K St. Braces for ’08 Blues

But Many Firms Hoping to Grow in Election Year

Posted October 2, 2007 at 6:21pm

Holland & Knight’s chief lobbyist Rich Gold is smack in the middle of his pitching season. Between Labor Day and Thanksgiving, Gold says he and and his team can meet with five potential clients a week to “pitch” them to hire the firm for the coming year.

But a presidential election year like 2008 usually spells slowed growth for lobbying firms and can render such pitches unproductive. Already some lobbyists say privately they fear their existing contracts might get sliced — and future clients won’t materialize — if the legislative process grinds to a halt as the campaigning takes over completely.

And some corporate lobbyists say those jitters are well-founded. “We’re going to have a lot fewer consultants next year,” one said. “There’s no reason to have a ton of consultants on the payroll when you don’t have a lot of issues before the Congress.”

But Gold said he is figuring on expanding Holland & Knight’s business by 15 percent, from an expected $54 million this year to a projected $62 million in 2008.

“Clients have to assume at any moment they might get screwed,” said Gold, a former Clinton administration official in the Environmental Protection Agency. Tax legislation, energy and transportation bills and health care policy are sure to spill well into 2008, he said.

Giving a glimpse of one of his client pitches, Gold added, “at the end of the day, nobody trusts or can absolutely trust that a deal won’t be cut that won’t hurt the oil industry. You can’t afford to not invest.”

To that end, Joel Wood, the top lobbyist at the Council of Insurance Agents and Brokers, said his group will keep its lobbying budget steady through next year. “We can’t kick up our heels,” he said. “There are still plenty of things out there that mean tens of millions of dollars to our members,” even if they seem parochial.

Recent presidential election years proved to be a mixed bag for top lobbying firms. While the biggest 25 shops in town saw their revenue growth slow to a measly 3 percent in 2004, the same bunch expanded their business by a healthy 14 percent in 2000, according to an analysis of figures from CQ MoneyLine.

To help prevent a repeat of the 2004 slump, lobbyists said they also are using Congress’ historically low approval ratings as a tool to keep existing clients around and to lure new ones in 2008.

“It’s true that usually in an election year, especially a presidential year, there’s a falloff,” said Nick Allard, a Democrat who co-leads the lobbying practice at Patton Boggs. “But legislatively, it’s no ordinary Congress. This Congress has a lower approval rating than the White House, so Congress really needs to show that it’s doing something. That counteracts what you would normally see.”

Allard said Patton Boggs is on track to have a record year in 2007, so it will be difficult to keep up with that pace.

Another firm with a banner first half of 2007, Ogilvy Government Relations, also will be hard-pressed to grow at the same rate it has this year, a whopping 80 percent.

“For a firm like ours that’s had a strong year, our mission No. 1 is to ensure that our clients re-sign with us for next year,” said Ogilvy’s Andy Rosenberg, who was the first Democrat hired at the now-bipartisan firm. “Whether or not an awful lot gets done next year, it’s an important year to set the table for future efforts.”

Scott Parven, who opened an all-Democrat lobbying shop less than a year ago, said he’s telling clients to get ready for a government that looks like the political makeup of his firm, Parven Pomper Schuyler.

“This town is about to turn on its head,” Parven predicted. “And clients are going to have to learn to play offense and defense and find new champions and resources. Smart people who run government relations, they need to change with it and prepare for 2009. And they’re going to need a full year to do it.”

Cassidy & Associates, once the reigning king of K Street firms, dipped for the first half of 2007, but the shop’s Kai Anderson, a former aide to Senate Majority Leader Harry Reid (D-Nev.), said business has picked up after that early year lull. He expects that to continue into 2008.

“Folks in the business community are trying to prepare for multiple outcomes,” Anderson said. “They’re trying to either be prepared for opportunities across the spectrum or inoculated against threats.”

But perhaps it won’t be so easy. One in-house lobbyist at another corporation said he likely would evaluate his outside consultants in late winter or early spring of next year, determining whether he would make cuts based on the status of his company’s key issues. “In presidential cycles, after February most stuff shuts down anyway,” he said.

Tory Newmyer contributed to this report.