K Street aims to break election year lull after strong 2023

Several K Street insiders told The Hill they expect federal lobbying to hold strong ahead of the election and defy trends after another strong year for the influence industry.

During the final quarter of 2023, a drawn-out Speakership race after the historic ouster of former Speaker Kevin McCarthy (R-Calif.) butted up against a potential government shutdown just before the Thanksgiving holiday, with the funding deadline ultimately being punted to January.

Congress has already passed stopgap funding this year, further extending two government funding deadlines to March.

“It feels a little bit like Groundhog Day,” Karishma Page, a partner at K&L Gates and co-leader of the firm’s public policy and law practice, told The Hill. “At the end of last year, we were looking down not just one, but two potential government shutdowns. And here we are today having averted another one, but having a potential one six weeks from now.”

The Biden administration has also been pumping out rules as the election draws closer, including new climate, cryptocurrency and disclosure rulemaking by the Securities and Exchange Commission that have drawn ire from industry groups and politicians.

“I think that the administration’s very activist agenda on the policy, regulatory and enforcement front is going to continue to drive interest,” Will Moschella, co-chair of Brownstein’s government relations department, told The Hill.

There are also some big policy fights looming on the Hill. The pharmaceutical industry is driving pharmacy benefit manager reform, retailers are duking it out with big banks over a credit card “swipe fee” bill and the country is heading for a tax cliff in 2025, when several provisions in the 2017 Tax Cuts and Jobs Act are set to expire.

Congress will also have to pass behemoth packages including Federal Aviation Administration reauthorization and the farm bill. Congress renews both every five years, and while both were set to expire in September, legislators have punted on the bills, along with other appropriations. In an era of legislative gridlock, these packages have become prime targets for lobbyists looking to advance their client’s legislative priorities.

“It seems like a broken record, but there’s only a few big trains leaving D.C. bill-wise over the next few months,” Langston Emerson, partner at Mindset, told The Hill.

Federal lobbyists cashed in last year amid partisan standoffs on Capitol Hill and big regulatory moves by the Biden administration. Many top lobbying shops not only surpassed their October through December quarterly earnings mark compared to the same period in 2022, but also their top-line annual revenue.

Brownstein Hyatt Farber Schreck LLP was the top firm by federal lobbying revenue for the third year in a row. The law and lobbying giant hit $16 million in revenue for a single quarter for the first time and set an annual lobbying revenue record, raking in more than $62.6 million last year.

Firms outside the Big 10 also saw their revenue grow amid the uncertainty and uptick in regulatory activity. Monument Advocacy’s annual federal lobbying revenue grew 16 percent to $15.8 million in 2023 from $13.6 million in 2022.

“As Congressional gridlock continues, Monument is working with our clients on major legislation, including the Farm Bill, AI policy, FISA reauthorization, immigration reform, and appropriations as the legislative branch tries to clear the deck before election year campaigning overtakes their agenda,” said C. Stewart Verdery Jr., CEO of Monument Advocacy.

The bipartisan interest in and general hype around artificial intelligence (AI) has generated a particularly notable uptick in lobbying activity. The money-in-politics nonprofit OpenSecrets reported that lobbyists for more than 350 clients reported working on issues related to AI in the first nine months of 2023, more than twice the number of groups lobbying on it during all of 2022.

“When I hear people say nothing gets done in Washington, that tells me they are not engaged in the significant policy negotiations underway,” Loren Monroe, a principal at BGR Group, told The Hill.

“Of course, the deep partisan divides are there for all to see, but there are also unusual areas of common ground being found between clusters of members on different sides of the aisle on labor, trade, artificial intelligence, and even cryptocurrency issues. Businesses dismissing those early patterns do so at their own risk.”

Federal lobbying spending has dipped during recent presidential election years. Several lobbyists suggested this year could buck the trend.

“I don’t anticipate — as many people sometimes speculate — a slowdown in engagement with policymakers,” Moschella said, noting uncertainty around the outcome of the upcoming elections and ongoing regulatory activity.

Total lobbying spending climbed continuously through the 2000s and peaked at $4.2 billion in 2009, adjusted for inflation, according to federal lobbying data analyzed by OpenSecrets. But in the subsequent decade, following fallout from the 2008 financial crisis and a protracted lobbying battle over the Affordable Care Act, the lobbying bubble deflated, with lulls that coincided with presidential election years.

Total lobbying spending dipped to $3.72 billion in 2012 from $3.82 billion in 2011, adjusted for inflation, and to $3.4 billion in 2016 from $3.52 billion in 2015, according to OpenSecrets data. Lobbying spending stayed relatively flat from 2019 to 2020, which saw totals of $3.55 billion and $3.53 billion, respectively.

But federal lobbying spending has been ballooning again, topping $4.1 billion in 2022, a nominal record. Total federal lobbying spending surpassed $3.1 billion spent through the first nine months of 2023, and total lobbying spending could hit a new record.

OpenSecrets told The Hill it’s still crunching the numbers for the final quarter of last year.

“These are unprecedented times, and they’re gonna continue to be,” Page said. “We’re in sort of a new era, where that really requires stakeholders to be prepared and proactive and ready to engage on an ongoing basis to be able to just really navigate the uncertainty ahead.”

A wave of retirements are also expected to shake up House and Senate races this year. That means a “large number” of new members and “a lot of lost institutional knowledge,” Emerson said.

“It’s not starting from scratch, but there will be a lot of work to be done to make sure that people are educated and understand the situation and where things are,” Emerson said. “It’s going to be a lot to do going into 2025.”