K Street in overdrive as investigations ramp up

K Street in overdrive as investigations ramp up
© Greg Nash

K Street professionals who specialize in helping clients deal with congressional investigations are in high demand this year as lawmakers ramp up their oversight on a number of industries and issues.

“In my 20 years here at Covington, I don’t think we have ever been as busy with congressional investigations matters as we are right now,” Rob Kelner, co-chairman of the firm’s congressional investigations practice and a partner on the white-collar defense team, told The Hill. “That trend began before the Democrats took control of the House and it has certainly accelerated very significantly since the election.”

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Lawmakers this year are vowing to press companies across diverse industries on a number of hot-button issues, including how tech companies are handling consumer data, how the nation’s companies have benefited from President TrumpDonald John TrumpDavid Axelrod after Ginsburg cancer treatment: Supreme Court vacancy could 'tear this country apart' EU says it will 'respond in kind' if US slaps tariffs on France Ginsburg again leaves Supreme Court with an uncertain future MORE’s tax law and how drugmakers set their prices.

Both the Democratic-controlled House and GOP Senate are holding hearings on drug prices. Last week, Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyThe road not taken: Another FBI failure involving the Clintons surfaces White House denies exploring payroll tax cut to offset worsening economy Schumer joins Pelosi in opposition to post-Brexit trade deal that risks Northern Ireland accord MORE (R-Iowa) said the nation’s drug execs had declined to testify before his panel and vowed they would appear.

For companies, a public inquiry into their practices, often with top executives hauled before Congress and cameras, is a worrying prospect. More than ever, businesses are coming to lawyers on K Street to help them handle those unique challenges.

“I have sometimes referred to congressional investigations as the wild, Wild West,” Kelner said. “They move really rapidly.”

The spike in work has firms that handle congressional investigations beefing up their teams, often with those with experience on the committee side.

Karen Christian joined Akin Gump’s congressional investigations practice as a partner in January, after previously serving as general counsel of the House Energy and Commerce Committee and before that as chief counsel on the panel’s Oversight and Investigations Subcommittee.

“Committees have precedents for dealing with investigations,” Christian said. “There’s an art to understanding how an investigation fits in the House and the Senate.”

Handling congressional investigations requires a complex team with lobbyists who can provide insight into what policymakers are thinking, as well as lawyers who know how to best protect a client’s rights.  

And it’s not just businesses. Many firms are hired by high-profile individuals who are called before Congress. Those individuals face a different set of issues.

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“There’s more focus on personal risk in terms of criminal exposure,” said Steve Ross, co-leader of Akin Gump’s congressional investigations team.

The slew of investigations into the White House and administration can also have companies on edge. 

President Trump in his State of the Union address on Tuesday denounced the many investigations into his administration and campaign as “ridiculous partisan” exercises, but there is no sign the flurry of probes will end.  

“Sophisticated major corporations understand that congressional focus on the White House isn’t really good news for them because oftentimes those administration-focused investigations end up sweeping in corporations one way or another,” Kelner said. “While the focus may be on the president, corporations can be collateral damage in those investigations.” 

If the White House gets investigated, they use the in-house counsel office, although in rare cases an official might seek personal counsel.

Former Environmental Protection Agency Administrator Scott PruittEdward (Scott) Scott PruittControversial husband and wife EPA duo to leave Washington Environmentalists renew bid to overturn EPA policy barring scientists from advisory panels Six states sue EPA over pesticide tied to brain damage MORE, for instance, hired Cleta Mitchell, a lawyer with the firm Foley & Lardner, while he was still in office.

There are also big investigations outside of Capitol Hill. One prominent example is the Department of Justice probe into donations and spending tied to Trump’s inaugural committee. Federal prosecutors in New York have subpoenaed documents from the committee to determine if any donations were illegal or came from foreign sources. Those subpoenas reportedly list hundreds of corporations and wealthy individuals.

“The government will no doubt take an interest in some of these individual companies. It is certainly a high-profile issue that has public interest implications,” Barry Hartman, a partner at K&L Gates, told The Hill. 

Hartman said Congress could also jump in.

“It’s a high-profile policy issue that may attract the attention of a variety of committees,” he added.

For companies facing the prospect of Congress looking into their practices, preparation is key. In many cases, some companies have sought out K Street’s help even before attention from lawmakers.

Kelner said companies want to be prepared in case they ever find themselves under the spotlight.

“That’s very new,” Kelner said. “Until two or three years ago, it was pretty unusual for us to be hired as a congressional investigations counsel by companies who did not have a pending congressional investigation.”

“Especially in 2018, as people began to expect a Democratic takeover in the House, we were retained by several big, multinational companies to help prepare them for congressional investigations,” he added.

After the election, Covington issued three advisories to its clients on technology, pharmaceutical companies and financial institutions. The advisories cataloged any press release or letter that a ranking member or senior Democrat had issued over the prior two years that dealt with a particular company.

When a company or individual is contacted by Congress regarding an investigation, it’s almost inevitable that they hire a firm with a congressional investigation team, those The Hill spoke to said. Even if a client thinks the investigation is politically motivated or meritless, the experience can be grueling.

“It can be a knee-jerk reaction but it doesn’t change the fact that Congress has a pretty big megaphone and subpoena authority,” Raphael Prober, a partner at Akin Gump, told The Hill.

Ross, who launched Akin Gump’s investigations practice in early 1993, has experience with the probe into Iran-Contra and former President Clinton’s impeachment.

“At that time, nobody had a congressional investigations defense practice,” Ross said. “Previously, the target of the investigation would hire a lobbyist who might have a good relationship with the [committee] chairman, thinking that they could make it go away. Or conventional litigators would be brought in and would pound the table, which isn’t necessarily helpful in a congressional investigation setting.”

Now, these investigative response teams have a prominent role at firms.

On the client side, Ross said, “the spectrum of risk” from an investigation is broad and can include criminal prosecution, senior leaders losing their jobs, civil litigation, reputational harm and market loss.

Prober joined Akin Gump in 2008, around the time of the financial crisis, and said only a small number of firms had practices dedicated to congressional investigations even at that time.

“The financial crisis led more firms to start to recognize the importance of these investigations. While a number of firms in D.C. tend to understand the nuances and potential pitfalls of these investigations, it has historically been an inside-the-Beltway practice,” Prober said.

With the White House under a microscope and Democratic committee chairs looking into various industries, investigations experts say their work shows no signs of slowing down.

“We expect the tempo of congressional investigations to be very high right through the 2020 election because there’s such a huge backlog of issues on which the Dems want to conduct congressional investigations,” Kelner said. 

He added that such investigations were previously seen as a distraction from an election but now could be a “key tool in [members’] political toolkit.”

“The media environment today has made those investigations much more valuable as a political tool than they used to be,” Kelner added.