Small lobby shops are giving K Street giants a run for their money

The era of the K Street mega-firm could be drawing to a close.

At a time when many lobbying giants are struggling to maintain revenue, smaller shops are snagging clients and posting eye-popping revenue numbers that have turned “boutique” into an industry buzzword.

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“At a small firm, you get to deeply engage in policy and politics while being an entrepreneur — and that combination is a heck of a lot of fun,” said Hunter Bates, a former staffer to Sen. Mitch McConnell (R-Ky.), who recently founded his own firm.

Lobbyists, lawmakers and Capitol Hill staffers who are shaking up K Street culture say the desire for autonomy is the main thing driving them away from Washington’s power firms.

“When I left Congress, I realized I hadn’t had a boss since I was 35 years old,” said former Rep. Walt Minnick (D-Idaho), who founded The Majority Group shortly after leaving Congress in 2011. “I wasn’t about to have one, even if it were the president of the United States.”

But the freedom that comes with working a small business also has a major financial draw.

Without the overhead and administrative costs of a major law firm, successful lobbyists can often reap more of the bounty from their efforts.

“I want to be able to have more influence over my income, and I can do that in a smaller firm than in a large firm,” said Andrew Woods, the chairman of Liberty Partners Group, whose $1.9 million in revenue during the first half of this year almost matches the firm’s total for all of 2012. 

Revenue is growing steadily at a number of firms with less than 10 lobbyists on the payroll.

Firms such as The Majority Group, Liberty Partners Group, Daly Consulting Group, GDS Strategies, and Clark, Lytle, Geduldig and Cranford are all on pace to outperform previous years’ earnings, despite the broader slump in the industry.

Their success is coming, in large part, because businesses have embraced them with enthusiasm.

Microsoft, MasterCard, Goldman Sachs, Boeing, Amgen, UPS, the Chamber of Commerce, Duke Energy, American Petroleum Institute and Comcast are among a lengthy list of titans who employ representation at smaller advocacy outfits. 

Lobbyists say their clients are drawn to the individual attention, competitive prices and hustle that only small firms provide. 

“The 50-person firm is less agile, more expensive, less close to the Congress and the government than someone who is at a much smaller firm,” Minnick said.

The growth of the small shops is coming at a time when the broader industry is in flux.

Mega-firms have seen their revenue stagnate as they try to serve clients who increasingly want a broad array of services, including public relations and grassroots organizing, to complement traditional shoe-leather lobbying.

Patton Boggs, the top-earning lobby firm, saw its 2013 mid-year revenue fall more than 10 percent from the same time last year. Cassidy & Associates, which once stood at No. 1, fell 22 percent during the same period. Other firms posted similar numbers.

Amid the turmoil, the bigger firms have seen a mini-exodus of staffers departing for new ventures — often taking their clients with them.

It’s common for small shops to register a flurry of clients shortly after opening their doors as familiar faces seek out their help. 

Lincoln Policy Group, which is only beginning its seventh week in operation, has already signed with Valero, Comcast, Wal-Mart, Experian and a handful of other clients.

Former Sen. Blanche Lincoln (D-Ark.) and her former senior staffer, Robert Holifield, left top-earning Alston & Bird to start up the venture. The phone began to ring almost immediately, Holifield said.

“My experience here is that people are excited to work directly with Sen. Lincoln as a principal and not have an apparatus around them,” he said. 

Republic Consulting, launched by Bates and former Rep. Geoff Davis (R-Ky.) in January, has already taken in $880,000 for its lobbying efforts in the first six months of operation.

Bates initially founded his own firm, Bates Capitol Group, in 2003 after leaving his post as chief of staff for McConnell. In 2007, it merged with C2 Group, a much larger operation. He says he’s ready to be independent again.

“At the end of the day, clients are less concerned with whether your address is on K Street or in a van down by the river,” Bates said with a laugh. “They want the person they hired to be the one doing the work, answering the phone call and getting the results.”

There’s a consensus among lobbyists at small firms that the risks involved in striking out on your own make their work all the more satisfying. 

At Clark, Lytle, Geduldig and Cranford, a five-man Republican firm formed in 2002, “our clients are a very emotional thing,” said founder Steve Clark. “We understand the sentiment of a first dollar bill hanging in a frame at a business because that’s us.”

A client of Clark, Lytle, Geduldig and Cranford who runs the lobbying operations for a Fortune 500 company and requested anonymity to speak freely said his employer “wouldn’t think twice about going any other direction.”

“Big shops all struggle to give you a small-shop feel,” the lobbyist said. “You never know if the whole firm is committed to your interests. … You might just be another blip on their balance sheets.”

Sam Geduldig, a partner and a former senior staff member for John Boehner (R-Ohio) before he was Speaker, said he takes pride in the relationship his firm has with clients. 

Whether visiting Capitol Hill or the corporate boardroom, “our credibility is all we have,” Geduldig said. 

“We’re selective about the clients we take. When we go to the Hill, [members and staffers] know we’re not going to peddle junk policy to them,” he said.