The old Federalist Group had a certain MOD squad charm about it. The all-Republican lobby shop’s clients included gun, liquor and tobacco interests. And its partners, some with a folksy Southern drawl and all with impeccable connections, might just as easily talk huntin’ as leadership races on Capitol Hill.
That firm doesn’t exist anymore. It, quite literally, sold out.
And now the corporate-owned successor, Ogilvy Government Relations, faces an uncertain future as its parent company’s CEO is scheduled to arrive in town this week from London for private meetings.
Federalist sold to WPP Group, went bipartisan and took on the Ogilvy moniker. Some of the shop’s early partners exited two years ago when they had collected their portion of the sale through an earn out. Last week, the outfit lost four lobbyists, including its biggest rainmaker, Wayne Berman, who announced he was going inhouse with client Blackstone Group.
It’s a tale not uncommon to K Street: Build a firm with a lot of buzz and a long roster of clients, then sell to one of the big communications conglomerates that court lobbying firms the way single Hill staffers eye summer interns. But with a holding company’s cash often comes a culture change and directives from a headquarters that might not entirely sync with the business of K Street.
Top talent makes for the exits amid squabbles about control and how to divvy up the profits between the firm and its parent. Major staff departures can be a setback to any business. But on K Street — where personalities and relationships are the currency — it’s a serious blow.
“Our assets walk in and out of the door every day. It’s a complete people business,” said Tony Podesta, who owns the independent Podesta Group and has over the years considered selling out. “If people are unhappy, they don’t stay. Happiness is easier when it’s somewhat controllable inside your own organization than when you’re part of a much larger organization.”
Sir Martin Sorrell, WPP’s London-based chief executive, downplayed the significance of the departures and said Ogilvy Government Relations will continue.
“We’ve got many businesses in Washington,” he said. “And they’ve actually done quite well over the years. ... And they continue to do pretty well actually.”
WPP’s holdings include Glover Park Group, Wexler & Walker Public Policy Associates, QGA Public Affairs, Prime Policy Group and public relations firms Burson-Marsteller and Hill & Knowlton.
Sources familiar with Ogilvy Government Relations and WPP say the lobby shop and its parent company had a brewing conflict over profit sharing and management matters. WPP executive Howard Paster, a longtime lobbyist and Washington insider who died last year, had been the conglomerate’s point man for many of its K Street businesses, including Ogilvy. WPP has been unable to replace Paster’s penchant for diplomacy and knowledge of the business, these sources note.
Sorrell said Ogilvy lobbyists “requested a separation” from the Ogilvy public relations unit and that they now report to him and Mark Linaugh, who is WPP’s chief talent officer in New York.