The 50 highest-grossing lobbying practices in the country passed the $1 billion revenue mark for the first time last year, thanks in part to strong growth in work that's outside the traditional boundaries of legislative lobbying.
Legal Times' annual Influence 50 survey shows that some of the biggest players in the lobbying world raked in multimillion-dollar increases in fees from public relations, legislative activity monitoring, and grass-roots advocacy. The survey, which covers annual income from lobbying work for 2007, also reveals that law firms are continuing to outpace nonlaw firms in revenue growth -- and last year pulled in more than 64 percent of the revenue among Influence 50 firms.
Overall, revenue among the Influence 50 was up 11 percent. Akin Gump Strauss Hauer & Feld ranks No. 1 on the list for the second consecutive year, with $89.8 million in lobbying income. Patton Boggs was a close runner-up, pulling down $89.3 million.
Both firms reported double-digit revenue increases, and Patton Boggs, in particular, saw a big jump in the amount of money earned from less traditional lobbying work. More than half the firm's $18.2 million gross revenue increase came from something other than legislative lobbying.
The Influence survey measures lobbying revenues reported to Congress under the Lobbying Disclosure Act (LDA) and to the Justice Department under the Foreign Agents Registration Act (FARA). It also asks firms to provide information about state-level and foreign lobbying and other related lobbying work.
It's that "other related work" category that many firms see as a linchpin for future growth. The category accounted for a third of the overall gross revenue collected by the Influence 50 -- or $339 million. That's a 13 percent increase over last year's total, and the fastest growing revenue category on this year's survey.
Aside from Patton Boggs, Podesta Group, in its first year since PodestaMattoon split apart, saw the "other revenue" category rise from 7.7 percent to 12.4 percent of the firm's total gross. Much of that jump came from the firm's efforts in public relations. Those "other" fees became a larger percentage of Arnold & Porter's total revenue, too, jumping from roughly 60 percent to 66 percent, and helping to drive the firm's 110 percent revenue growth in 2007.
BETTING ON THE 'OTHER'
If anything, firms are betting that related revenue will continue to grow. Gregg Hartley, chief operating officer of Cassidy & Associates, wants his firm to help American companies expand abroad. Van Scoyoc Associates is starting a consulting arm targeting educational companies. BGR Holding is moving into corporate transactions.
Sonnenschein Nath & Rosenthal added a six-person strategic communications and public affairs practice in June, and credits the practice for boosting that revenue category by almost $2 million, bringing it to almost 49 percent of Sonnenschein's revenue. Last year, it accounted for 44.5 percent.
Hartley says Cassidy is seeing the results of its investment in a federal marketing team that targets government procurement for clients. "It's a place for measured growth," he says. "It tends to be very work-intensive, very hands-on with the client, and so it takes a lot of time to service a client well and you measure your growth as you put resources into it." Hartley adds that the firm has increased its average fee for such work by 50 percent over the past three or four years.
It also helps that congressional Democrats have been stepping up investigations. Clients are turning to firms to help with oversight work, and that's also plumping the bottom line. Patton Boggs' Nick Allard says growth in congressional oversight helped fuel his firm's increase in related revenue. "In fact," he says, "the ratio between that type of work and straight legislative lobbying work might well increase this year."
Some of this, however, is simply cyclical. It's an election year, and that generally means less legislation. The Bush administration is nearing its end, and has less clout to advance a legislative agenda. The close partisan divide in the Senate has contributed to gridlock. And many clients have shifted their focus to lobbying administration officials and regulatory agencies, often at levels too low to trigger LDA reporting requirements.
That said, LDA work still accounts for the biggest chunk of revenue for Influence 50 firms, nearly $617 million of the total. Rich Gold, head of the public policy practice at Holland & Knight, says he expects the focus to shift back to LDA work -- but not until 2009, after a new administration arrives and starts working with Congress on a legislative agenda.
In 2009, he says, observers parsing lobbying revenue numbers will be looking at an uptick in LDA revenue and asking, "Where did that come from?"
LAW FIRMS' GAME
Holland & Knight was one of the law firm players that saw revenue rise across the board in 2007. Like Patton Boggs and Akin Gump, it, too, experienced a double-digit revenue increase. That's a turnaround from 2006, when many big firms posted small gains, or in the case of Patton Boggs, a decline.
So what is it about the big law firms that is catching clients' attention this year?
"You let the game come to you," says Steve Ross, the Akin Gump partner who leads the public policy group, quoting former basketball player and Sen. Bill Bradley, D-N.J. For the big law firms, he says, "the game is coming to us a bit." By that, Ross says he means that clients are seeking out bipartisan firms with the ability to handle complicated policy and regulatory work -- something the law firms say they're well-positioned to do.
Patton Boggs' Allard says law firms, with their reputation for professional ethics, are benefitting from the recent spotlight on lobbying scandals and new compliance rules, as well as a focus on policy lobbying. "That's because law firms have a reputation for compliance, which is very important," he says.
See the top 10 lobbying practices, excerpted from the complete Influence 50 report.
Methodology: Readers Guide to the Influence Revenue Report