By Kevin Bogardus and Megan R. Wilson - 10/22/12 10:47 PM EDT
Election Day can’t come soon enough for K Street.
Several of Washington’s biggest shops reported a decline in lobbying revenue this past quarter, a three-month stretch when lawmakers were mostly at home campaigning for reelection instead of working on legislation.
Kevin O'Neill of Patton Boggs, K Street’s top-earning firm, said lobbyists knew from past presidential election years that the third quarter would be slow — and planned accordingly.
“Scheming and dreaming for 2013 is not reportable but it is revenue on our bottom line,” said O’Neill, the deputy chairman of Patton Boggs’s public policy department. “You have a lot of people who are gaming out what happens after the election.”
Monday was the deadline for lobby firms to disclose their third-quarter reports for 2012 as required under the Lobbying Disclosure Act (LDA). Few firms reported increases in their lobbying businesses, and many industry leaders, including Patton Boggs, saw their annual take fall.
O’Neill said the firm is helping clients prepare for after the election and continues to expand its work on regulations, which boosts the firm’s earnings but isn’t disclosed under the LDA.
“The expectation was that not a lot was going happen in this 90-day period,” O’Neill said.
The third quarter was marked by two lengthy recess periods for lawmakers — one in August, and another beginning in September that will run past the Nov. 6 election. Those extended breaks left little time for legislating and made it hard for lobbyists to get face time with members.
"There's a big national pause button, and somebody pushed it," said H. Stewart Van Scoyoc, the president and CEO of Van Scoyoc Associates.
Van Scoyoc’s firm reported earning $16.4 million for the first three quarters of 2012, a 10 percent drop from this point last year.
Van Scoyoc said his clients — which include state universities, municipalities and corporate giants such as FedEx and Lockheed Martin — are prioritizing items in their budgets, with many cutting back on lobbying.
But those cutbacks are unlikely to continue after the election, when Congress will get down to business on the Bush tax rates, sequestration, the farm bill, tax reform, spectrum allocation and the sweeping policy changes that make up the “fiscal cliff" of tax hikes and budget cuts.
Van Scoyoc’s clients, he said, are “of the belief that the country cannot afford this process [of delay] any longer."
“Now is the time to deal with it. The election was an excuse to kick the can down the road,” he said.
Other notable names on K Street saw their lobbying revenue plateau or plunge, including Podesta Group, which reported earning $20.6 million in lobbying fees for 2012 so far — no change from last year.
The downward trend was felt at K&L Gates, which reported a 5 percent decline from the first three quarters of 2011, and Holland & Knight, which reported a 4 percent dip. K&L has taken in $13.4 million in lobbying revenue so far this year, while Holland & Knight earned $13.6 million.
Another one of the perennial leaders on K Street, Ogilvy Government Relations, saw its LDA revenue fall after the departure of star lobbyists Wayne Berman and Drew Maloney.
Ogilvy reported earnings $12.2 million in lobbying revenue for 2012 so far — an 18 percent decline from 2011, and enough to knock the firm down a few pegs on the K Street earnings list.
Gordon Taylor, the firm’s president, noted that Ogilvy finished this quarter with seven people on the payroll, compared to 15 people at this point last year.
“It's a testament to our firm that our revenue numbers are still strong,” Taylor said, adding the firm has made a number of new hires.
Some firms were able to buck the influence industry’s malaise and post growth.
Brownstein Hyatt Farber Schreck reported earning $17.1 million in lobbying fees, a 4 percent increase over this point last year. Mehlman Vogel Castagnetti reported growth of 4 percent as well, reporting $9.6 million in revenue for the first three quarters.
“We had a bunch of client wins in 2011 that translated into a strong first half of 2012. Many are experiencing a ‘hurry-up-and-wait’ period prior to November, but many other clients are eager to hit the lame duck [session of Congress] hard and gearing up for a very intense January,” said Bruce Mehlman, a firm partner at Mehlman Vogel Castagnetti.
Many lobbyists are anticipating a busy fourth quarter to finish out 2012. The fiscal cliff could bring a flurry of legislating the last two months of the year, with massive repercussions for business nationwide.
“We are immediately going into battle mode. It just depends on who is going to control what after the election,” said Steve Hart, chairman and CEO of Williams & Jensen.
Hart’s firm reported $13.6 million for lobbying revenue so far this year — a slight uptick of 1 percent from this point last year.
Smitty Davis, co-head of Akin Gump Strauss Hauer & Feld’s policy and regulation group, believes the Capitol will soon be buzzing again.
“I do believe after the election for the rest of the year, there is going to be a significant amount of activity,” Davis said. “Elections have consequences. To some extent, the substance of what else may happen will be affected by the election results.”
Akin Gump reported earnings of $23.3 million so far this year. That figure is second only to Patton Boggs, but it still represents a 16 percent drop when compared to this point last year.
Though Congress will certainly be active after the election, it’s far from assured that legislation will be passed to avert the fiscal cliff — raising the possibility of a jam-packed 2013, regardless of who holds power after the election.
“We are either going to see a dramatic, historic lame duck or we are going to see a decision to push this off until the first half of 2013,” O’Neill said.
Come back to The Hill this week to see how other firms did in the third quarter of 2012.