With a new party running Congress and new ethics rules to learn, Washington lobbyists found 2007 a year of turmoil, but not so much that it got in the way of steady-and, in some cases, whopping-earnings growth for many of K Street's top lobbying firms.
On Capitol Hill, a tax fight involving investment fund managers, a brawl over automobile fuel-economy standards, and the complexities of navigating corporate transactions were among the high-profile issues that contributed to another record year of fee income for the influence sector.
"There are more challenges than ever before at the nexus of business and public policy," says Ken Mehlman, a partner at Akin Gump Strauss Hauer & Feld, a former chairman of the Republican National Committee, and the manager of President Bush's 2004 re-election campaign. He cited tax reform, health care, energy, and climate change at the top of the list.
Total federal lobbying spending hit $2.79 billion last year, up 7.7 percent from $2.59 billion in 2006, according to the nonprofit Center for Responsive Politics. The total is based on the semi-annual reports that all registered lobbyists, lobbying firms, and corporations submit to Congress under the 1995 Lobbying Disclosure Act. Under amendments passed in 2007, beginning this year lobbyists and firms must report twice as often-every quarter.
To compile the list of top firms, National Journal used documents provided directly by the firms as well as data from the center.
For the fifth year in a row, law and lobbying firm Patton Boggs came in at No. 1, reporting $42.5 million in LDA-related fees, an increase of 23 percent from 2006. Among its five largest clients last year were investment fund Cerberus Capital Management and the Managed Funds Association, which represents hedge funds; both clients were heavily involved in two of the most-lobbied issues in Congress. Cerberus, which owns automaker Chrysler, lobbied on the fuel-efficiency debate, and the Managed Funds Association worked to stave off new taxes on fund managers.
The No. 2 firm last year was Akin Gump, posting LDA-related fees of $32 million, up 25 percent from 2006, a jump spurred in part by legal and lobbying work, plus strategic advice on navigating Washington's regulatory environment, for client Kohlberg Kravis Roberts, one of the world's largest private equity firms, which specializes in buyout transactions. Akin Gump also represented the Private Equity Council, which, like the Managed Funds Association, fought tax proposals that would have affected the investment industry.
Representatives of both Patton Boggs and Akin Gump said their law and lobbying firms were aided by their ability to expand the scope of existing legal and regulatory work for clients into lobbying services. Pivoting from providing legal services to lobbying also helped other firms to achieve robust growth last year, including No. 11 Holland & Knight, which posted a 16 percent gain from 2006; No. 14 Brownstein Hyatt Farber Schreck, up 23 percent; and No. 18 Covington & Burling, up 36 percent.
In contrast, several lobbying-only firms saw slower growth or declines in income as Congress increased its scrutiny of earmarks, the controversial process by which lawmakers set aside appropriations for specific projects. No. 3 Van Scoyoc Associates posted growth of 4 percent; No. 4 Cassidy & Associates experienced 1 percent growth; and No. 24 Livingston Group weathered a fee income drop of 13 percent. All three firms are known for their appropriations practices.
"The state of lobbying is good, but it could be better," says Cassidy COO Gregg Hartley. Appropriations work represents less than 50 percent of his firm's revenue, he said, adding that Cassidy has been diversifying its business into other areas. H. Stewart Van Scoyoc, president of Van Scoyoc Associates, likewise says that appropriations work is now less than 40 percent of revenues and that the firm is also diversifying into additional lines of work.
The Capitol Hill shift in power to Democrats may have affected previously all-Republican firm BGR Holding (formerly Barbour Griffith & Rogers). At No. 5 on the list, the firm experienced revenue growth of 6 percent in 2007-respectable, but below its gains in the years when Republicans controlled Congress. Last month BGR hired its first Democratic lobbyist, Michael Meehan, former chief of staff to Sen. Maria Cantwell, D-Wash., to launch a new public-relations practice.
The firm with truly eye-popping growth in 2007 was No. 7 Ogilvy Government Relations. Revenues jumped 51 percent as the firm received $4.5 million in fees from top client Blackstone Group, a private equity firm involved in the high-profile tax fight.
As in years past, officials at a number of lobby shops argued that rankings based on LDA filings do not give a true picture of their businesses. The reason is that an increasing number of the influence industry's services fall outside the reporting requirements of the law. Under the LDA, lobbyists must disclose only direct contacts with Capitol Hill lawmakers, senior staff, and executive branch officers.
Cassidy and other firms are increasing their business in the area of federal marketing-helping businesses navigate government contracts-which doesn't fall under disclosure rules. At Dutko Worldwide, lobbying represents about half of the No. 6 firm's revenue, says CEO Mark Irion. Dutko also provides grassroots lobbying help and representation to companies overseas, other services that aren't reported.
"Why cast your net in the exact same spot all the time?" Irion responds when asked why Dutko has been expanding into new areas.
Law and lobbying firm DLA Piper, which was tied for No. 16, posted a 22 percent drop in lobbying revenue from 2006, says partner John Merrigan, because it placed greater emphasis on legal and strategic client services that fall outside of reporting requirements. "Lobbying has just become a fraction of what we do," Merrigan says.
A newcomer to the list is No. 25 Alpine Group. Partner Greg Means attributed his firm's 13 percent growth to a combination of the shift in power to Democrats and clients' decisions to expand their contracts. "We're bipartisan, so to the extent that companies or folks were looking for lobbyists and didn't have the Democratic side covered sufficiently, [it may have] caused them to look at" Alpine, he said. - Reporting Intern Mariwan Hama-Saeed contributed research for this story. The author can be reached at bvaida@nationaljournal.com.
The Top 25 Lobbying Firms of 2007 Reported Lobbying Disclosure Act fee income, January 1 to December 31, 2007
Lobbying Firm Total 2007 Total 2006 %Change
Revenue Revenue
1. Patton Boggs $42,500,000 $34,550,000 23%
2. Akin Gump Strauss Hauer & Feld
32,000,000 25,670,000 25
3. Van Scoyoc Associates
27,130,000 26,050,000 4
4. Cassidy & Associates
24,490,000 24,285,000 1
5. BGR Holding 22,460,000 21,180,000 6
6. Dutko Worldwide 22,452,500 21,112,515 6
7. Ogilvy Government Relations
22,200,000 14,660,000 51
8. Hogan & Hartson 19,030,000 17,511,574 9
9. Quinn Gillespie & Associates
17,980,000 17,905,000 0
10. PMA Group 16,470,132 15,925,000 3
11. Holland & Knight 16,290,000 14,050,000 16
12. Williams & Jensen 16,200,000 15,350,000 6
13. K&L Gates 13,860,000 13,355,000 4
14. Brownstein Hyatt Farber Schreck
13,310,000 10,800,000 23
15. Washington Council Ernst & Young
13,256,060 10,217,000 30
16. Carmen Group 12,880,000 11,070,000 16
16. DLA Piper 12,880,000 16,485,000 -22
18. Covington & Burling
12,469,512 9,160,000 36
19. Ferguson Group 1,760,500 9,794,500 20
20. Podesta Group 11,260,000 12,080,000 -7
21. Venable 10,680,000 8,480,000 26
22. Alcalde & Fay 10,500,000 10,320,000 2
23. Cornerstone Government Affairs
10,330,000 8,900,000 16
24. Livingston Group 9,960,000 11,490,000 -13
25. Alpine Group 9,765,000 8,620,000 13
Totals $432,113,704 389,020,589 11%
Sources: Lobbying Disclosure Act filings; lobbying firms; Center for Responsive Politics
Top Clients of the Top 15 Firms From January 1 to December 31, 2007 1 Patton Boggs 1. Mars Inc. $2,300,000 2. Cerberus Capital Management 2,140,000 3. American Association for Justice 1,320,000 4. Kidney Care Partners 800,000 5. Bristol-Myers Squibb 700,000 5. Managed Funds Association 700,000
2 Akin Gump Strauss Hauer & Feld 1. Coalition for 21st Century Patent Reform $1,180,000 2. Mortgage Insurance Companies of America 1,140,000 3. Kohlberg Kravis Roberts 1,020,000 4. Citizens Educational Foundation 800,000 5. Gila River Indian Community 740,000
3 Van Scoyoc Associates 1. Coalition of EPSCoR States $420,000 2. University of Alabama 360,000 3. L.A. County Metro Transportation Authority 340,000 4. Dallas Area Rapid Transit Authority 300,000 4. DuPont 300,000
4 Cassidy & Associates 1. Boston University $960,000 2. UMass Memorial Health Care 560,000 3. Bombardier 520,000 4. Alenia Aeronautica 440,000 4. Rambus 440,000
5 BGR Holding 1. Republic of China $1,000,000 2. Thaksin Shinawatra 920,000 3. Alan Kilkenny 760,000 4. Government of Serbia 720,000 4. Kurdistan Regional Government 720,000
6 Dutko Worldwide 1. Erickson Retirement Communities $370,000 2. Petroleos De Venezuela SA 355,000 3. Americans for Democracy 335,000 4. R/V Moynihan Station Development 310,000 5. Global Demandwidth 280,000 5. ProtectingAmerica.Org 280,000
7 Ogilvy Government Relations 1. Blackstone Group $4,500,000 2. Verizon Communications 1,160,000 3. American International Group 760,000 4. Carlyle Group 540,000 5. Poker Players Alliance 480,000
8 Hogan & Hartson 1. Nissan North America $2,700,000 2. FM Policy Focus 1,660,000 3. Berkshire Hathaway 780,000 4. Intrepid Mining 540,000 4. TAP Pharmaceutical Products 540,000
9 Quinn Gillespie & Associates 1. Verizon Communications $960,000 2. Cemex USA 760,000 3. PricewaterhouseCoopers 600,000 4. Delta Airlines 580,000 5. Alliance for Quality Nursing Home Care 560,000 5. State Farm Insurance 560,000
10 PMA Group 1. EDO $600,000 2. DRS Technologies 560,000 3. L-3 Communications 480,000 4. Parametric Technology 440,000 4. PPG Industries 440,000
11 Holland & Knight 1. St. Regis Mohawk Tribe $460,000 2. Jicarilla Apache Tribe 420,000 3. Mille Lacs Band of Ojibwe Indians 380,000 4. Council of Chief State School Officers 360,000 5. American Chemistry Council 320,000 5. Amscot Financial 320,000 5. Hartford Insurance 320,000
12 Williams & Jensen 1. Owens-Illinois $740,000 2. OGE Energy 480,000 3. Time Warner 440,000 4. American Council of Life Insurers 360,000 5. Enbridge Pipelines/ Lakehead Pipeline Partners 340,000 5. International Speedway 340,000 5. Pyramid Companies 340,000
13 K&L Gates 1. Pitney Bowes $1,040,000 2. RenaissanceRe Holdings 520,000 3. Star Cruises 500,000 4. Overseas Shipholding Group 440,000 5. Fei Co. 380,000
14 Brownstein Hyatt Farber Schreck 1. Alliance for Investment Transparency $680,000 2. National Cable & Telecommunications Assn. 520,000 3. Terrastar Networks 480,000 4. Citadel Investment Group 440,000 4. Mobile Satellite Ventures 440,000
15 Washington Council Ernst & Young 1. General Electric $680,000 2. Merrill Lynch 600,000 3. Reynolds American 360,000 4. Fortress Investment Group 340,000 5. Association of American Railroads 320,000 5. Carrix 320,000 5. Citigroup 320,000 5. Ford 320,000 5. Johnson & Johnson 320,000 5. Securities Industry Association 320,000
This article appears in the April 12, 2008, edition of National Journal.
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