K St. Posts Feeble Growth in 1st Half
Hit by a downturn in the economy and a slow Congressional calendar, many of K Streets titans reported tepid growth for the first half of 2008.
Yet among K Streets 25 largest law and lobby firms, performance varied widely, with more than half of the largest firms recording double-digit percentage changes from the same period last year.
And despite the presidential campaigns intrusion into business as usual, much of the news among the top earners on K Street was good.
Despite early gloom and doom predictions about billings this year, in total, K Street improved its take by 2.8 percent for the first half of 2008, according to mandatory Lobbying Disclosure Act reports filed with the Senate and House.
Still, thats less than the 4 percent the biggest firms posted in the same time period in 2007, and nothing compared with the double-digit revenue bumps enjoyed in the years before.
Shops with bipartisan roots and others with deep Democratic benches continued to bring in big numbers.
Among the top firms, there was little movement, with Patton Boggs sustaining its place as pack leader, reporting $20.5 million in lobbying fees, a 5.7 percent gain from last year.
Akin Gump Strauss Hauer & Feld continued at No. 2 with a dramatic increase of 17.1 percent, bringing the firms billings to $17.8 million.
Van Scoyoc Associates rounded out the trio with its best first half ever, according to firm founder H. Stewart Van Scoyoc. I was a little surprised, Van Scoyoc said. Weve been struggling, since its not a big legislative year.
The firm pulled down $14.5 million, a 16 percent increase from the same period last year, which Van Scoyoc attributed largely to new activity relating to the housing crisis and taxes. Although the firm usually increases its revenue in the second half of the year, Van Scoyoc predicted that with the presidential election that wouldnt be the case.
The projections are down a little bit since Congress is only going to work another eight weeks, Van Scoyoc said. Its a little bit harder, but I think the thing I am seeing is a significant uptick in requests for our services for next year.
Cassidy & Associates was ranked No. 4 spot despite a 1.6 percent dip in revenues. The firm reported $12.1 million during the first six months of the year.
Cassidy Vice Chairman and COO Gregg Hartley attributed the decline to the firms growth in non-LDA reportable work in areas such as federal marketing and lobbying on behalf of foreign governments, not because of fewer appropriations clients.
An increasing amount of our work is in policy areas as opposed to approps, although the approps business is staying steady, Hartley said.
One of the biggest differences in 2007 is in Ogilvy Government Relations numbers. In 2007, the firm grew its revenue by a whopping 80 percent to $12.4 million, ratcheting up its standing to the No. 4 spot. This year the firm dropped to No. 8 after billing $9 million.
The 27.4 percent drop-off is largely attributed to its biggest client, the Blackstone Group, a private equity firm that it billed less than $5,000 so far this year.
Over the same period in 2007, Blackstone paid Ogilvy $3.74 million to help it lobby against a tax package.
The firm also attributed less special project work this legislative session as another, but smaller, factor in the revenue decline.
By contrast, the Podesta Group had the most dramatic increase in billings, with $7.4 million in lobbying revenue, a whopping 48 percent increase from last year.
Firm founder Tony Podesta attributed the increase to a growth spurt last year that was disguised by Republican Dan Mattoon exiting the firm.
We ended up without his book of business looking like we had a flat year when in reality we grew 33 percent last year for those of us who remained, Podesta said. Weve been on a substantial growth curve since then.
Although a bipartisan shop, Podesta says that part of the firms increase has certainly been as a result of the Democratic takeover in Congress.
We work very closely with the House and Senate Democratic leadership, said Podesta, who noted that he expects an even bigger second half to 2008.
The firm has recently signed up several new clients, including BAE and M.D. Anderson Cancer Center in Houston.
Podestas rise could be a sign of the future of K Street, lobbyists say.
I do think there has been a rush to firms like Podestas that have probably seen a rise as people are hedging their bets for next year, said Drew Maloney of Ogilvy Government Relations. We continue to get calls and continue to get new clients. Its just a slower legislative year.
Quinn Gillespie & Associates David Hoppe says his firm experienced a similar drop in numbers in 2008. The firm reported $7.6 million so far this year, an 11.6 percent decrease from the same time last year.
While many heads of lobbying shops are hedging their bets about whether the next six months spells more of a slowdown on K Street, not everyone was gloomy.
Despite seeing a 7.3 percent drop in LDA revenues compared to last year, Holland & Knights Rich Gold said he isnt worried. Gold attributed the drop to a shift in more non-LDA reportable work and expects business to pick up as companies prepare for a faster-paced 2009.
I think there is going to be a shift with people trying to get stuff done before they turn off the lights, Gold said about the end of the Bush administration. It really will pick up in earnest as people begin to plan for transition.