Influence industry officially in a funk

Washington’s lobbying industry is officially in a funk.

After a banner year in 2010, many of K Street’s biggest shops have seen their lobbying revenue decline this year, a trend that has continued in recent months.

Thursday was the deadline for firms to file reports that detail lobbying revenue for the third quarter as required under the Lobbying Disclosure Act. 

Several prominent lobby shops told The Hill show that earned less than they did during the same period last year.

Smith Davis, a partner at Akin Gump Strauss Hauer & Feld, said legislative activity in Washington is moving slower than normal due to the overwhelming focus on the supercommittee — the powerful congressional panel charged with finding at least $1.5 trillion in budget cuts.  He said the 2012 campaign season won’t thwart work in Congress because it’s “already here.” 

“I think you can still get things done meaningfully through May or June of next year,” Davis said. 

His firm’s lobbying revenue dropped 6 percent, from $27.5 million at this point last year to $25.8 million now.

Other firms saw declines as well.

The Podesta Group reported a 6 percent slide, going from $21.7 million in fees earned at this point in 2010 to $20.5 million now after the first three quarters of 2011.

Cassidy & Associates has earned $15.3 million in 2011 so far, an 18 percent drop from the $18.7 million they took in at this point in 2010.

And Holland & Knight had a 12 percent decline, going from $16.1 million made in lobbying fees in the first three quarters of 2010 to $14.2 million earned so far this year.

Rich Gold, head of Holland & Knight’s public policy and regulation group, said work on regulations — which is not reported under the Lobbying Disclosure Act — has helped firms compensate for the lobbying slowdown.

“Since nothing's happening, a lot of the little stuff you will piddle around on up there is just not worth investing in. They are much more invested in agency X, Y and Z and want to see if they can get some help there,” Gold said. “You count on one hand the things that might move [in Congress.]”

Patton Boggs, perennially the top-earning lobby firm in Washington, has reported $35.9 million in lobbying fees for 2011 so far, an increase of 19 percent over their $30.1 million performance last year.

Patton’s 2010 figure, however, doesn’t include lobbying revenue from Breaux Lott Leadership Group, which merged with the firm in July 2010. Comparing this year’s third quarter to last year’s third quarter — including Breaux Lott’s lobbying revenue in both figures — shows a $1 million drop for Patton Boggs, a sign that old-fashioned lobbying is not buzzing like it was in 2010.

“We're busy, but the registered lobbying work is down a bit,” said Nick Allard, a partner with Patton Boggs.

“Good thing for regulation and litigation. … The policy practice is very busy due to regulations, especially in advising clients on the healthcare side and financial services,” Allard said. “Major legislation begets major regulatory work.”

The healthcare reform and financial services laws that Congress passed last year kept lobbyists on their toes and fueled a business boom. 

But the new Congress has been defined by gridlock, embodied in the battles over the budget and that debt ceiling that have left lawmakers little time to move other pieces of legislation.   

Alston & Bird is one of the few firms to defy the trend, logging a 17 percent increase in revenue. The firm reported $10.2 million in lobby earnings for the first three quarters of 2011, up from $8.7 million last year. 

Bob Jones, a partner at the firm, said some recent high-profile hires help account for the growth, including teaming up with former Rep. Billy Tauzin (R-La.). 

“Sen. Dole’s here and he’s our leader. And we’ve brought on [former Sen.] Blanche Lincoln and Congressman Pomeroy, both of whom have just left Congress,” Jones said. “It increases our stature and our ability to bring national leaders into how we develop strategy. I think what you’re seeing is people being more aware of our bipartisan, bicameral team.” 

Covington & Burling has also seen a big boost in lobbying revenue in 2011. The firm has reported an 11 percent gain in fees, earning $8.3 million in the first three quarters of 2011, compared to $7.5 million at this point in 2010.

“We're not a firm that really handles appropriations matters. I know a number of firms who specialize in that have suffered from the antipathy from earmarks,” said Rod DeArment, a partner with Covington & Burling.

Rob Smith, co-chairman of Venable’s legislative practice group, said his firm’s steep decrease in lobbying revenue can be partly attributed to the ban on earmarks. The firm took in $7.4 million in lobbying fees for the first three quarters of 2011, down 13 percent from this point last year.

“We have a fairly robust appropriations practice,” Smith said. “So we’ve found that in many cases our clients want to advocate for grant money at the agencies as opposed to traditional earmarks.” 

The business-friendly House GOP agenda has also prompted some clients to decrease lobbying efforts since clients feel their priorities are already being recognized, according to Smith.

“House Republicans are listening to industry and are helping to push their priorities. Part of the Republican jobs plan is to roll back or block some environmental measures that hurt the private sector, so industry may not feel they need much outside help right now,” Smith said.

Dutko Grayling, formerly known as Dutko Worldwide, also saw its lobbying revenue decrease from $13 million for the first three quarters of 2010 to $8.8 million this year. Andy Wright, who helps lead the firm’s federal lobbying practice, said Dutko is moving away from a singular focus on lobbying. 

“It seems to me that most lobbying now-a-days is not the old going-up-to-the-Hill — that’s always obviously going to be part of it — but to break through the noise on Capitol Hill now you need a whole campaign,” Wright told The Hill. “Our clients come to us not looking for a lobbying firm but looking for a way to solve a problem.” 

Wright said his firm’s services include not only federal, state and local lobbying services but also public relations “to help clients frame their story the best way.” 

Some lobbyists are not expecting business to pick up much next year, either.

“The fourth year in a presidential term is usually the low year for lobbying in a four-year cycle,” said Allard of Patton Boggs. “Things tend to slow down to see what happens with the election.” 

The one exception could be corporate tax reform, which would likely ignite a lobbying response from every sector of the economy.

“Even though tax reform might not get addressed until 2013, there will be a lot, a lot of preparatory work,” Allard said. 

Check back in with The Hill to see how other K Street firms fared this quarter.