Lobby Revenues Slowed Last Year, Firms Say

For much of K Street, 2010 will not go down as a gangbuster year because the poor economy and the midterm elections resulted in limited legislative activity and diminished lobbying revenue.

While the biggest law firms saw a spike in lobbying revenue largely because of acquisitions of boutique shops, many other firms reported flat or declining revenue, according to the year-end disclosure reports filed last week with Congress.

Lobbying executives were cautious in predicting a major uptick in lobbying revenue this year, citing uncertainty about a divided Congress and the appropriations process as well as a shift in activity from Capitol Hill to executive branch agencies.

"The operative word of the year was 'haircut,'" said John Feehery of Quinn Gillespie & Associates, noting that everything was being trimmed last year as the firm's lobbying revenue dropped by 10 percent.

Feehery, a former GOP Congressional aide who joined Quinn Gillespie late last year, said that while the firm's lobbying business declined, its communications practice is expanding.

Michael Ferrell, who chairs the legislative practice at Venable, said his firm was disappointed in the slight dip in Lobbying Disclosure Act revenue from 2009 to 2010, especially after the firm saw a hefty increase from 2008 to 2009.

"With the shortened season of the election year and the fact that health care sucked the life out of most of the unfinished business, it's not surprising that some firms, like ours, suffered a decrease in our LDA revenues," Ferrell said.

So far, he said, 2011 is off to a good start.

"We've got a couple of new big projects coming in," he said. However, Venable lobbyists, who do some appropriations and earmark lobbying, are still operating on uncertainty.

"We're still trying to figure that out. It's kind of a legislative black hole, but I think the prospects are good," Ferrell said.

Ogilvy Government Relations, another top lobbying shop that reported a dip, last year lost six lobbyists who left to form their own firms. However, Ogilvy recently brought on two new lobbyists as it rebuilds its practice.

Other firms have moved to diversify their practices into regulatory or business consulting work.

McBee Strategic Consulting's Steve McBee has seen an increase in his firm's lobbying work, but it also has set up practices to advise investors. "We remain incredibly excited about our advocacy business, but we're spending a lot of time on our diversified business as well."

As the Obama administration crafts rules to implement the new health care and financial reform laws, many shops have shifted attention from the Hill to the executive branch. And much of the income from lobbying federal agencies is not reported in disclosure filings.

Kevin O'Neill, deputy chairman of the public policy department for No. 1 firm Patton Boggs, said regulatory work is "certainly keeping a lot of people busy in Washington."

In 2010, Patton Boggs maintained its top ranking in terms of lobbying revenue, but much of that increase was from its acquisition last summer of the boutique lobbying firm Breaux Lott Leadership Group, which reported $6.5 million in lobbying revenue in the first half of the year prior to the sale.

O'Neill also said his firm benefited from a more active than expected fourth quarter, in which a lame-duck Congress tackled a major tax bill and several other items.

The No. 2 firm, Akin Gump Strauss Hauer & Feld, reported a more than $3 million bump in revenue, attributing some of the growth to its purchase of the boutique Democratic lobbying firm Parven Pomper Strategies last March.

Smith Davis, co-leader of Akin Gump's policy practice, was more upbeat about the prospects for lobbying on Capitol Hill this year, saying clients will be paying particular attention to the appropriations measures, which will likely serve as vehicle for other legislative issues.

"This is not going to be a do-nothing year," he said.

But others do not see as much lobbying, at least in the halls of Congress.

Rich Gold, who heads Holland & Knight's public policy and regulation department, said he did not expect lobbying "this Congress to be as ginned up as it was in the last Congress."

Even in the last Congress, Gold said, his firm saw a slowdown in lobbying activity in the last half of the year after the passage of the health care reform. But the other side of the equation was that Holland & Knight had increased staff devoted to regulatory work, Gold said.

Al Mottur, managing partner of Brownstein Hyatt Farber Schreck's Washington, D.C., office, said 2010 amounted to a "very solid year" for the firm. "We retained many of our clients," he said.

But he noted that it would be impossible to keep up with the 60 percent pace of growth the firm posted in 2009. "You can't replicate that every year," he said.