By Megan R. Wilson - 07/24/14 06:00 AM EDT
The lines of power in Washington’s lobbying industry are being redrawn.
While upheaval is nothing new for K Street, change has come at a dizzying pace in recent months, with each day bringing announcements of firms snatching up offices, combining forces or stealing away entire groups of employees.
“It’s like LeBron James going to [the] Cleveland [Cavaliers]. When you see players going to different teams, there’s a whole different competitive playing field,” he adds. “You have to ask yourself: How do we compete with those teams on the court?”
The seismic changes extend all the way to the top of the industry, where the firm formerly known as Patton Boggs has seen undergone a massive restructuring as part of a merger with the law firm Squire Sanders.
The merger deal led to an exodus of staff, with at least three competitors — Holland & Knight, Akin Gump Strauss Hauer & Feld and Jones Day — welcoming some former Patton employees into the fold.
But there have been several other shakeups in the past year that show just how volatile the lobbying business has become.
Earlier this month, the law firm Dickstein Shapiro saw more than a dozen of its lobbyists walk out the door and join Greenberg Traurig. Earlier in the summer, a handful of Williams & Jensen advocates broke away to start their own venture.
“Once you have that blood in the water, the sharks start to circle, and you see firms try to pick off the best people,” said Mike House, the chairman of the legislative practice at Hogan Lovells.
“I think it’s been coming for some time, and it’ll come in waves,” House said of the K Street churn.
Veteran lobbyists agreed that the business is going through a time of change but said the recent convulsions have been unusual in their frequency.
“Leaving a firm and taking a big chunk of people with you, or a whole practice area, doesn’t really happen twice in the same year, let alone twice in the same month,” said Tony Podesta, the founder and chairman of the Podesta Group.
Between the 1990s and early 2000s, several lobbyists noted, K Street underwent a major transformation as public affairs shops began acquiring lobby firms.
“That was en vogue for awhile,” said Joel Jankowsky, who founded Akin Gump’s public law and policy practice. “They were trying to create these ‘one-stop-shopping’ deals.”
“You don’t see that anymore,” said House, of the same trend.
Jankowsky told The Hill that, while there does appear to be a new pattern developing on K Street, it largely “mirrors the corporate world.”
“It’s not unique to law firms or lobby firms. There’s a lot of consolidation in the corporate world, particularly in the high-tech sector,” said Jankowsky, who represents some of the tech industry’s biggest names. “I don’t know if it’s a cycle, but there does seem to be a pattern.”
Akin Gump brought in $33.8 million last year, and stands to make millions more this year with the addition of new lobbyists, including an 11-person healthcare practice.
Times are also changing at Greenberg Traurig, the former stomping grounds of the infamous lobbyist Jack Abramoff.
The firm has added 40 new lawyers and lobbyists to its Washington outfit alone. In the most recent move, Andrew Zausner joined the firm — and brought 12 lobbyists along with him. He also brought a $2.8 million client, the tobacco company Lorillard.
The additions “put them back on the map as far as having a government relations presence,” said headhunter Ivan Adler, a principal at The McCormick Group.
Adler says the volatility of the industry has kept his phone ringing.
“Star lobbyists are no different than star athletes who are looking for the right team where they can excel,” he said.
Industry leaders said some lobbyists leave firms to carve out a niche for themselves, while others seek stability. Sometimes, lobbyists simply want more freedom to run their business as they see fit.
“Some of it is economics, some of it is — people crave change,” Podesta said.
“Competition is tougher than it was five years ago; there’s more of us now,” said Moses Mercado, a principal at Ogilvy Government Relations, while acknowledging that the number of actual registered lobbyists has gone down. “The cream always rises.”
Ogilvy went through a major restructuring within the last few years, after some of the firm’s star lobbyists departed, taking millions of dollars in client work with them. Mercado says the firm is stronger now, thanks to the rebuilding.
hough the breakneck turnover gives some firms pause, many lobbyists and practice leaders said it’s up to law and lobby firms to create an environment where employees don’t want to leave.
“If you’re, as we are, trying to build and sustain an institution for the long run, you always care about your people and you want to make the best work environment that you can,” Jankowsky said. “That’s just part of being a good place, rather than a fear of losing people.”
Akin Gump has spent the last six years “very consciously” building the next generation of top lobbyists, he said.
K&L Gates, meanwhile, has seen its revenue stay relatively stable, despite a slight decline from a 2010 heyday, and — perhaps more importantly — its staff remains cohesive.
“If you looked at the senior member of our practice group — I would bet you the average time working together is 20 years,” Conner said, pointing to Manny Rouvelas, who launched the firm’s lobby shop about 40 years ago. ”It’s a real testament to our practice.”