Judge Orders NEH to Hold Back Portion of Restored Grants for Possible Attorney Fees

The ruling preserves a portion of restored funding while lawyers’ fee request is pending; the government is appealing the judge’s order to reinstate the grants.

White House senior adviser Elon Musk walks to the White House after landing with President Donald Trump in Marine One on the South Lawn of the White House on March 9, 2025. Samuel Corum/Getty Images

A federal judge in New York on Aug. 5 ordered the National Endowment for the Humanities (NEH) to temporarily hold back 2.5 percent of restored grant money so that lawyers for the winning plaintiffs can later seek their fees.

The case goes back to April 2025, when the Trump administration canceled more than 1,400 grants, adding up to more than $100 million in congressionally appropriated funds awarded to scholars, writers, research institutions, and other humanities organizations.

The move was part of a cost-cutting drive that tech billionaire Elon Musk was leading at the Department of Government Efficiency (DOGE). He left the role in May 2025.

The grantees sued, and on May 7, U.S. District Judge Colleen McMahon ruled that DOGE’s termination of hundreds of humanities grants last year was unconstitutional and involved “blatant” discrimination. She ordered the grants reinstated.

She ruled that the terminations violated the First and Fifth Amendments and that DOGE had no legal authority to cancel the grants.

“What mattered to DOGE was not whether a grant lacked scholarly merit. … What mattered was that the grant concerned a ‘minority group,’” she said.

Attorneys for the grant recipients who belong to the Authors Guild later asked the court to set aside money for their fees.

They cited the common-fund doctrine, a legal principle that allows lawyers who win a case that benefits a whole group of people to be paid a reasonable fee out of the money they recovered for that group. The idea behind the doctrine is that without setting aside some kind of reserve, the individuals who benefit from a lawsuit could receive the money without helping to pay for the legal work that made it possible.

The lawyers asked the court to temporarily freeze 15 percent of the funds that NEH is about to pay the grantees.

The government opposed the request, saying the court never created a traditional common fund and that using the money for fees would violate appropriations rules.

In her new decision, McMahon rejected the government’s reasoning.

The plaintiffs here did not ask NEH “to reprogram appropriated money from one agency purpose to another. They ask the Court to allocate proportionately the cost of obtaining a litigation-generated benefit among the persons who receive that benefit – the very allocation authorized by the common-fund doctrine,” she said.

The judge rejected the proposed 15-percent reserve as excessive and issued a separate order directing the NEH to hold back 2.5 percent of the restored grant money for possible lawyers’ fees. A federal appeals court approved the same 2.5 percent figure for a common-fund recovery in a prior case, she added.

The government’s appeal of McMahon’s May 7 ruling that restored the grants remains pending in the U.S. Court of Appeals for the Second Circuit.

Guy Birchall contributed to this report.