Lobbying Powerhouses Flexible on Billable Hour vs. Retainer
Holland & Knight made headlines for all but eliminating the billable hour for its lobbying clients in January 2012 in favor of the retainer. More than a year later, that all-in approach has been all but ignored by the larger law firm government-affairs practices in Washington, D.C.
Leaders at lobbying powerhouses Akin Gump Strauss Hauer & Feld, Covington & Burling, and Hogan Lovells continue to view the billable hour as an important tool. W. Michael House, director of Hogan’s legislative group, said it would be “foolish” not to promote both billable hours and retainers for lobbying clients. “If you have a firm with a very large regulatory practice like we do, you have to offer both,” he said.
Akin partner Smith Davis, a co-manager of the firm’s policy and regulation practices, said that “for the most part, we bill any way the client wants to be billed.” In practice, lobbyists at Akin, Covington, and Hogan said, at least half of their clients opt for retainers over billable hours.
According to Covington partner Dan Bryant, chairman of the firm’s public policy and government affairs practice, each billing method has its advantages. Under the retainer, clients have a “clearer perception” that a team of lobbyists is there for them, he said. But the billable hour allows clients to pay for the level of service they want and better supports time-consuming projects. Moreover, the billable hour is more transparent, he added.
Ultimately, billing is about economics. “The client has to have confidence that they are getting value for their dollar,” Bryant said.
According to Holland & Knight partner Rich Gold, who leads the firm’s public policy and regulation practice, clients are “happy” without the billable hour. At the time of the switch, Gold expected about 10 percent of the firm’s more than 125 lobbying clients to stay with that billing method. But only a handful did, mostly for internal accounting and policy reasons, he said.
“I can’t say anyone regrets it,” said Gold, whose firm reported to Congress lobbying revenue of $17.6 million in 2012. The sum was the seventh highest among lobbying shops, according to the Center for Responsive Politics.
Without the billable hour, Gold said, the firm provides more efficient and effective work for clients, allowing lobbyists to work on various projects at the same time. During the past few months, Holland & Knight lobbyists could easily jump between work on the Water Resources Development Act, the farm bill and other legislative matters for clients, he said.
“Under the traditional time-keeping system, it would have been difficult to do that,” Gold said.
The absence of billable hours has been an important recruiting tool, too, Gold said. At least one lobbyist’s decision to join Holland & Knight was prompted in part by the firm’s billing method. Partner Paul Bock in May came over from Capitol Hill Strategies, which used a retainer model. He said Holland & Knight’s strong support for that billing method was “very attractive” to him. “The retainer model is better for the lobbyist and the client,” Bock said.
Retainers typically are the go-to billing method for lobbying shops that aren’t part of law firms. Marlowe & Co. is one of those shops. Former American League of Lobbyists President Howard Marlowe, who runs the boutique, said the retainer model is ideal for a small business like his. Marlowe knows how much money will come in and doesn’t have to devote resources to counting hours.
“It just didn’t make sense,” Marlowe said of billable hours.