive communication with known contacts avoids this problem several ways. It puts the matter on the agency’s radar early. It allows counsel to identify potential deficiencies or issues before they harden into formal delays. And it creates a contemporaneous record that counsel acted diligently, which can be critical if timelines are contested later.

Ensure all communications are in writing—or promptly confirmed in writing. In the context of agency backlogs, written communication isn’t merely good practice—it’s essential risk management.

Agencies are unique environments. Personnel change, files move, and institutional memory can be short. Oral conversations, no matter how constructive, often disappear into the ether unless they are documented.

Attorneys should adopt a default rule: If it matters, it should be in writing. This principle applies in several ways:

• Primary communications: Whenever possible, substantive communications with agency staff—status requests, responses to questions, clarifications, and submissions—should be through email or written
  correspondence.
• Confirming phone calls: When a phone call is necessary or productive, counsel should follow up promptly with a written confirmation summarizing the discussion. A simple email stating, “Thank you for taking the time to speak today. As discussed …” can memorialize commitments, timelines, or next steps.
• Preserving interpretive guidance: Agencies sometimes provide informal interpretations or practical guidance orally. If counsel intends to rely on that guidance, it should be confirmed in writing, even if only to document that the advice was given.

Written documentation creates continuity if an agency contact changes. It allows matters to escalate to supervisors if needed. It provides evidence of diligence if delay later becomes an issue in negotiations, litigation, or enforcement. And it enables counsel to give clients clear, defensible advice based on an objective record.

Identify responsive contacts—and include them consistently. A common source of frustration with backlogged agencies is uncertainty about who exactly is responsible for a task or situation. Applications may pass through multiple hands, and generic inboxes often yield slow or inconsistent responses.

One of the most practical steps attorneys can take is to identify the most responsive and relevant agency contacts early and include them consistently on communications. Ideally, the attorney has maintained a contact or contacts over time and can return to a known individual at the agency. This requires some upfront effort but pays dividends over time.

Additional Considerations

Attorneys also should consider several complementary strategies:

• Front-load submissions. In a backlog environment, incomplete or unclear filings are costly. Investing time upfront to ensure submissions are thorough, error and omission free, internally consistent, and well-organized can save months later.
• Anticipate delays in deal documents. Where approvals are required, transaction documents should account realistically for agency delay, including flexible outside dates, cooperation covenants, and clear risk allocation.
• Educate clients early. Clients often underestimate agency timelines. Setting realistic expectations at the outset—and explaining the steps counsel is taking to manage delay—helps maintain trust when backlogs surface. This is especially true where licensure or agency approval timelines are somewhat or completely open-ended. Both parties need to understand what that can mean for the transaction.
• Know when to escalate formally. In extreme cases, statutes, regulations, or case law may provide mechanisms to compel agency action. While such steps should be used judiciously, counsel should be aware of them and prepared to advise clients.

Agency backlogs are unlikely to disappear in the near term. By treating agency delays as a predictable risk and adopting structured, repeatable tactics, attorneys can better protect their clients’ interests, preserve flexibility, and navigate even the most congested regulatory pipelines with confidence.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Josh Freemire is a health regulatory and compliance attorney at Epstein Becker Green, where his clients include private equity companies, health care investors, and more.

Dan Fahey is a health care M&A attorney at Epstein Becker Green where he counsels clients on transactions, corporate governance, and regulatory compliance matters.

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