Business & Lobbying

Fears of lame-duck session in Congress could boost K Street’s bottom line

The potential for a chaotic, high-stakes congressional session after the November election is already driving foot traffic to K Street.

Friday was the deadline for lobby firms to disclose their first quarter reports for 2012 as required under the Lobbying Disclosure Act (LDA). Several on K Street reported more lobbying revenue this past quarter than during the same time period in 2011.

{mosads}Many lobbyists predicted the lame-duck session at the end of the year would boost business for their firms. After the election, lawmakers are likely to be under incredible pressure to act on several massive pieces of legislation, such as increasing the debt ceiling, keeping the Bush tax rates in place and canceling out budget sequestration. Hundreds of billions of dollars will be on the line.

The Hill reported this week that lobbyists are making sure to schedule all their vacation time before the lame duck begins, and are anxious about what might happen if Congress takes things down to the wire. 

Kathryn Lehman, a partner at Holland & Knight, said the likely agenda for session “sends shivers down people’s spines.”

But the workload after the election could have a financial upside as well. 

Al Mottur, the managing partner of Brownstein Hyatt Farber Schreck’s Washington office, said fears of a tumultuous lame duck have contributed to his firm’s revenue growth this year.

“People are beginning to gear up for issues now that may not happen for a while, like tax reform. They want to get their views before policymakers now before all the activity begins in earnest, especially considering what could be an unusually busy lame-duck,” Mottur said.

The firm reported $5.6 million in lobbying revenue for 2012’s first quarter, a 6 percent jump over the same period last year. Mottur said Brownstein Hyatt was able to keep many of its clients from last year.

“The end of the year is usually a triggering point for companies to reevaluate their consultants. That didn’t happen last year. We were able to keep a real strong client base,” Mottur said.

Other top lobbying firms, including Alston + Bird, Ogilvy Government Relations, Mehlman Vogel Castagnetti and K&L Gates, also reported an increase in revenue last quarter.

But the trend wasn’t across-the-board, as many big-name shops saw a decline. 

Patton Boggs reported earning $12.2 million lobbying fees for the first quarter — a two percent slide in revenue from last year. Both of those figures include revenue from Breaux-Lott Leadership Group, which Patton Boggs acquired in July 2010.   

Kevin O’Neill, deputy chairman of Patton Boggs’s public policy department, said the firm has been “going gang-busters,” but not all its activity is reportable under the LDA, especially considering the regulatory work that’s churning out of Washington.

“While there may not be much going on in Congress, there’s tons going on with the implementation of Dodd-Frank, the Affordable Care Act and energy policy,” O’Neill said. “The problem with the LDA numbers is it’s like only reporting box office for the seats on Friday opening night.” 

O’Neill said the firm believes the post-election work in Congress could be a boon for lobbying fees.

“The lame-duck session is approaching like the Four Horsemen of the Apocalypse. You have got the Bush tax cuts, the payroll tax holiday, sequestration and the debt ceiling. I’m sure I’m missing a Fifth Horseman there,” O’Neill said. “So everyone is busy preparing their strategies to deal with the Four Horsemen after the election.”

Smith Davis, a partner at Akin Gump Strauss Hauer & Feld, predicted a wave of “crisis work” would hit K Street after the election. 

“It is an unusual period where I would say the activity in Congress, from my perspective, has slowed in comparison to other years,” Davis said. “But as people anticipate the nightmare that is to come after elections, the billable hours portion will pick up. … There is a lot of crisis work coming up.” 

Akin Gump reported making $7.9 million in lobbying fees for this year’s first quarter, a 9 percent decrease from the same time period in 2011. 

Other firms also saw a slide in lobbying revenue from 2012’s first quarter compared to last year’s.

The Podesta Group reported they took in $6.6 million for LDA revenue for the first quarter, a decrease from the $7 million they earned by this point last year. Further, Cassidy & Associates disclosed they earned $4.1 million in lobbying revenue this past quarter, which was a decline from the $5.5 million they took in 2011’s first quarter.

Other lobby firms fared better. Alston + Bird reported $3.3 million in LDA revenue for the past quarter, up 6 percent from this point in 2011.

“Despite the election-year uncertainty, there still is a lot of work taking place in Congress now. That work will continue throughout the year, including wrapping up 2012 with a busy lame-duck session,” said Bob Jones, a firm partner, in a statement.

Ogilvy Government Relations grew, posting lobbying revenue of $5 million this past quarter, an 11 percent spike from this point last year.

In a statement, Drew Maloney, the firm’s CEO, said expanding the firm’s healthcare lobbying as well as signing several new clients, like US Airways, helped contribute to the revenue growth.  

Mehlman Vogel Castagnetti also had a strong quarter, reporting $3.3 million in LDA revenue. That’s a 14 percent spike in lobbying fees for the firm from this point in 2011. 

“We are busy and getting busier, because companies are seeing late 2012 and early 2013 as packed with lots of promise and potential downside,” said Alex Vogel, a partner at the firm. “You can’t do 90-day extensions forever.” 

K&L Gates also reported growth this past quarter, earning $4.7 million in lobbying fees, a 2 percent climb over this time last year. 

Former Rep. Jim Walsh (R-N.Y.), a government affairs counselor at the firm, said lobbyists and clients are getting down to work as if the lame duck were already underway. 

“Given sequestration and the end of the Bush tax cuts, something has to happen. So people are gearing up for that and that bodes well,” Walsh said. “It will be very compressed. Lots of things could happen, good and bad, to clients. You want to be in the game right now.” 

Check back with The Hill in the coming days to see how others on K Street fared in the first quarter of 2012.

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