Tech fight puts former FTC officials in high demand

Tech fight puts former FTC officials in high demand
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Large tech companies are tapping former Federal Trade Commission (FTC) officials for help as they face growing regulatory scrutiny over their privacy practices and market power.

In two landmark privacy enforcement actions the agency imposed on Facebook and Equifax last month, both companies were represented by former top FTC officials in their respective negotiations.

Facebook enlisted Sean Royall, an attorney with the firm Gibson Dunn, who was previously a deputy director in the FTC’s Bureau of Competition from 2001 to 2003, according to the law firm’s website. Current FTC Chairman Joseph Simons was the bureau’s director at the time.

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And Edith Ramirez, a Democrat who was selected by then-President Obama in 2013 to chair the FTC, represented Equifax over privacy charges stemming from their massive 2017 data breach. Ramirez, who left the agency in February 2017 to join the law firm Hogan Lovells, has also defended Google-owned YouTube against a class action lawsuit over children's privacy. A federal judge in South Carolina threw the case out in April.

The FTC is currently finalizing a settlement with YouTube over allegations it violated children’s privacy laws. A spokesman for Hogan Lovells told The Hill that Ramirez is not currently representing Google or YouTube in any investigations or litigation.

The revolving door between agencies and private law firms is not unique to the FTC. But the moves by Facebook and Equifax highlight how the FTC’s targets are increasingly turning toward former officials as the agency intensifies its oversight amid new political pressure from Washington.

Earlier this year, the FTC announced a new task force to review antitrust concerns around Silicon Valley with a mandate that includes reviewing issues about past mergers.

And just hours after Facebook and the FTC announced a $5 billion privacy settlement, the company revealed that it was also facing an antitrust investigation from the agency.

Outside the FTC, Silicon Valley is also facing antitrust probes from the House of Representatives, the Department of Justice (DOJ) and a coalition of state attorneys general.

That has the private sector’s demand for former FTC attorneys surging, according to Jeffrey Lowe, a top legal headhunter. Lowe, a partner with the legal search firm Major, Lindsey & Africa, told The Hill that law firms have been staffing up to deal with the investigations.

“It's not like it was a dormant market, it's already been strong and has been for a number of years," he said. "And now it's just intensifying."

Lowe said that he helped place Republican Maureen Ohlhausen and Democrat Terrell McSweeny, the two most recent commissioners to leave the FTC, at the prestigious law firms Baker Botts and Covington & Burling, respectively.

“I can tell you that the desire to have them was very, very strong,” he said.

Joining the private sector is a common career move for lawyers at the FTC and other agencies following a stint in public service.

But watchdogs say the practice raises further concerns about the FTC, which has been dogged by questions from lawmakers and public interest groups over its willingness and ability to crack down on corporate giants.

Jeff Hauser, the executive director of the Revolving Door Project at the Center for Economic and Policy Research and a former antitrust lawyer at the DOJ, said that the commitment to the public interest can be undermined at an agency where officials flow back and forth to private law firms where they represent corporate clients.

“There's just an enormous expectation that either you yourself will revolve if you're at the FTC, or that in almost any important matter someone opposite you at the table is a former colleague, and maybe a former boss who gave you a promotion or a friend,” Hauser told The Hill.

“I mean, there's a lot of ongoing social connections between current and former FTC lawyers, who are often going to be ostensibly on the opposite side of tables," he added. "And I think it would be an act of robotic perfection for that to not influence the tenor of the conversations at those tables.”

Hauser and his research assistant Max Moran have been using public records requests to track the career moves of FTC officials. Their project is ongoing, but so far they have found that at least 36 of the 82 lawyers who have left the FTC’s Bureau of Competition — the office that handles antitrust cases — since 2014 have gone on to work in private law firms. Moran said they’re still trying to track down 16 of the 82 former officials.

“It just looks like service for the government is just another rung on the ladder to becoming a super lawyer,” Rick Claypool, research director at the consumer group Public Citizen, said. “I don't think that's appropriate.”

Claypool conducted a study that found that corporate conflicts were widespread among current and former top FTC officials. In one notable example, the group discovered through a Freedom of Information Act request that Andrew Smith, the head of the FTC’s Bureau of Consumer Protection, had listed 120 conflicts of interest on a financial disclosure form with the agency stemming from his work at Covington & Burling. Among the companies listed were Facebook, Equifax and Uber.

Lowe, the legal headhunter, said that many agencies have ethics rules to protect against any potential conflicts of interest and he has seen how current and former officials strive to avoid any improprieties.

“They take great pains to make sure they follow proper procedures,” he said.

Lowe said there are a number of reasons why private law firms are eager to hire former government officials to help clients.

“No. 1 is you've been in the trenches and you know exactly what's going on at the relevant commission because you've been very deeply involved in it, so you have the most up-to-date information,” he said. “No. 2, it's very attractive to both the law firms and the clients of the law firms, because even when you've left you still know all the players at the commission and you're basically on a first-name basis with them."

“You really just can't replicate it,” he added.

Peter Kaplan, a spokesman for the FTC, told The Hill in a statement, “The FTC strictly adheres to all federal government ethics rules and guidelines.”

Those include a lifetime ban on former officials representing any companies that they were personally involved in overseeing in cases before the federal government.

Still, Lowe said law firms find that the experience former FTC officials can bring to the table for their clients is invaluable.

They bring "insider knowledge of how the whole process works," he said.

"It's a huge advantage for clients to have someone like that versus hiring someone who never really had that much experience with the relevant department or commission.”

--This report was updated at 11:23 a.m.