Lobbying giants expect a historic earnings boom to continue, even as a divided Congress threatens to slow legislation to a crawl.
The top Washington, D.C., lobbying firms on Friday reported massive earnings for the final three months of 2022, capping off a record-breaking year for K Street.
The strong fourth-quarter performance, which defied election season norms, boosted hopes that corporations will continue to spend big on D.C. lobbyists in the new year.
Lobbyists said that clients are particularly interested in must-pass spending bills, the tenuous debt ceiling battle and GOP investigations that will implicate major companies.
“People making the assumption nothing is going to happen over the next two years might be making a mistake,” said former Speaker John Boehner (R-Ohio), a senior adviser at Squire Patton Boggs, pointing to House Republicans’ investigations and proposals impacting the energy and tech industries.
Gridlock is bad for business. Lobbying spending hit record levels in recent years amid bipartisan bills to combat COVID-19 and Democratic control of D.C., which introduced trillions of dollars in new government spending.
Demand for lobbyists typically plummets when legislation stalls, but K Street is eyeing a host of bipartisan legislation.
“Contrary to predictions of partisan doom and gloom, we expect significant activity around the debt limit, cryptocurrency, the farm bill, FAA and Defense reauthorizations, expiring TCJA [Tax Cuts and Jobs Act] tax provisions, and issues regarding China,” said Brian Pomper, a partner at Akin Gump Strauss Hauer & Feld and former Democratic Senate aide.
Lobbying firms expect the spending boom to continue through the early part of the year, when clients aim to introduce themselves to new lawmakers and committee chairs and help them navigate an unpredictable Congress.
“Right now, the focus is on: Who do we need to know? Who do we need to meet? How do we need to position ourselves going forward on some of these issues?” said Nadeam Elshami, co-chair of government relations at Brownstein Hyatt Farber Schreck and former chief of staff to former Speaker Nancy Pelosi (D-Calif.).
In many cases, lobbying efforts have already moved beyond Congress.
Major bills from last Congress like the Inflation Reduction Act and the CHIPS and Science Act are the gift that keeps on giving for K Street. Corporate clients that lobbied the bills when they were being drafted are now lobbying agencies that write the new rules and dole out lucrative contracts.
“Regulatory implementation is a very significant area of focus right now,” said Karishma Page, co-leader of K&L Gates’s policy practice. “So much significant policy came out of the Inflation Reduction Act and we’re spending a significant amount of time for our clients analyzing the implementation guidance and providing feedback.”
Large corporations are fretting about the debt ceiling fight, which has the potential to result in an economy-crushing default, but also see a potential debt limit package as an opportunity to secure priorities such as tax reforms.
Earlier this month, the U.S. Chamber of Commerce, corporate America’s largest lobbying group, warned that businesses are “fed up” with inaction from Congress and won’t accept gridlock on priorities like the debt limit, immigration and permitting reform.
“Return of a divided Congress will put a huge premium on bipartisan reach and solutions, demanding a lot more patience and persistence from companies aiming to shape policy outcomes,” said Bruce Mehlman, a partner at Mehlman Consulting.
Several firms set new earnings records
Brownstein Hyatt Farber Schreck reported $61.6 million in annual earnings, a 9 percent increase from its 2021 total, which smashed records at the time. The firm captured the No. 1 spot among lobbying firms for the second straight year.
Akin Gump brought in $14 million in the final three months of 2022, its best quarter on record. The firm reported $53.1 million in yearly revenue, down less than 1 percent from its record-breaking 2021 haul.
The top lobbying firms have sought to cement their dominance by hiring senior staffers with close ties to D.C. power players.
Akin Gump recently hired Reggie Babin, former chief counsel to Senate Majority Leader Charles Schumer (D-N.Y.). In October, Brownstein hired Will Dunham, former deputy chief of staff for policy to Speaker Kevin McCarthy (R-Calif.).
Holland & Knight brought in an estimated $43.4 million, a 24 percent increase from 2021. Recently retired Rep. Ed Perlmutter (D-Colo.) joined the firm’s lobbying team earlier this month.
BGR Group, meanwhile, earned $10.1 million in the fourth quarter and $39.2 million in 2022, both high-water marks for the firm.
“We were helping protect client priorities in the defense, health and appropriations bills that the Democratic majorities in Congress were finishing at the same time as engaging with the incoming House majority as Republican leaders were setting the 2023 agenda,” said Loren Monroe, a principal at the BGR Group.
Invariant earned $9.9 million in the fourth quarter and $38.2 million on the year, a nearly 23 percent increase from 2021. Cornerstone Government Affairs brought in $37.4 million, an 8 percent year-over-year increase.
Mehlman Consulting reported $25.7 million in annual earnings, up 8 percent from the previous year. Squire Patton Boggs boosted its earnings from $24.4 million to $25.3 million. The Tiber Creek Group brought in $25.2 million, up from $24.6 million the year prior.
Cassidy & Associates saw its earnings rise from $20.6 million to $22 million. Van Scoyoc Associates boosted its yearly revenue from $19.5 million to $21.2 million.
K&L Gates posted $21.4 million in lobbying revenue, up slightly from 2021. The firm hired former Rep. Mike Doyle (D-Pa.), a longtime member of the influential House Energy and Commerce Committee, to its government affairs team last month.
K Street has been scooping up former lawmakers and leadership staffers as if there’s no slowdown on the horizon.
Former Rep. Rodney Davis (R-Ill.) joined Cozen O’Connor last week, while former Rep. G.K. Butterfield (D-N.C.) joined McGuireWoods Consulting earlier this month.