Home | Business & Lobbying | Business A Lobbying

For K St., nowhere to go but up

After a dismal 2013, K Street is praying for a comeback in the new year.

Lobbyists say 2014 can’t be worse than 2013, when their revenue plunged as lawmakers battled through a government shutdown and punted on K Street cash cows like immigration and tax reform.

ADVERTISEMENT
“There is really only one way to go from the last year,” said Nick Allard, a partner at Patton Boggs.

The hope is that an expected year-end budget deal will grease the skids for progress on other legislation.

But the worry is that midterms in 2014 will ensure another dry year, extending K Street’s losing streak.

 “It’s probably going to be a pretty flat year if the industry is lucky,” said John Raffaelli, founding partner of Capitol Counsel. “If everybody can hold their own, they would be happy.”

One Republican lobbyist said the forecast for 2014 “doesn’t look great.”

“During an election year, they are less able to work on bipartisan compromises than they would be able to do in non-election years,” the lobbyist said.

Lobbying revenue has been in decline for some time.

In 2012, K Street reported taking in $3.31 billion in lobbying fees, down from the $3.33 billion firms earned in 2011, according to the Center for Responsive Politics. Fourth-quarter reports for 2013 won’t come in until next month, but firms have only pulled down $2.38 billion so far, and are not on pace to match last year’s lobbying revenue.

“[Lobbying revenue] was down for obvious reasons. There was virtually nothing to lobby because Congress passed few bills and there was the continuing hangover from the economy,” said Allard, who is also dean of Brooklyn Law School.

Patton Boggs, the No. 1 lobby firm, has earned $30.7 million so far in 2013 — below the $35.2 million the firm had after three quarters last year.

Lobbyists say they have some things going in their favor in 2014.

Despite delays, Sen. Max Baucus (D-Mont.) and Rep. Dave Camp (R-Mich.) are not giving up on tax reform efforts. ObamaCare will still be under scrutiny as lawmakers try to tweak the law, and immigration reform will continue to drive business to lobby shops.

In addition, unfinished business on Capitol Hill — a farm bill, patent reform legislation and a permanent “fix” to how Medicare payments are calculated for doctors — will require K Street’s attention.

“There will be lobbying work on legislation Congress considers next year whether or not it passes in 2014 or later,” Allard said.

Other lobbyists said there’s pent-up demand for lobbying services after an unproductive first session of Congress.

Former Rep. Jim Walsh (R-N.Y.), a government affairs counselor at K&L Gates, said, “historically, and ironically, in election years, Congress passes more bills than it does in the year preceding an election. So we are hopeful that congressional — as well as regulatory — action will pick up in 2014.”

“Everyone says that nothing happens in an election year, and therefore the lobbying business in an election year dies off — I’m not sure that’s true,” said Stewart Verdery, founder and partner at Monument Policy Group. “For most members, they’re going to want to show that they’ve accomplished something in whatever committees they care most about.”

Monument Policy actually saw its highest lobbying revenues during the last midterm election year, taking in nearly $4.1 million in 2010.

The firm’s primary policy areas — transportation, trade and technology — are primed to see a lot of action in 2014. Verdery said lobbyists are likely to be active on the agency level, bypassing congressional gridlock altogether.

“Most of the issues nowadays are either partially regulatory or purely regulatory,” Verdery told The Hill, saying work consists of trying to shape rules or help clients procure federal grants.

Other firms have sought new revenue streams outside of traditional lobbying with work in foreign policy and media relations.

“While the core of our business remains federal lobbying, we have expanded into other areas, particularly international relations work and public relations counsel,” said Missi Tessier, a principal at Podesta Group.

Lobbyists acknowledge the election year will present them with a time crunch.

“If the past is any guide, they’ll be out [of town] by the end of September,” said Brad Close, vice president for public policy at the National Federation of Independent Businesses (NFIB). “Once you get into the summer, it gets harder, because they’re in full campaign mode.”

The NFIB is an ardent opponent of the healthcare reform law, and plans to keep up the fight in 2014.

“The White House has opened the door to delaying some of the law, so we argue that as long as you’re doing that, they should delay all of the mandates and taxes that affect small businesses,” Close said.

Bob Van Heuvelen, a principal at VH Strategies, said the perception of a do-nothing Congress won’t deter “clever lobbyists” from finding legislative vehicles that they can attach provisions to.

“It’s going to take more work to get less done. People still have business problems that need to be addressed,” Van Heuvelen said.