Wrong! Lobby Shops Are Doing Fine

National Journal
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Chris Frates
July 21, 2011, 5:45 p.m.

Some of Wash­ing­ton’s biggest lob­by­ing shops are pulling down good money this year, but you wouldn’t know it from their pub­lic dis­clos­ures.

The early re­ports of second-quarter rev­en­ue num­bers, due at mid­night on Wed­nes­day, had lob­by­ists be­moan­ing how a slump­ing eco­nomy and a de­fi­cit-ob­sessed Con­gress were hurt­ing busi­ness. But that down­turn in lob­by­ing rev­en­ue is more than off­set by the reg­u­lat­ory work, polit­ic­al in­tel­li­gence, in­vest­ig­a­tion prep, and agency lob­by­ing that is part of the un­re­por­ted in­flu­ence eco­nomy, in­siders say.

“Lob­by­ing is the tip of the ice­berg,” said Mark Ruge, co­chair­man of K&L Gates’ policy group.  

In­deed, the pas­sage of health care and Wall Street re­form, from which K Street made a killing lob­by­ing for two years, have now morph­ed in­to a reg­u­lat­ory gravy train as cor­por­a­tions scramble to in­flu­ence the hun­dreds of rules that will soon gov­ern their in­dus­tries.

And be­cause reg­u­lat­ory work re­quires spe­cial­ists who un­der­stand the rule-mak­ing pro­cess and can help cli­ents com­ply with, or chal­lenge, the new rules, it is much more luc­rat­ive than tra­di­tion­al lob­by­ing — pay­ing two to three times more.

Take Akin Gump, for ex­ample. The firm brought in about $17.7 mil­lion lob­by­ing dur­ing the first half of this year, down from last year’s $18.3 mil­lion. But over­all, the firm has in­creased its rev­en­ue about 2 to 3 per­cent, said Smitty Dav­is, who co-man­ages the group.

“The reg­u­lat­ory prac­tice, that trend is pretty ob­vi­ous be­cause there are more prob­lems there,” Dav­is said. “Cli­ents re­tain those parts of your firm where the ac­tion is and right now a lot of the ac­tion is on a reg­u­lat­ory basis.”

Ruge said K&L brought in about $9.6 mil­lion dur­ing the first half of this year, down from $9.8 mil­lion dur­ing the same time peri­od last year. But K&L does about $2 in reg­u­lat­ory work for every $1 in lob­by­ing activ­ity and that is “well up this year, par­tic­u­larly in the fin­an­cial ser­vices and en­vir­on­ment­al sec­tors,” he said.

And it’s not just reg­u­lat­ory work that is boom­ing. With the ear­marks ban, lob­by­ists are busy work­ing agen­cies and de­part­ments that are now in charge of dol­ing out money in the form of con­tracts and grants. Firms are also cash­ing in as cli­ents pre­pare to testi­fy in front of con­gres­sion­al pan­els and re­spond to agency in­vest­ig­a­tions. And polit­ic­al in­tel­li­gence con­tin­ues to pay, in­siders say.

All that money is hard to track be­cause, un­like tra­di­tion­al lob­by­ing, the law doesn’t re­quire as much dis­clos­ure.

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But a vet­er­an lob­by­ist with a ma­jor firm es­tim­ated that while the ra­tio of lob­by­ing to oth­er in­flu­ence work over the last few years has been about 70 per­cent to 30 per­cent, those num­bers have es­sen­tially flipped this year. And the ex­plo­sion of reg­u­lat­ory, in­vest­ig­a­tion, and agency work has grown the size of the lob­by­ing pie by 10 to 20 per­cent, des­pite the slump­ing eco­nomy.
Pat­ton Boggs saw their second quarter rev­en­ues jump from $10.3 mil­lion last year to $12.4 mil­lion this year, ac­cord­ing to part­ner Jim Chris­ti­an. But, the rev­en­ue bump was helped by the ac­quis­i­tion of the boutique lob­by­ing shop Br­eaux-Lott, led by former Sens. John Br­eaux, D-La., and Trent Lott, R-Miss., which Pat­ton picked up last sum­mer.

“If you’re in a big, di­verse firm, es­pe­cially a lar­ger law firm that has a com­bin­a­tion of skill sets and has di­verse ex­pert­ise than they’ve all ex­per­i­enced that the le­gis­lat­ive work has flattened out,” said Pat­ton Boggs part­ner Nick Al­lard, adding that oth­er ad­vocacy work is “up slightly. It’s not gang­busters, but it’s bal­anced out and grow­ing.”

Brown­stein Hy­att Farber Schreck, whose “bread and but­ter” is more tra­di­tion­al lob­by­ing, brought in about $10.7 mil­lion dur­ing the first half of this year, down about $1 mil­lion dur­ing the same peri­od last year, said man­aging part­ner Al Mot­tur. But, he said, “We’re among the lead­ers and keep­ing pace and very pleased.”


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