By Kevin Bogardus - 06/13/12 09:00 AM EDT
There’s a new paradigm for making it on K Street: going it alone.
The small lobby shop — staffed with just a few people, or even one person — has become a profitable niche in the influence industry for lobbyists who have traded the comfy confines of established firms for the chance to be their own boss.
It’s a career move that more and more lobbyists are considering at a time when corporate consolidation has taken root on K Street.
The Hill interviewed more than a dozen lobbyists at small firms for this article. Several said they are happy with the choice they made and have no plans to return to the big firms. Others disclosed they are making two to three times more in salary than they did at their old jobs.
Loper launched her own firm in January 2010 to keep representing Teva Pharmaceuticals after a client conflict emerged at Prime Policy Group — the newly merged firm of BKSH & Associates and Timmons and Co., Loper’s former firm.
Loper’s practice has since grown to include the American Medical Association and the Consumer Healthcare Products Association, as well as subcontract work for Harlow Government Relations — which is run by the former Timmons president, Larry Harlow.
Loper’s take in 2011? More than $493,000 in lobbying fees, according to lobbying disclosure records.
Not bad for a business run out of Loper’s basement office in her Arlington, Va., home, where she said she balances her career with family life.
“It’s a constant juggling act to do it all. That’s why the flexibility matters to me,” Loper said.
Despite their rise, lobbyists at the small shops predicted the established firms would continue to take up a huge slice of the lobbying business.
But several lobbyists said they have one advantage over the larger shops. Going small, they said, lets them pay closer attention to their clients’ issues, allowing them to almost become an in-house employee.
“We are a low-cost, highly effective alternative,” said John Simmons, managing partner of the Roosevelt Group. “There seems to be more than enough work out there for small firms.”
There’s also the advantage of less overhead. There’s really no need for a receptionist, IT department or even office space for most lobbyists to serve their clients.
Other former Timmons lobbyists have struck out on their own, including Rich Tarplin of Tarplin Strategies and Bill Timmons Jr. of Timmons Consulting.
“You need a phone, a BlackBerry and a computer, and that’s it. That said, you have to be real good, because the competition’s intense. You have no one else to rely on,” Tarplin said.
Many lobbyists said they were comfortable staying small.
“The kind of work I’m doing is where I invest a lot of time and energy in my clients. I’m comfortable when I keep count of them all on one hand,” said Jamie Brown Hantman, president of the JBH Group.
The new ventures are a response, in part, to the trend of multinational companies — such as WPP, Omnicom Group and Interpublic Group — snatching up and combining lobby firms.
Lobbyists said that when a multinational steps in and buys a firm or merges it with another, new performance quotas often have to be met. Compensation sometimes drops even as the workload increases, leading some employees to explore other career options.
Some of the best-known lobbying brands in Washington are under multinationals’ ownership. WPP’s holdings include the Glover Park Group, Prime Policy Group, Quinn Gillespie & Associates and Wexler & Walker Public Policy Associates; Omnicom owns Mercury/Clark & Weinstock; and Interpublic owns Cassidy & Associates.
Martin Sorrell, WPP’s CEO, said the company provides its lobby firms client and international connections as well as better research and technological capabilities that they didn’t have before. He said the competition from smaller firms is part of “a healthy Darwinian process.”
“As far as I can remember, firms have been started and finished for many years in D.C. — and everywhere else, for that matter,” Sorrell said. He noted that “bigger, better-resourced firms” have an advantage because of market trends.
Sorrell said WPP makes sure that compensation is not concentrated solely in its firm’s key principals.
“Our approach goes well beyond an earn-out period,” Sorrell said. “We target incentives at high levels precisely to deal with the point you’re making and ensure incentives spread beyond principals.”
Lobbyists said starting their own practices has brought a freedom they wouldn’t otherwise have.
“First and foremost, I wanted to determine my own course. I wanted to create a culture at a firm that was entrepreneurial and would focus on subjects that I care about,” said Bob Van Heuvelen, founder of VH Strategies. “If it wasn’t going to be my own firm, I knew I was going to be limited in doing that.”
Founded by Van Heuvelen in 2007, VH Strategies now has five employees and made close to $1.8 million in lobbying fees last year, according to records.
At small firms, staff time gets cut down — mostly because there isn’t much of a staff.
“We have no fire safety meetings, no sensitivity training or internal staff meetings. You have all that time back on your schedule,” said Dave Lugar of Lugar Hellmann Group.
But there are certain disadvantages when starting a business from scratch. A small-business owner has to deal with accounting, labor law, real estate and any other problem that arises.
“I miss the IT service. I just don’t have that skill set,” said Missy Edwards of Missy Edwards Strategies. “The Missy Edwards IT department is pretty lax. “
Several lobbyists also said they tore their hair out when filing their first Lobbying Disclosure Act report.
“It’s humbling as a small-business owner when you’re sitting on the floor assembling furniture,” said John Schofield of Shockey
Scofield Solutions. “If there’s a purgatory, I’m sure it involves Allen wrenches and Swedish instructions.”
Nevertheless, Scofield’s firm has gone gangbusters since its founding in May 2011. It took in $790,000 in lobbying fees last year and, to go along with its office space in Alexandria, Va., opened a satellite office in Eastern Market.
Another change for lobbyists is losing the prized expense account. Some lobbyists who are out on their own said they tried to avoid pricey client lunches, heading to the nearest Starbucks instead.
Other perks also disappear. Timmons and Co., for example, employed drivers for its lobbyists and clients. If an employee needed an umbrella, the driver would loan one. Forgot a business card? The driver would have an extra one in the dashboard compartment.
Once with Timmons, Harlow of Harlow Government Relations said he now splits the cost of a parking space with Loper at St. Joseph’s Church on Capitol Hill.
“If I’m doing my job, I’m usually up here on the Hill,” Harlow said.
Navigating the annoyances of small-business ownership can pay off big, though. Many lobbyists said they’re doing much better now than when they were at the bigger shops, and several estimated their salary has spiked anywhere from 50 to 200 percent.
While the rewards might be large, so is the risk. Clients can end relationships within weeks, leaving small firms without much recourse.
“You have to have a certain degree of risk tolerance to do it, because everything that changes affects you directly,” said Megan Hauck of Nathanson + Hauck.
“I knock wood and thank God every day that it has worked for us and it wasn’t by accident,” said Melanie Nathanson, Hauck’s partner at the firm.
In short, it’s lobby or die.
“You eat what you kill, for better or worse,” said Timmons of Timmons Consulting.