10-19-2002

LOBBYING: For K Street, Good Times in a Bad Year

Terrorism, corporate scandal, plummeting stock prices, and a weak economy
have hurt many businesses in 2002, but Washington's top lobbying firms
have emerged largely unscathed.


K Street's top-10 firms billed clients $88.4 million during the first six
months of 2002, 8 percent more than they collected during the same period
in 2001.


"When the economy is booming, we're hired to stop bad tax proposals
or bad government mandates," explained Steven Hart, CEO of law and
lobbying firm Williams & Jensen. "When things are in crisis,
people come to Washington because they have problems."


The four biggest shops maintained their positions at the top of the
rankings. Perennial No. 1 firm Cassidy & Associates was one of only
three in the top 10 that saw their fees drop. From January to June 2002,
Cassidy's billings declined 10 percent, to $14.9 million, but the firm
still stayed on top by counting on a long list of six-figure fees from
corporate, university, and government clients. A Taiwanese think tank
continued to pay Cassidy $2 million a year to promote stronger ties
between the United States and Taiwan.


Law and lobbying firm Patton Boggs, the perennial No. 2, couldn't catch
its rival, despite Patton Boggs's strong showing, with a 30 percent jump
in fee income, to $13.4 million. Akin Gump Strauss Hauer & Feld was
No. 3, increasing its fee income 14 percent, to $10.8 million.


Verner, Liipfert, Bernhard, McPherson and Hand remained in the No. 4
position with $8.6 million in fees over the six-month period, a slight
decline from its earnings the year before. After the midyear filings,
Verner, Liipfert was acquired by the Baltimore law firm of Piper Rudnick,
whose small lobbying practice posted a tiny $360,000 in fees during the
six-month period.


Climbing into the top five of the rankings for the first time was Van
Scoyoc Associates. The firm continued its rapid rise, building its fee
income by 35 percent, to $8.4 million, doing mostly appropriations-related
work.


Greenberg Traurig, meanwhile, dropped one notch in the first half of 2002,
finishing at No. 6. The law firm relied heavily on rainmaker Jack
Abramoff, whose client list of Native American tribes accounted for most
of the firm's income. Abramoff did lose one longtime client: the
Commonwealth of the Northern Mariana Islands. The U.S. territory, which
has come under fire in Washington for its relaxed labor standards, elected
a new government last November that decided not to retain
Abramoff.


Still, Greenberg Traurig managed to replace most of the one-time $4
million fee it earned last year from the families of three Cuban-American
men whose small plane was shot down by the Cuban government in 1996. The
firm had helped the families win a massive payout of Cuban government
funds.


Longtime top finishers Williams & Jensen; Barbour Griffith &
Rogers; and Washington Council Ernst & Young claimed the No. 7, 8, and
9 slots respectively. Each banked fee increases, but none claimed a higher
percentage rise than law firm Hogan & Hartson, which posted a 55
percent gain in fee income and reclaimed a spot in the rankings by coming
in at No. 10. The firm narrowly edged lobbying shop Quinn
Gillespie.


National Journal compiles its survey of the 10 top-earning lobbying firms
twice a year, relying on reports the firms must file with the Senate and
the House. The reports are mandated under the 1995 Lobbying Disclosure
Act.


Most lobbyists said that despite the upsets in the economy and the fear
over domestic security, business returned to normal for them in 2002.
"In the immediate aftermath of the 9/11 attacks, the whole country
stopped," said Joel Jankowsky, a partner at Akin Gump. "But as
Congress slowly began to get back to its traditional work, so did those
who work with it."


Jankowsky said K Street firms aren't affected by the economic downturn in
the same way as other businesses. "It hasn't hit us, because as the
economy slips, Congress reacts," he said. "It spawns things like
the terrorism-insurance bill. It spurred the bankruptcy
bill."


Some old issues did disappear, but many others continued to spark debate
in Washington. Akin Gump, for example, continued to earn big bucks from
Arizona's Gila River Indian Community, which wants Congress to pass
legislation settling a long-standing dispute over water rights near
Phoenix. Akin Gump's other top clients-AT&T, Bridgestone/Firestone,
PG&E, and Volkswagen-stayed loyal as well.


Many lobbyists thought that Verner, Liipfert would drop in the rankings
after it let half of its staff go last year and closed the merger with
Piper Rudnick. But the firm held steady, thanks in part to the American
Insurance Association, which enlisted Verner, Liipfert to work on a
legislative solution to the upsurge in asbestos claims. The $2.1 million
the AIA paid to Verner, Liipfert was the largest single fee in the midyear
filings. Verner, Liipfert also banked $380,000 from a Kansas-based law
firm, Warden Triplett Grier, which two London insurers had retained to
track terrorism-insurance legislation. Both the Senate and House have
passed versions of the insurance bill, but differences over the degree of
liability for building owners or employers have stalled the legislation in
conference.


In another example of how lobbyists can benefit from an ailing economy,
Verner, Liipfert was paid $480,000 from Bermuda-based manufacturer
Ingersoll-Rand because Congress decided to go after U.S. companies that
move to offshore tax havens. Legislation that would have penalized such
companies was introduced in the House and Senate but has not
passed.


The same issue helped Williams & Jensen boost its total. The firm
earned $220,000 for just two months' work after Connecticut-based
toolmaker Stanley Works announced in May that it was moving to Bermuda.
The announcement set off a firestorm and became a hot topic in
Connecticut's 5th Congressional District race. In August, the company
backed off its plan.


Patton Boggs earned the second-highest fee from a single client-more than
$1.3 million from candy manufacturer Mars, which pushed for freer trade in
sugar, peanuts, and dairy products. The privately held company also
promoted eliminating the estate tax permanently.


Of course, there's nothing like a controversial issue to get the meter
running. Patton Boggs came to the rescue when the Russian government took
over private television station NTV, sparking cries of protest from
advocates of press freedom. For a price of $580,000, a Patton Boggs team
helped persuade members of Congress to eliminate language in the 2001
Russian Democracy Act that criticized the takeover, and to shelve a
resolution that called for removing Russia from the Group of Eight
industrialized nations.


Similarly, Hogan & Hartson and Barbour Griffith continued to make hay
by bashing Fannie Mae and Freddie Mac, two quasi-governmental institutions
that promote home ownership in low- and moderate-income communities. The
two lobbying firms represented FM Watch, an organization backed by private
banks and mortgage lenders that say Fannie and Freddie steal their
business.


Helping companies navigate a Washington regulatory thicket is an old
standby. Patton Boggs earned $360,000 helping satellite television firm
EchoStar Communications try to seal a merger with industry rival Hughes
Electronics. Nonetheless, the Federal Communications Commission has
rejected the merger plan.


Barbour Griffith & Rogers, by contrast, has had more success helping
cable company Comcast tie the knot with AT&T Broadband. That deal is
expected to go through by year's end. Barbour Griffith earned $460,000 for
its efforts.


Of course, anytime a new high-paying client arrives, it can do wonders for
the bottom line. Mike House, chairman of the Hogan & Hartson
legislative group, gave carmaker Nissan credit for his firm's resurgence.
The company paid Hogan & Hartson $560,000 from January through June
for work opposing an increase in the federal corporate average fuel
economy standards. Nissan also asked Congress to allow it to classify its
Mexican-built Sentra as an imported car, despite trade rules that group it
with American-made automobiles. Concerned that its import fleet might not
meet fuel-efficiency standards, Nissan said that the efficient Sentra
would have helped, but Congress declined to recategorize the vehicle.
"People were saying that business would fall off a cliff, but it's
been a good year," said House.


Indeed, 2002 was a busy year on Capitol Hill, and that, more than the
economy, is what matters to Gucci Gulch. "Business is very
event-driven," explained Washington Council partner Nick Giordano.
"Some firms have a lot of homeland security work now. For us, we had
clients with a tremendous interest in the stimulus package."


Some top lobbying accounts are shrouded in secrecy because of loopholes in
the 1995 disclosure legislation. For example, Washington Council Ernst
& Young's top client, the Net-Operating-Loss Group, is a coalition
that sought successfully to have tax rules altered in order to allow
companies experiencing a loss to receive tax refunds on income reported in
previous years. But the legislation doesn't require the lobbying firm to
report the members of the coalition, and the firm declined to name
them.


Similarly, Abramoff of Greenberg Traurig posted $580,000 in fees from the
American International Center, an obscure group of wealthy conservatives
who use a post office box in Rehoboth Beach, Del., as their address.
Abramoff said the group wants to promote a "pro-free-market,
pro-free-trade" approach to governance in Southeast Asia. He named
one of the center's backers, venture capitalist David Grosch.


Shawn Zeller

National Journal