Dem majority triggers mixed results for K St.

Patton Boggs appears likely to continue as the reigning king of K Street with a revenue growth of nearly 9 percent, according to mid-year lobbying reports filed to Congress Tuesday.

The law firm earned nearly $19.4 million from lobbying as defined by the Lobbying Disclosure Act, or LDA, for the first half of 2007, versus the $17.8 million it took in during the first six months of 2006. The firm finished first in the revenue race in 2004, 2005 and 2006.

{mosads}Elsewhere along Washington’s lobbying corridor, though, results were decidedly more mixed. While several firms reported revenue growth, a number have yet to shake off the doldrums of the last half of 2006, when legislative activity dropped off as members left town to campaign for the midterm election.

For example, Cassidy & Associates reported a slight dip in revenues in 2007. It reported $12.3 million for mid-year 2007 versus the $12.6 million the firm reported a year ago.

Van Scoyoc Associates, another big earner, reported flat revenues. Hogan & Hartson, a top 10 earner, reported a slight dip (see chart, P 9).

The LDA numbers were due Tuesday, and several big names did not have their revenue totals ready by press time. These firms include Dutko Worldwide, which generated more than $20 million in lobbying revenues last year.

(The figures will be added to the chart online at digital-staging.thehill.com as they become available.)

The firms that did well attribute their success in part to the new Democratic majorities.

Perhaps the biggest success story so far is Ogilvy Government Relations. The newly bipartisan firm, which was formerly all-Republican and known as the Federalist Group, reported mid-year totals of $12.4 million, versus the $6.8 million it reported for the first six months of 2006.

“We have added talented Democrats that have contributed significant value to our clients and the firm,” said Drew Maloney, a managing director at Ogilvy and a former aide to then-House Majority Whip Tom DeLay (R-Texas).

Although the switch to bipartisan seems to have been a good one, the firm’s success can largely be attributed to one client.
Blackstone Group, which is lobbying against a proposed tax hike on private equity firms, has paid Ogilvy $3.74 million so far this year. Blackstone paid Ogilvy just $240,000 for all of 2006.

Akin Gump Strauss Hauer & Feld, a perennial top five earner, also grew. The firm reported mid-year totals of $15.2 million, compared to $13.3 million during the first half of 2006.

Joel Jankowsky, who runs Akin Gump’s policy practice, said Democrats have been good for his firm’s bottom line.

“The change in Congress has increased activity on a variety of issues and that has spawned more work,” Jankowsky said. Akin Gump now counts 186 clients versus the 165 clients it had at the end of last year.

Barbour Griffith & Rogers and K & L Gates’s policy group each also reported a slight growth over their revenue totals of a year ago.

Even firms that did less well were optimistic business was beginning to pick up, even though Democrats have sought to change the cozy relationships between lawmakers and lobbyists through new gift and travel limitations and other rules.

Gregg Hartley, vice chairman and chief operating officer for Cassidy, said the firm’s business was rebounding from a slow 2006.

“I see us on the way back up,” he said.

The Cassidy figure does not include revenues reported by its affiliate, the Rhoads Group, which reported an additional $2.2 million in revenue.

Van Scoyoc Associates, another top five firm, reported Tuesday that it made $12.5 million this year, roughly the same it reported during the comparable period a year ago.

“We held pretty even in a very difficult environment and I would consider that a pretty successful first half,” said Stu Van Scoyoc, president of the firm.

Scandals have made it a difficult political environment for lobbyists and clients have moved cautiously because of uncertainty about new congressional earmarking rules, Van Scoyoc said.

The LDA filings paint only part of the picture of these firms’ performances. Many of the large and mid-sized firms have lucrative lines of business in other areas.

Firms like Patton Boggs and Akin Gump that operate large legal practices are also benefiting from the more active oversight of the Democratic-led Congress, for example.

Democrats have held an estimated 600 oversight and investigation hearings so far, and many clients under the microscope have sought K Street’s counsel.

“The overall congressional activity is through the charts,” said Nick Allard, co-chairman of Patton Boggs’s public policy department.

“Lobbying reports are up, but they are just part of what we do, and underestimate what is probably a historic level of activity in Congress and as such a historic level of representation of clients before Congress,” Allard said.

The investigations also often lead to new legislation, which further drives business to K Street.

The LDA numbers also do not capture work done under the Foreign Agent Registration Act (FARA), which is reported separately. Most public relations and federal marketing work, both of which are growing revenue streams for many firms, are also not reported under LDA.

Cassidy, for example, made an additional $1.4 million from FARA, public relations and federal marketing, Hartley said. Van Scoyoc also will report at least $300,000 in FARA revenue.

Moreover, the LDA itself provides firms with wide latitude in how they define lobbying activities, and thus what revenue must be accounted for in their semiannual filings.

While some firms blamed stagnant revenues on the unfavorable (and, they add, unfair) scrutiny the lobbying industry has received from the Jack Abramoff scandal, most lobbyists don’t see the recently passed lobbying/ethics bill as a threat to their businesses.
Patton Boggs’s Allard, for instance, believes the new rules may benefit firms with legal practices and larger lobbying firms
that may be better equipped to manage the intricacies of the new law.

“The need for public policy advocacy doesn’t go away,” he said. Firms that relied on relationships, however, may well be hurt. Potential clients are “are not going to go for the quick fix or silver bullet or glad-handing,” Allard said.

Lobbyists will have to report more frequently. The new law requires filing quarterly rather than semi-annually.

The continued focus on earmarks, though, may eventually hurt firms that have built their practice around appropriations work, said Hartley.

“There is a potential for a dramatic impact on that part of the lobbying industry,” said Hartley.

Cassidy was once just such a firm. Until recently, as much as 70 percent of Cassidy’s lobbying revenue came from
appropriations, but a four-year restructuring effort has dropped that figure to 51 percent, Hartley said.

Now 67 percent of new business is tied to non-appropriations work, he added.

The Democratic takeover of Congress also spawned a growth in all-Democratic lobbying firms.

Elmendorf Strategies, founded by Steve Elmendorf, reported revenues of nearly $1.9 million, despite having just three lobbyists. Elmendorf is a former chief of staff to House Minority Leader Richard Gephardt (D-Mo.) and is a sought-after party strategist. His firm is six months old and has 19 clients.

The firm Parven Pomper Schuyler reported revenues of $750,000 in part by targeting business-friendly Blue Dog Democrats.
Scott Parven said the firm has 13 clients. It recently signed on to lobby for the Pharmaceutical Research and Manufacturers of America. The contract was not included in its mid-year filing.

Roxana Tiron contributed to this report.