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K Street bounces back

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Revenues are rising again on K Street after a brutal 2013 for many of Washington’s top firms.

Four of the top five lobby shops on Monday reported increases in lobbying revenue over the first three months of 2014, with some in the top 20 recording double-digit growth.

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While lobbyists aren’t expecting a boom year, they’re holding out hope that Congress will have a productive summer despite the pressures of the midterm election season.

“You don't have an across-the-board bull market, but you're seeing increased activity where Congress is acting,” said Smith Davis, a partner in the public law and policy practice at Akin Gump Strauss Hauer & Feld. 

In the first quarter of 2014, Akin Gump banked $8.6 million in lobbying revenues, an uptick of about 7 percent from the same period last year and the latest in a run of steady gains for the firm that began after a 2012 slump.

“It's not as robust as it will be — because there is a pent up demand, and everybody knows it — but it's not as robust as it once was,” Davis said.

Congress has a number of big-ticket legislative items on the agenda for 2014, including the “doc fix” for Medicare, tax extenders and the reauthorization of a transportation bill. So even if campaign politics gum up the works in the run-up to the election, lobby firms are expecting a flurry of activity in the lame-duck session.

"It’s a lot of getting everything prepared so when you come back and you only have a month to wrap all this stuff up … the pieces of the package are all there,” said H. Stewart Van Scoyoc, president and chief executive of Van Scoyoc Associates. “Most of what happens at that point in time happens in very small rooms with very few people.”

Van Scoyoc’s firm made more than $4.8 million in lobbying fees in 2014’s first quarter, a small jump over the $4.7 million it made during the first three months of 2013. 

Still, growth of any kind — no matter how small — is exciting prospect for lobby firms after a multi-year slump that saw many corporate clients cut back their influence budgets.

One big winner in the first quarter was Capitol Counsel, which again pumped up its profits, seeing revenues jump 24 percent in the first quarter of 2013 to $4.1 million. That continues a streak of explosive growth that has transformed Capitol Counsel into one of Washington’s top-earning firms.

Patton Boggs, which has long been king of the earnings game, retained its spot as the No. 1 K Street firm, but saw its lobbying revenues fall about 9 percent amid a large restructuring at the firm and several departures. 

The firm banked $10.3 million in the first three months of 2013, but brought in $9.4 million in the same stretch this year.

Kevin O’Neill, the deputy chairman of the public policy department at Patton Boggs, said that the firm is making up revenues that were lost due to staff departures. He also said their per-lobbyist earnings are actually up 8 percent.

“From a business development perspective, we had the best quarter — demand-wise — than the last couple years,” he said. “[It] shows that our aggressive strategy of focusing on core areas of growth has really started to pay off.”

He said Patton has seen a jump in foreign lobbying work, which is not included in the lobbying revenue figures tallied by The Hill. 

“Historically, a president's second term is more focused more abroad than at home. A lot more foreign entities will spend more time trying to get the attention of the administration and Congress, and we're starting to see that sort of demand now,” O’Neill added.

Tech lobbying has been a growth area for K Street, and that trend has continued this year with Congress working on patent reform.

Lawmakers are also facing deadlines this year to reauthorize programs that of major importance to the business community.

Rich Gold, the head of public policy and regulation group at Holland & Knight, said his firm is focused on legislative “nuts and bolts” — the renewal of the Export-Import bank, terrorism risk insurance and transportation funding.

Holland & Knight’s first quarter lobbying revenues jumped almost 10 percent, going from $4.4 million to $4.8 million.

“Things feel like they're picking up and it feels like we're more able to legislate. If you look at the last decade, we do most of the legislating during lame-duck sessions,” Gold said.

The return to something resembling regular order for Congress has also been a welcome respite for lobbyists.

December’s budget agreement set a blueprint for congressional appropriators, giving them time to craft annual spending bills for the first time in years.

The burst of activity on appropriations has given K Street and its clients a place to make their case for funding priorities.

“While we still have all the high-level political drama that’s out there as we head towards the election, we’ve got a more regular order process underneath the radar,” Van Scoyoc said. 

“We’re seeing that people are looking at the appropriations process this year as being relevant again,” said John Keast, a partner at Cornerstone Government Affairs. The firm also saw modest revenue gains.

“I’m not going to say that everything is perfectly rosy, but the bills are moving," he said.

Rob Smith, the co-chair of Venable’s legislative group, said his firm is rushing to get issues resolved before the campaign trail takes lawmakers away from Washington.

“From a macro perspective, the first half of the year is the only time you're going to get anything done,” Smith said. “We're all pretty much writing off [the third quarter],” which includes the August recess and the midterm campaign.

But if nothing else, lobbyists can hold out hope for the next Congress, which could look far different than the 113th.

“Industry-wide, I think there’s a fairly negative view that a whole lot substantive items are not going to be at the president’s desk at the end of the year,” Keast said. 

“But how you set the table for the next meal or the next Congress, I think is pretty important.”

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