Appropriations Shops Restructure Their Business Models

Posted October 23, 2009 at 6:10pm

Lobbying firms that once specialized in securing earmarks for their clients appear to be weathering both the economic downturn and public outrage over the “Bridge to Nowhere— and other pet projects that have been cast as a misuse of federal tax dollars.

A sampling of lobbying disclosures from firms once known primarily for their prowess before House and Senate Appropriations panels suggests some earmark specialists are faring better than others. Cornerstone Government Affairs has experienced nearly double-digit revenue growth for the first nine months of 2009, while Cassidy & Associate’s Lobbying Disclosure Act-related income has plunged by 14 percent since last year, according to Senate records.

Cornerstone President Geoff Gonella attributed the uptick at his firm to recent hires and the broadening of Cornerstone’s offerings to include traditional, non-appropriations advocacy work.

“Our amount of appropriations work has gone down in the last 12 months, but we continue to do a lot of it,— Gonella said. “It’s a matter of diversifying the services we’re providing to specific clients.—

Through Sept. 30, Cornerstone has brought in $9.7 million in LDA-revenue, a 9 percent increase from the first nine months of 2008. According to disclosures filed with the Secretary of the Senate, Cornerstone earned $8.9 million from Jan. 1 to Sept. 30, 2008.

Cornerstone recently hired Paul DiNino, a former staffer to Senate Majority Leader Harry Reid (D-Nev.), former House Appropriations Committee aide Greg McDonald and ex-Wal-Mart lobbyist John Kelly.

But fortunes at Cassidy these days appear less rosy. Senate records suggest that the firm has experienced a downturn since passage of the Honest Leadership and Open Government Act of 2007. Through Sept. 30, the legendary firm — whose founder, Gerald Cassidy, is considered the father of earmark lobbying — reported $17.9 million in LDA-revenue, according to Senate records. In the same period last year, Cassidy & Associates brought in $20.8 million.

“This has been a difficult year for many sectors of our economy, and K Street has not been immune from that difficulty. But our firm is stronger as it has transitioned our business model into more integrated solutions for clients where our public policy work now includes lobbying, global strategies, federal marketing and strategic communications,— firm executive Gregg Hartley said in an e-mail. “It would be difficult for us to narrowly define our revenues because our work is very integrated and can include everything from policy development and advocacy to federal marketing, but our appropriations work remains a viable part of our business model.—

Craig Holman, a lobbyist for the watchdog group Public Citizen, suggested that Cassidy and other firms are struggling to adjust in a world in which “earmarks specifically have fallen out of favor.—

“HLOGA significantly reduced the number and amount of earmarks that have gone through appropriations bills, which has cut into Cassidy’s revenues,— Holman said.

Like Cornerstone, McBee Strategic Consulting also has watched its revenue soar during the first nine months of 2009. Through Sept. 30, McBee’s firm brought in $8.4 million worth of LDA-related income, an 18 percent increase from the first nine months of 2008, when the firm disclosed $7.1 million.

“I attribute it to the bets we’ve made on clean energy and energy, as well as investments we’ve made in regulatory issues we projected would be ascendent, including finance and health care,— firm Founder Steve McBee said.

Four years ago, McBee said, appropriations work made up nearly 40 percent of the firm’s revenue. Nowadays, he said it constitutes less than 10 percent.

According to disclosure forms, other appropriations-inclined firms appeared to be experiencing less dramatic revenue swings during the first nine months of the year. Through Sept. 30, Alcalde & Fay has made $8.2 million in LDA work, essentially unchanged from the same period in 2008.

“While strong in appropriations work, we’ve always had a diverse practice with at least 10 different practice groups,— Alcalde lobbyist Jennefer Hirshberg said. “Our energy and environment group is doing a lot of work for the climate change and energy bills.—

LDA-revenue at Van Scoyoc Associates also has been essentially flat so far this year. Through Sept. 30, the firm’s revenue had inched up 3 percent, rising to $20.4 million from $19.8 million a year ago.

“This very active Obama Administration and the 111th Congress are spurring a matching amount of interest in government by our clients,— firm President Stewart Van Scoyoc said in a statement. “We continue to believe this is going to turn out to be a very strong year for us, if not the best ever.—

Other firms appear to be doing better than Van Scoyoc. At Denny Miller Associates and the Ferguson Group, LDA-based revenues have edged up by 6 percent since last year. Both firms did not respond to requests for comment.