Lobbying suffers pre-election slump

Lobbying suffers pre-election slump
© Greg Nash
It’s always darkest before the election, at least if you’re a lobbyist.
 
Not even the top firm in the influence industry, Akin Gump Strauss Hauer & Feld, could escape an earnings slump before Election Day, new disclosure forms for the third quarter show.
 
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Several leading firms on K Street reported drops from July to September, a time when Congress spent far more time on the campaign trail than in session.   
 
Akin Gump still took in more than $8.5 million during the quarter, down from $9.7 million in the same period in 2015, a non-election year.
 
“From our perspective, we don't feel a pinch or a drop,” said Don Pongrace, the leader of Akin Gump’s public law and policy practice. “There is tons of advisory work trying to figure out what the policy agenda for 2017 will be, and not all of it is immediately reportable. I've had more new matters come in [over] the last six weeks than we had all year long.”
 
Lobbying revenue does not provide a complete picture of a firm’s financial earnings.
 
The disclosure criteria set out by the Lobbying Disclosure Act (LDA) doesn’t include things such as legal work, consulting, strategic communications, foreign lobbying or a large chunk of regulatory advocacy — all big moneymakers for firms.
 
Yet it’s true that the lobbying industry as a whole tends to fluctuate with the amount of activity in the administration and Congress.
 
Presidential election years like this one, when the administration is certain to change, often result in a quiet third quarter in the influence world, said a leader of K&L Gates’ lobby shop.
 
The law and lobby firm saw its advocacy revenue drop almost 14 percent in the third quarter of this year over 2015, to $3.78 million. 
 
“The [third] quarter of an election year, especially in a change election year such as this one, generally produces less LDA reportable work as many of our clients are waiting to see what the next administration will bring,” said Darrell Conner, a co-leader of K&L Gates’ public policy and law practice. “Our clients have already told us that they will be ramping back up as they prepare for the presidential and congressional transitions.”
 
In 2008, K&L Gates saw a similar decline during June through September pre-election period.
 
Other firms where revenue fell last quarter include Squire Patton Boggs, where quarterly lobbying revenue fell by 26 percent, to $4.5 million. Hogan Lovells dropped 24 percent from the third quarter in 2015, to $2.44 million. Capitol Counsel had a 9 percent dip over last year, taking in $3.99 million in the third quarter of 2016.
 
Lobbying fees were stagnant at other firms. Law and lobby firm Holland & Knight earned $5.03 million in the third quarter of 2016 and $5.05 the year prior. 
 
Forbes-Tate — which has made a name for itself by offering services in grassroots advocacy, public relations and political fundraising work — had its LDA-based revenue stay exactly the same in the third quarter: $2.3 million. From January through September, the firm earned $7.1 million in lobbying-only revenue.
 
Brownstein Hyatt Farber Schreck had a modest third-quarter increase the year before, going from $6.26 million to $6.38 million.
 
“Election years are incredibly difficult for new money in the system. There's a paralysis in Washington that has contributed to that,” said Marc Lampkin, the head of Brownstein’s Washington office. “The number you're seeing this year are indicative of the slow progress in Washington.”
 
The firm's overall lobbying revenue for the year grew 9 percent, to $19.9 million.
 
BGR Group found itself somewhere in the middle. Its third-quarter revenue this year — $4.32 million — was above its total in the same period of 2015, but was a slight drop from the second quarter, when the firm earned $4.45 million. 
 
Fierce Government Affairs, an all-GOP lobbying firm, saw slightly decreased revenue in the third quarter compared with the same time last year. But it has been doing better this year overall. In the first three quarters of the year, the firm earned more than $9.77 million in lobbying revenue, compared with $9.65 million during the same period in 2015.
 
Covington & Burling also slumped when comparing third-quarter 2016 to the same time last year, going from $3.44 million to $3.1 million; however, it is up over last year in total: $9.58 million versus $9.32 million.
 
It’s not all bad news. Other shops on K Street have been expanding, adding clients and taking advantage of the absence of lawmakers to spend more time with congressional staff.
 
“You can always use downtime to strategize and plan and visit. We've done a lot of that with our clients when Congress has been out during the unusual extended recess this summer and fall,” said Chris Giblin, a principal at Ogilvy Government Relations. “Clients use that time wisely by strategizing and keeping relationships fresh.”
 
Ogilvy took in almost $2.6 million from July through September, a 5 percent increase from the same period a year ago. Overall, Ogilvy has boosted its lobbying fees by 6 percent over the first three quarters of 2015, earning $7.86 million.
 
Cornerstone Government Affairs has continued its ascent in the K Street earnings game, adding almost 9 percent to its federal advocacy balance sheet this year. The firm earned more than $12.4 million in the first three quarters of 2016.
 
Monument Policy Group, which has made several strategic hires in the last year, earned $4.37 million in the first nine months of 2016 — compared with $4.07 million during the same period in 2015. 
 
Podesta Group also had a 5 percent bump in the third quarter, taking in almost $6.1 million. For the year, the firm has earned almost $18 million.
 
Mehlman Castagnetti Rosen & Thomas has also added members to its team and increased revenue 10 percent in the third quarter, compared to the same period in 2015. In 2016, the bipartisan firm had $3.3 million in lobbying revenue from July through September. Since the beginning of the year, it has taken in more than $9.6 million.
 
K Street is already looking ahead to the lame-duck session of Congress and the next administration, with clients interested in impending funding bills and expected actions on items from tax reform and immigration to infrastructure spending and development. 
 
“There's a lot of pent up frustration that we need to deal with a number of issues that have been on a slow boil for a number of years,” said Lampkin of Brownstein. “We've already started to feel the notion that people are doing a lot of planning.”