Also In This Issue What You Don't See • Speed Bumps On The Exit Ramp • Graphic: K Street On The Campaign Trail

By Peter H. Stone and Bara Vaida, National Journal
© National Journal Group Inc.
Friday, March 21, 2008

If Charles Dickens were around to train his eye on Washington and its lobbyists -- as the novelist did 150 years ago on London and Paris -- he might think of reprising his famous opening line from A Tale of Two Cities: "It was the best of times, it was the worst of times..."

On one hand, lobbyists have never had it better -- business on K Street is booming. Once all the numbers are tallied, federal lobbying revenue is expected to come in near $2.9 billion for 2007, another record year. And that amount captures only income that must be disclosed under federal law; clients spent at least hundreds of millions of dollars more on grassroots lobbying, public relations, consulting, strategic advice, and many other forms of advocacy that make up the Washington lobbying sector but aren't reported.

Yet for all the money being made, lobbyists and lobbying firms are now targets as never before. They are still adjusting to the aftershocks from high-profile scandals that sent former lobbyist Jack Abramoff and former Reps. Bob Ney, R-Ohio, and Randy (Duke) Cunningham, R-Calif., to prison for their roles in fraud and corruption cases. In 2007, Congress passed tough reforms that cracked down on many of K Street's most hallowed practices. Gone are the days when lobbyists could buy meals and gifts for lawmakers and their staffers and could finance entertainment, corporate jets, and junkets. Lobbyists and their firms must now file three times the number of reports with Congress than in years past. Even more ominous, the new law exposes lobbyists and their employers to potential prison time and hefty fines if they fail to follow the regulations.

As if that were not enough, the lobbying class -- long derided outside the Beltway as the scourge of Washington -- is a convenient punching bag in the presidential campaign. After winning the Wisconsin primary on February 19, Sen. Barack Obama, D-Ill., declared in a victory speech, "Washington has become a place where good ideas go to die... because lobbyists crush them with their money and influence."

Obama has refused all campaign donations from registered lobbyists, although the relatives of federally registered lobbyists, state lobbyists, and people who work for lobbying firms (but aren't registered as lobbyists) have donated money to his campaign. Moreover, lobbyists are serving in the Obama campaign as policy advisers and other key players.

In an August speech on the Senate floor, presumptive Republican presidential nominee John McCain of Arizona said, "Only by breaking the iron triangle of big money, special-interest lobbyists, and the legislation they buy can sovereignty be restored to the American people." McCain's website notes that he has battled the "revolving door by which lawmakers and other influential public officials leave their posts and become lobbyists for the special interests they have aided."

Yet, McCain has more lobbyists working as money bundlers -- individuals who gather checks from many donors and deliver them to the campaign -- than has either of his Democratic rivals. He also has lobbyists among his top campaign advisers.

Democratic presidential candidate Hillary Rodham Clinton, meanwhile, has raised the highest dollar total from lobbyists and counts K Street veterans among her top campaign aides. But the senator from New York has also joined in the rhetorical bashing, albeit in more-muted language. Clinton's recent campaign advertisements said, "It's time to level the playing field against special interests."

Compounding the situation for some on K Street, all three top White House contenders have called for a moratorium on budget earmarks -- the controversial targeted spending provisions that have long been a business mainstay for many Washington lobbying firms.

"There's as much hostility if not more than there ever has been toward lobbying," says Nicholas Allard, partner and co-chair of the public policy practice at Patton Boggs, K Street's top-earning firm. "There are new lobbying rules, and yet there's more lobbying than ever before."

Harold Ickes, a partner at the Ickes & Enright Group and a senior adviser to the Clinton campaign, comments, "Lobbyists are an easy pinata to flog."

Lobbyists say they have been working to stay within the new rules while trying to understand their complexity. As a consequence of the tougher ethics regime, a surging compliance business has emerged, especially among law firms; lobbyists and lobbying shops are paying for training and advice on how to comply with the new codes of conduct.

And one more change for lobbyists is congressional Democrats' heavy focus on regulatory oversight, which has spurred new K Street businesses focused on helping clients with government hearings and investigations. On a separate tack leading to new business opportunities, a number of firms have expanded to help clients with domestic and overseas transactions.

In this, National Journal's third-annual State of Lobbying issue, we explore not only a booming business and the areas fueling the growth but also the multiple roles that lobbyists are playing in the presidential race. We also look at prospects for further reforms and how ethics rules enacted last year are transforming the daily lives and business operations of many on K Street.

Some lobbyists believe that their profession will face ongoing scrutiny for some time and that other changes and reforms lie ahead. "Whoever gets to the White House will make ethics a top priority," says Scott Reed, a longtime GOP campaign strategist who runs the lobbying firm Chesapeake Enterprises and who is close to the McCain campaign. Candidates, he says, "have campaigned heavily on the issue."

McCain's Corps
There is nothing new about seasoned lobbyists raising money and shaping strategy and policy for presidential candidates -- or for any other politician, for that matter. The leading sources of financial contributions to the McCain and Clinton campaigns are, respectively, the law and lobbying firms Blank Rome and DLA Piper.

"It's not surprising that you see lobbyists so involved... because many have worked in government and left to lobby, and now have come back to help on these campaigns," says Larry Noble, an election law and ethics specialist with Skadden, Arps, Slate, Meagher & Flom.

McCain's corps of lobbyist-bundlers represents just one of K Street's ties to the presumptive GOP nominee's campaign. According to the watchdog group Public Citizen, 65 lobbyists are bundling funds for McCain; the Clinton campaign has 22 lobbyists who are bundlers. Obama says he won't accept money from lobbyists at the federal level, but his campaign is using 14 bundlers who were formerly registered lobbyists, Public Citizen reports.

Beyond those who are raising money, McCain's inner circle includes senior campaign adviser Charlie Black, the chairman of government-relations firm BKSH & Associates; campaign manager Rick Davis, who is on leave from the lobbying firm Davis Manafort; campaign vice chairman Wayne Berman of Ogilvy Government Relations; and former Rep. Tom Loeffler, R-Texas, who runs the Loeffler Group lobbying shop and, as a campaign general co-chair and the finance chair, is overseeing a few dozen fundraisers who are each responsible for bringing in $500,000.

Several Washington trade association leaders are also helping McCain by raising money or serving as advisers or surrogates on the campaign trail. Among these bundlers are former Rep. Steve Bartlett, R-Texas, who runs the Financial Services Roundtable; Walter McCormick of the United States Telecom Association; and Kyle McSlarrow of the National Cable and Telecommunications Association.

According to the Center for Responsive Politics, McCain had collected $509,402 in contributions through January from registered lobbyists, their relatives, and employees of lobbying firms.

Former Oklahoma Gov. Frank Keating, who is president of the American Council of Life Insurers, has not only raised money but also helped with the campaign's outreach to Catholics. Randy Scheunemann, director of foreign-policy and national security issues, is the president of Orion Strategies, which has recently represented the nations of Georgia and Macedonia. Scheunemann says he is "devoting a lot of time" to the campaign as a volunteer, and is personally "no longer doing any lobbying."

Black contends that there is nothing surprising about lobbyists' deep involvement in the senator's White House bid. Most lobbyists are partisan in their political views, Black says, and "devote their volunteer time and contributions to candidates of their choice on both sides of the aisle," adding that he personally won't lobby McCain during the campaign.

Still, some controversy has arisen. Both the Loeffler and Ogilvy firms lobbied last year for the parent company of Airbus, which is part of a U.S.-European consortium that recently won a $35 billion Air Force contract to build tanker planes. The deal has sparked an outcry on Capitol Hill and a formal protest from Boeing, which lost out in the deal. McCain famously led a Senate probe four years ago that helped kill a scandal-ridden tanker contract for Boeing and he wrote two letters to the Pentagon in 2006 that may have helped Airbus's prospects. A McCain spokesman has said that the senator wasn't personally lobbied on the issue by the people now working in his campaign and that the letters only urged that the process be fair and open.

"The irony is that any connections to special interests hurt McCain more, not less, than they would hurt other politicians, because he's cast himself as a crusader for reform all these years," says Sheila Krumholz, executive director of the Center for Responsive Politics.

Famous for his opposition to earmarks and his leading role in probing the Abramoff scandal, McCain argues in his own defense that he has "many friends who represent various interests," and he challenges his critics: "Do they have excess or unwarranted influence? And certainly no one ever has, in my conduct of my public life and conduct of my legislative agenda."

Still, advisers such as Black and Berman are expected to soon take leaves of absence from their firms to work on the campaign full-time: "To attribute every lobbyist's involvement to cynical business interests is wrong and unfair," Black says.

The Democratic Teams
Clinton's campaign has no shortage of lobbyists and other K Street figures. Some served in Bill Clinton's administration, including Ickes, the former White House deputy chief of staff who has been overseeing the drive for superdelegates; chief campaign strategist Mark Penn, who runs the giant PR firm Burson-Marsteller; campaign communications director Howard Wolfson, a partner in the PR firm Glover Park Group; campaign manager Maggie Williams, a partner at the consulting firm Griffin Williams and a chief of staff to Hillary Clinton when she was first lady; Pat Griffin, former White House director of legislative affairs and also a partner at Griffin Williams; and former White House deputy chief of staff Steve Ricchetti, now of Ricchetti Inc.

According to the Center for Responsive Politics, Clinton had received more in contributions from federal lobbyists, their relatives, and the employees of lobbying firms -- $848,090 through January -- than either McCain or Obama. DLA Piper, the lobbying firm that has done the most fundraising for Clinton, boasts three lobbyists who have raised at least $250,000 each -- Mac Bernstein, former Michigan Gov. James Blanchard, and John Merrigan. According to campaign finance records, the firm's employees and their relatives have chipped in close to $500,000 for the Clinton effort.

In the drive to win superdelegates, Ickes has tapped a network of some two dozen Clinton administration alums on K Street, led by Griffin. Some lobbyists are raising money and doing on-the-ground work in key primary states. Ricchetti, who is from Ohio, helped assemble a team that contributed to Clinton's victory there on March 4. Lobbyist and Clinton fundraiser Tony Podesta is serving as a "key point person" in Pennsylvania in advance of the April 22 vote, according to Ickes.

Other lobbyists and consultants who were part of President Clinton's foreign-policy team -- former National Security Adviser Sandy Berger, co-founder of Stonebridge International, and former Secretary of State Madeleine Albright of the Albright Group, to name two -- are actively advising Hillary Clinton's White House bid.

Clinton, who has taken heat from Obama for accepting campaign contributions from lobbyists, shot back at a candidate forum last August: "A lot of those lobbyists, whether you like it or not, represent real Americans. They represent nurses, they represent social workers -- yes, they represent corporations that employ a lot of people."

Although Obama has railed against lobbyists to the delight of his supporters, he hasn't rejected help from K Street and corporate interests altogether.

Stan Fendley, director of legislative and regulatory policy for Corning, is one of dozens of D.C.-based lobbyists who are part of a network of 1,000 individuals who advise the Obama campaign on issues ranging from education to capital markets to health care. Fendley, a friend of Obama's from Harvard Law School, helped pull together a group focused on communications and technology issues. The group develops a consensus and then passes on the ideas to the campaign.

The Obama campaign has also tapped lobbyists to knock on doors and make phone calls. In addition, according to the Center for Responsive Politics, through January Obama had received $105,502 in reported contributions from individuals who work in the broader influence industry (but aren't registered as federal lobbyists) and from spouses of lobbyists.

Former Senate Majority Leader Tom Daschle, D-S.D., a special policy adviser at Alston & Bird, is deeply involved in helping Obama woo superdelegates. "We are making sure that we keep close tabs" on which superdelegates are still in play, Daschle says. "We are up against the best."

To be sure, the lobbyists who are helping to define Obama's policy agenda say that the campaign has limited their ability to lobby for their clients. One lobbyist said that the Obama camp warned the volunteers that they would be thrown off the policy committee if they were perceived to be lobbying during meetings. Further, Obama has said that as president he would not hire lobbyists to work on issues on which they had directly lobbied.

"There are certainly lobbyists helping in the campaign, but I think most aren't involved with a view to their next job," Fendley says. "Frankly, I think that is why some lobbyists are nervous about an Obama presidency. If you look at lobbying and working for a campaign as a stepping-stone to the next job, then you might be nervous about a candidate that doesn't want your money."

Obama has taken campaign money from employees at law firms. Many of those firms, such as Sidley Austin and Kirkland & Ellis, employ lobbyists who represent clients with important lobbying issues on Capitol Hill. Donations to Obama from law firms were $11.3 million, according to the Center for Responsive Politics. Corporate executives have also helped to bundle hundreds of thousands of dollars in checks for Obama's campaign. Two who have each raised more than $200,000 are Commonwealth Edison CEO Frank Clark and UBS Americas CEO Robert Wolf, according to Public Citizen. Among the 14 former lobbyists identified by Public Citizen as bundlers for Obama are two well-known figures who worked on K Street: Tom Wheeler, who was head of the Cellular Telecommunications Industry Association, now named CTIA-The Wireless Association; and Robert Sussman, who was a federally registered lobbyist before he retired in December from the firm Latham & Watkins.

Obama addressed his connections to special interests during a January debate in South Carolina. "Nobody's hands are perfectly clean in politics," he said. "I mean, there is a distinction, though, between not taking [political action committee] and federal lobbyist money and having that as a major way of driving your campaign and having some ancillary involvement."

When asked why money bundled by a corporate CEO is cleaner than money from a corporate PAC, Obama campaign spokesman Tom Vietor said that Obama's policy on lobbyists "isn't a perfect solution and it isn't a perfect symbol, but it reflects his record of trying to change the way business in Washington is done."

Lobbyists who are volunteering for Obama seem to share his position that some lobbyists have too much influence. In interviews, pro-Obama lobbyists say they were attracted to him, despite his attacks on their profession, because they agree that the political system should be overhauled and that there is too much money in politics.

Moses Mercado, senior vice president at Ogilvy Government Relations and a superdelegate, is one. "Some people ask me, 'Why would you volunteer for someone who is opposed to lobbyists? It seems like it's against your professional interests,' " says Mercado, who took time off to help with ground strategy for the Obama camp in Nevada and Texas. "And I say, because this isn't about me, Moses. It's about the country. We can all agree that Washington is politically broken, and we have to fix it."

Following New Rules
Most on K Street seem to be shrugging off the candidates' comments as mere potshots aimed at attracting outside-the-Beltway support. The right to advocate is enshrined in the Constitution, they say, and lobbyists provide indispensable information to lawmakers.

"If a lobbyist takes [the demagoguery] seriously then, man, they are in the wrong profession," says Rich Gold, partner at law and lobbying firm Holland & Knight, who notes that being the target of derisive campaign speeches comes with the territory. "Maybe used-car salesmen are lower in public esteem than lobbyists."

Still, lobbyists are an unsettled bunch these days. The reason is the new ethics rules and lobbying regulations enacted in 2007 as part of the Honest Leadership and Open Government Act. These changes ban lobbyists from buying meals, gifts, trips, and other activities for lawmakers and their staffs. They also require lobbyists to file disclosure reports four times a year, instead of twice, and to report on their campaign donations and other politically related activities every six months. Violators face harsh new criminal penalties, including possible prison time and up to $200,000 in fines.

Election law specialist Ken Gross of Skadden Arps notes that the new law requires public disclosure of the fact that a referral has been sent to the U.S. Attorney for the District of Columbia for possible prosecution. This "could create added pressure on [prosecutors] to bring cases," Gross says. "They may be looking for scalps."

The threat of incarceration has led everyone to lawyer-up: Firms that specialize in ethics rules and compliance practices are suddenly in demand. Allard of Patton Boggs says that his firm gets "five to 10 solicitations" a day from lobbyists looking for ethics training sessions. "The rules are not only complicated but they're not intuitive," he says. "You can very easily trip up."

Numerous lobbying shops have hired law firms to assemble and file the required forms with Congress rather than risk making a mistake. Cassidy & Associates went further this year by hiring a veteran Justice Department prosecutor, Andrew Kameros, as its full-time in-house counsel on several matters, including ethics training and LDA compliance. Kameros will "help us put in the right systems," explains Gregg Hartley, a Cassidy vice chairman.

Ethics lawyers are dealing with plenty of anxious clients; no one wants to be a test case for a federal prosecutor. But in a town where many lobbyists, lawmakers, and congressional aides are neighbors and friends, lobbyists worry that they could accidentally violate the rules, says Cindi Berry, chairwoman of the advocacy and government relations practice group at Powell Goldstein.

"I'm constantly fielding calls from clients who are fixated on hypothetical scenarios like, 'If I have a block party and someone who happens to be a staff member who I didn't invite comes with another friend, and I see they are eating a shrimp at my house, do I have to tell them to take the shrimp out of their mouth?' " That would be a technical violation of the law, Berry says, and "everyone is worried some overzealous prosecutor will go after someone who didn't intend to do anything wrong."

Adding to the confusion is that lobbyists are getting contradictory interpretations and guidance from lawyers, as well as congressional Ethics panels. During the Christmas season the National Association of Broadcasters wanted to hand out mugs with its logo. Would that pass muster under the new rules? At the time, the NAB was getting different answers from the Hill. The House Standards of Official Conduct (Ethics) Committee said that a trade group can give out something valued at less than $10; the Senate Select Ethics Committee said that nothing of value can be given to staff and members. "We pulled the plug on the whole thing," NAB spokesman Dennis Wharton says.

Melissa Schulman, principal at the Bockorny Group, says that when she plans any event that involves someone from Capitol Hill, she has to "go ask 10 people before you decide what to do, and often you get an answer that contradicts."

Corporations, trade associations, and public-interest organizations have stopped sponsoring trips for members of Congress and their aides, although they may do so if the trip includes only an overnight stay, with potential exceptions for two-day trips. John Engler, president and CEO of the National Association of Manufacturers, says that the travel ban has put an end to all the plant tours that NAM used to offer to lawmakers and staffers. "We did a lot of educational work," he says. "These weren't exotic locales. These were blue-collar trips, and they would see how things get made."

The Sierra Club can no longer take members to see the Arctic National Wildlife Refuge in Alaska, or to visit national parks, which had been an important way for the organization to demonstrate the impact of environmental regulations. "I bemoan the loss of that tool," says Melinda Pierce, the Sierra Club's associate director for national campaigns. "We protect beautiful places. And being able to let the places speak for themselves [had] tremendous power."

Meetings and meals between lobbyists and Capitol Hill aides now usually take place only in their offices or in one of the House or Senate cafeterias, where it's cheap to go Dutch treat. In another twist, some lawmakers are even paying for the lobbyists' meals. "I've been bought dinner by a couple of senators and congressmen," says Berman of Ogilvy Government Relations. "I think last year's ethics reforms have had a significant impact."

Although lobbyists say they don't have trouble getting meetings in Hill offices, they are finding it challenging to build and maintain their relationships on Capitol Hill. The unintended effect is that more lobbyists are using a key exception in the ethics rules and catching members and aides where none of the restrictions on food, drink, entertainment, and travel apply: campaign fundraisers.

"There are only so many hours in a day, and the elimination of breakfast, lunch, dinner, and educational trips took the networking capability away ... which was, of course, the intent," says Julie Domenick, president of Multiple Strategies. "The downside is replete with irony in that it has driven the conversation to the one event where it is still entirely appropriate for members and lobbyists to be together -- the fundraiser."

Domenick has held 40 small fundraisers during the 2008 election cycle at her Capitol Hill home, where lawmakers and lobbyists have mingled in an intimate setting. She has also donated more than $100,000 of her own money to Democratic candidates and committees in this election cycle. She makes a point not to discuss legislative issues at her fundraisers, but she will, on occasion, ask a staff member if she could follow up with him or her during business hours.

"It is uneasy for everyone," Domenick says.

Allard says that tightening lobbying rules but doing nothing to tighten campaign finance rules has created "this anomaly where you're actually, in a perverse way, forcing more people to interact in campaigns. It creates more opportunity certainly for the appearance of a quid pro quo."

Of course, not everyone dislikes the rules. Many lobbyists who said they never took people to lunch or bought drinks as part of their job think that the new regime has leveled the playing field. Drew Fields, a telecommunications lobbyist and principal at consulting firm Mercury Strategies, says he likes the changes because they "tend to reward the lobbyists who actually talk to people, read the bills, and can converse on policy matters. It puts a premium on the things I like, which is policy rather than happy hours."

Advocates of campaign finance and political reform also like the rules. Craig Holman, Public Citizen's legislative representative, says that all the emphasis on ethics and compliance is a good step toward reducing corruption. "Now you have lobbyists thinking aloud about the possibility of violating the rules," he says. "Before, no one paid attention."

Mood On The Street
If anyone has a good sense of the pulse on K Street, it's Thomas Donohue, president and CEO of the U.S. Chamber of Commerce. The drumbeat of anti-lobbying rhetoric and the uncertainty over who will win the White House in November have caused some "gloominess" at trade associations and in the Washington offices of corporations, says Donohue, who runs one of the largest trade groups of all.

"The K Street crowd, any time they are involved in an election that may change who is in the power seat, everyone wrings their hands," he says. "All these changes mean they have to make new friends and new people to deal with. It gets people like, 'My God! Where am I going to start? Who the hell are they going to bring in here?' "

But Donohue says he "isn't doing gloomy." He is optimistic that no matter who wins the presidential and congressional elections, the next president will have business issues to address and the chamber will be heavily engaged in the process. "We are going to keep this place at a very high pitch of energy and focus."

In monetary terms, the change and uncertainty about the elections has been good for the multibillion-dollar lobbying business. Data available as of March 19 show that the top 20 lobbying firms in Washington posted fee income of $356.5 million last year, up 4 percent from the $344.4 million the top 20 firms reported in 2006, according to the Center for Responsive Politics. (Final numbers for 2007 were not available at press time.)

Business is booming for a variety of reasons, lobbyists say. One is concern about the Democratic-controlled Congress and how its actions will affect corporate America's bottom line. The shift in leadership of the House and Senate drove companies and associations in 2007 to add Democrats to their rosters of consultants and in-house lobbying teams. Further, congressional Democrats' focus on climate-change legislation, oversight and investigation, ethics reform, and new taxes on hedge funds have bolstered business and revenue for the city's top lobbying firms.

"The state of lobbying is good, particularly at Patton Boggs," Allard says. Patton Boggs is expected to be the leader of the lobbying pack in 2007 with income of almost $42 million, about $10 million ahead of the projected No. 2 firm, Akin Gump Strauss Hauer & Feld, according to incomplete figures available as of March 19.

Some evidence indicates that Democratic lobbyists are in a buyer's market. The demand for Democrats at lobbying firms has become so intense that some lobbyists have been able to negotiate big compensation packages. "I just went through a round of pay negotiations with my Democratic lobbyists and they told me they had entertained three or four offers from other firms," says the head of a lobbying practice at one law firm, who would not agree to be named. "If you are a Democrat in a firm and you haven't made a demand for a chunky increase, you are missing an opportunity."

The state of lobbying is not as robust for lobbying firms that have traditionally specialized in earmark and appropriations work, however. Scrutiny on earmarks has intensified, and lawmakers have already tightened the rules and the process for directing budget funding to pet projects. In the fiscal 2007 budget, the number of earmarks dropped by almost half from 2006. Now many Democrats and Republicans are considering a moratorium on all earmarks.

Among the firms that have historically specialized in appropriations and earmarks is the Livingston Group, run by former House Appropriations Committee Chairman Bob Livingston, R-La. The firm started to diversify its business a few years ago. Still, the group "took a haircut last year," says Livingston, although he says he sees an "uptick" so far this year, bolstered by diversification into other practice areas, including more work for international clients.

Several other large K Street firms are also ready to move into new territory. As part of Williams & Jensen's bid to expand its international work, the firm recently hired an expert in Eastern European and Central Asian business deals, Eric Stewart, to help clients "identify decision makers and problems" in a range of business transactions.

Similarly, BGR Holding (formerly Barbour Griffith & Rogers) added an international investment group to its practice earlier this year and opened an office in London, after "clients kept coming to us for help with international transactions," says CEO Lanny Griffith. BGR recently hired a Democrat to run a new public-relations practice after years of being an all-Republican firm.

Other K Street shops are expecting to keep busy advising clients on congressional oversight probes. Additional hearings are likely for several business sectors that have already faced public scrutiny and negative press, including pharmaceuticals, mortgage and banking, and student loans. Leo Jardot, who runs the Washington office of drug giant Wyeth, says, "I think drug safety is a high priority in the House," and he predicts "more oversight of our marketing practices" and "continued review of Medicare and whether it's operating efficiently."

Oversight work has been a boon for Akin Gump, too. Partner Steven Ross, who heads the firm's oversight practice, says that the workload in 2007 more than doubled from 2006. He adds that he is currently representing about 15 clients who are facing some level of scrutiny from "very activist" Hill oversight committees.

Bracing For The Future
After a year of significant changes, lobbyists are bracing for even more on several fronts in 2008 and 2009, including the possibility of additional ethics and campaign finance rules; more shifts in their business priorities; and -- should the election again swing party control of Congress and the White House -- increasing diversification of K Street firms.

On ethics, support is growing on the Hill for the addition of independent ethics panels to probe allegations of wrongdoing by members and staffers, an idea similar to one championed by both McCain and Obama. On March 11, the House approved the creation of such a panel, which can make recommendations to the Ethics Committee. The Senate previously rejected a similar proposal.

Some public-interest groups predict that the next battle could be over public financing for presidential and congressional races, given this year's record money chase in the presidential election, which could exceed $1 billion by November. Holman of Public Citizen stresses that public financing would "take away the ability of lobbyists to buy influence through their fundraising," which would be a "major, major improvement in the way business goes on Capitol Hill."

Most lobbyists say they would welcome less pressure to raise campaign cash, and some say they would back curbs on lobbyists' donations. "I'd stand for a rule prohibiting people who are hired to be advocates making campaign contributions," Allard says.

Other lobbyists are wary of Congress's enacting new reforms before the recent ones have been fully tested. "I think you need the current reforms to take shape and see if they can be effectively enforced before you need to layer on more," says Steve Hart of Williams & Jensen.

David Girard-diCarlo, chairman of law and lobbying powerhouse Blank Rome, says, "I'm a game player and not a rule-maker. When the rules are set, I'm going to be scrupulously careful to play by them." He frets that the lobbying business has become too lax. "People [in lobbying] unfortunately are too often not careful, not scrupulous, and not honest," he says. "They've given a bad name to the profession."

Because of a backlog, the congressional offices that receive the disclosure reports filed by lobbying firms have not processed all of the forms for 2007. Thus, final numbers on how much firms earned -- and clients spent -- last year were not available at press time. Rather than report incomplete data now, National Journal will publish complete figures within the next few weeks in our list of the top firms in Washington and their top clients.

--Staff Correspondent Julie Kosterlitz and Contributing Editor Eliza Newlin Carney contributed to this story.

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