Consultants, 527s: The Dog That Didn’t Bark

Posted April 29, 2005 at 2:15pm

The leaders of the free-spending political-advocacy groups known as 527s may fear pending legislation aimed at curbing their influence. But political consultants don’t seem overly worried that a new restriction on campaign finance is about to hurt their bottom line.

After it became obvious that 527s were having an enormous impact on the 2004 presidential election — ranging from the Swift Boat Veterans for Truth on the right to America Coming Together on the left — a bipartisan effort gained steam in Congress, as reformers hoped to limit how much donors can give to such organizations. Hearings on the issue continued last week.

But while many political consultants do not support the effort led by Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.), they nevertheless do not fear for their livelihoods.

“The bottom line — there’s always going to be enough business to go around,” said Robert Doyle, president of Sutter’s Mill Fund Raising and Strategy Inc.

Rob Kelner, who heads the election law practice at the firm Covington and Burling and who recently questioned the wisdom of the pending legislation, said: “I don’t see it making much of a difference for political consultants.”

Partly for that reason — and partly because many consultants are wary of outwardly lobbying Congress about anything — the consultants’ official professional organization, the American Association of Political Consultants, will not try to influence the debate, said AAPC President Wayne Johnson.

“Most consultants consider it something of a conflict of interest to get involved in shaping policy through their clients,” said Johnson, president of the Sacramento, Calif.-based JohnsonClark Associates. “We don’t necessarily want to put those two professions together. We don’t want to have undue influence.”

The American League of Lobbyists, which has many members who do at least some work on campaigns, has taken a similar stance.

“The league has always taken the position that we don’t oppose rules and regulations, be it lobbying or disclosure or political contributions, as long as people have a right to exercise their freedom of speech,” said the league’s president, Paul Miller, a partner with Miller/Wenhold Capitol Strategies.

Miller added that his group does have expertise that Members could tap when drafting such legislation — if they were willing to ask.

“Why not work with these groups to find fair but unobtrusive legislation?” Miller asked. “No one has ever come to us. The action is more to score political points back home than to make anything better.”

Despite the AAPC’s official neutrality, Johnson is not convinced that the effort to curb the influence of 527s is a panacea.

“Would most political consultants rather see the candidates themselves be in control of the … presentation of their candidate?” Johnson asked. “Sure they would. But we’ve sort of gone down this bifurcated route [already]. If we’re going to rethink this, they should really go back to the beginning.”

The root question, he said, is how to prohibit Americans from certain political activities without encroaching on freedom of speech.

Theoretically, firms that cater specifically to 527s could be hurt most directly by the passage of stricter regulations on 527s. But there aren’t many such firms, consultants say: Most political consulting practices have a broader portfolio and can easily shift focus.

Erik Potholm is a partner with Stevens Reed Curcio and Potholm, the firm that produced the Swift Boat ads. He said that while the Swift Boat project catapulted the firm into the spotlight, losing similar accounts in the future, if they were curtailed by law, would not cost the firm much.

“We are a well-established, reputable firm with lots of Senate and gubernatorial clients,” he said.

Consultants agree that the 527 boon bolstered balance sheets in the consulting industry. The emergence of 527s “was an unintended, wonderful consequence, [and] when you get something like that, you kind of hate to see it go away,” Johnson said.

But as is often the case with campaign funding, a lot of the money left unspent on 527s would probably flow to political consultants in some other fashion, perhaps through groups organized under the 501(c) portion of the tax code.

“I don’t think anybody is going to be losing money from [a scaling back of] 527s,” Miller said. “It will just force people to think in creative ways to get around it.”

Most consultants agreed. The more the rules change and the trickier it becomes to influence elections, the more business they will tend to get.

“McCain-Feingold probably made more money for consultants [than it took away, and] the same thing is true for 527s,” Miller said. “No one anticipated the money they would raise. I don’t think it will hurt anybody [if the laws change again]. It probably will increase people’s client base.”

Campaign attorney Kelner agreed.

“The bottom line is that political consultants will be able to drum up new business, regardless of what campaign finance laws are put into place,” he said. “If the law favors 527s, then consultants will focus on 527s. If the law favors 501(c)s, then consultants will focus on 501(c)s. I don’t see it making much of a difference for political consultants.”