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Want to sell your tutoring services to schools in Alabama? Or launch an economic development project in Slovenia? If so, Dutko Worldwide, now Washington’s highest-grossing lobbying firm, would probably like to talk to you. The profile of successful K Street power brokers is well established, but in its rise to the top, Dutko has torn up that script. The firm’s revenues, which totaled $33.3 million in 2005, have tripled in the past three years, and the firm’s federal lobbying practice — the be-all and end-all for most lobby shops — is only one piece of a much larger pie. But while Dutko may be Washington’s lobby money king, it’s still rarely mentioned in the same breath as longtime players such as Patton Boggs and Cassidy & Associates. Also, unlike those firms, it doesn’t feature a deep roster of D.C. insiders. To Dutko, that’s just fine. It’s charting its own course and sees its atypical, even exotic, lobbying endeavors as key to opening markets and building a new kind of firm. Dutko’s vision, says CEO Mark Irion, is to be the first “global public policy company,” and in truth, the company’s outlook has little in common with the cocktail-hour crowd at the Capital Grille. To that end, Dutko is reluctant to even call its work lobbying; it prefers the term “multidisciplinary public policy work.” But that bit of consultant-speak obscures the fact that almost 90 percent of Dutko’s revenues still come from various kinds of lobbying. Based in Washington, the firm also operates from offices in Prague; Boston; Denver; Las Vegas; Tallahassee, Fla.; and Miami. The Dutko umbrella contains five branded practice areas: a federal practice, a state and local practice, an international lobbying and advisory wing, a federal marketing and procurement shop, and a small polling and research operation. In a sense, what Dutko has done with its business model is not a paradigm shift but, perhaps, a maturation. For the better part of 10 years, lobbyists have moved to diversify their offerings, adding popular cafeteria items like communications shops and federal marketing practices. This strategy is also fairly standard for large law firms as well, dozens of which have operations in distant state capitals and in Europe. But unlike those of many predecessors, Dutko’s expansion strategy seems to be making the company a lot of money. The firm’s revenue derived from sources other than federal lobbying has jumped from $3.6 million in 2002 to $12.2 million in 2005. That revenue growth attracted Lake Capital, a Chicago-based venture capital firm, which ponied up $60 million for a roughly 80 percent stake in Dutko in 2003. Lake Capital’s acquisition of Dutko threw K Street for a loop. Like many lobby shops, Dutko had been courted on and off for years by international public relations firms. But Dutko had balked at selling out, not wanting to lose control of its culture and financial destiny. “We were concerned whether or not we could trust someone,” says Irion. So it came as a surprise in October 2003 when Lake Capital, a small and relatively unknown venture capital group, snapped up a huge chunk of the firm. The deal was unusual not only because Lake Capital wasn’t a Washington player but because it was unheard of for a venture capital firm to invest millions on K Street. Lake’s $60 million was used to buy out Dutko’s 10 partners and to invest in future growth and acquisitions. To date, Irion says, the firm has used Lake’s capital infusion only to finance the acquisition of Florida lobby shop Poole & McKinley, in 2004. Though Dutko has been cautious in spending its new cash, there is no question that the firm has taken off since Lake acquired it. Irion and Dutko’s president, Craig Pattee, talk several times a week with Lake principals Paul Yovovich and Terry Graunke, and Lake is very involved in plotting strategy for Dutko, which Irion says calls for the opening of several new offices. But Irion insists that Dutko remains in control of its own destiny — if only because the firm’s revenues have grown substantially since the purchase two and a half years ago. Yovovich and Graunke did not return calls seeking comment for this article. A DEATH IN THE FAMILY Dutko’s emergence as a new breed of lobby shop was hardly preordained. Founded in 1981 as Dutko & Associates, the firm was fairly typical of most shops of the day — that is to say it was Democratic, concentrated in one industry (oil and gas), and centered on one person, Dan Dutko, who at the time was best known as having served as chief of staff for Sen. Don Stewart (D-Ala.) and Rep. Bob Krueger (D-Texas). In 1985, Dutko added Republican Steve Perry to its roster, becoming one of the few bipartisan firms in town. In 1993, Dutko made its first foray away from lobbying, opening a communications shop. It would prove to be ill-fated. The communications operation opened well before PR came into vogue in the local lobby scene. Dutko’s venture lasted eight years, folding in 2001, just as other lobby shops were adding PR practices to their portfolios. The lesson Dutko took away from the experience: “Don’t go into something unless you’re really going to do it,” Irion reflects. It was a lesson taken to heart. In 1998, Dutko launched its state and local practice. The next year, the firm opened its first state office, in Denver, and the new practice grew steadily, reaching $2 million in revenue by 2001 and $6 million by 2003. Last year, after the acquisition of Poole & McKinley and with a total of five stateside offices, revenues reached $8.2 million. For comparison, Greenberg Traurig, which runs the largest state lobbying operation, netted $11.8 million from its state lobby work. But just as its state operation was getting off the ground in 1999, Dan Dutko, the firm’s well-connected and charismatic leader, died unexpectedly in a biking accident at age 54. “It was devastating, but we stayed together and shared the vision, rather than break up,” says Irion of the months after Dutko’s death. “If only one thing holds you together, it’s easy for firms to break up.” If anything, the period after Dutko died was marked by remarkable growth, with the addition of more state offices and the quadrupling of revenues. In 2004, Dutko launched its most ambitious endeavor to date, an international consulting branch called Dutko Global Advisors. Headed by Sally Painter and Karen Tramontano, both of whom worked in the Clinton administration on international trade and commerce issues, the practice is part lobbying, part strategic advising, and part old- fashioned matchmaking, catering to corporate clients looking to penetrate emerging foreign markets. The practice’s strongest concentration is in the formerly communist countries of Central and Eastern Europe, where Painter and Tramontano worked extensively during negotiations over NATO’s 1999 and 2002 enlargements. Dutko opened a three-person office in Prague and recruited Alexandr Vondra, the former Czech ambassador to the United States and a leader of the Czechoslovak political underground movement in the 1980s, to head it. The practice now has a dozen clients and revenues of $1.8 million a year, a figure that Irion projects will increase 50 percent to 100 percent annually over the next three years. ON THE DOWN-LOW IN D.C. While financially Dutko has managed to climb to the top of Washington’s lobbying heap, it retains an extremely low profile. Absent from its roster are any star lobbyists — save, perhaps, for Ben Nelson’s brief tenure from 1999 to 2000, between his stints as governor of Nebraska and in the Senate. Big names, Irion says, “would change the dynamic of the organization. We have a very flat organization, and it’s not our style to be subservient to superstars.” That modest outlook is noticeable on a visit to Dutko’s offices. Sitting outside at a dive restaurant nearby, Irion pauses every few minutes to wave and say hello to Dutko employees leaving the offices on their lunch break. “We all know each other’s kids,” he says. “It’s that type of firm.” The apparent amity at the firm might have something to do with Dutko’s unorthodox compensation structure — one that does not encourage lobbyists to horde clients. At Dutko, lobbyists’ compensation consists of three parts: a base salary, commissions on clients brought into the firm, and bonuses awarded for work performed for clients. Under Dutko’s system, the lobbyist who brings in a client keeps 100 percent of the commission, but the bonus component is calculated based on the amount of work the lobbyist did for the client. That evaluation, Irion says, is less quantifiable (in terms of percentage of time spent on the client) than it is qualitative — that is, who’s getting the best results for the client. As for the future, Dutko still has millions in venture-capital dollars stashed in its bank account — and a lot of places to spend it. Next on the list? An office in Kiev, which Dutko expects to have up and running sometime this year. “Ukraine after the Orange Revolution is a bright light,” says Vondra, who heads Dutko’s Prague office. Specifically, Dutko is eyeing the lucrative natural gas market in Ukraine as well as what it sees as a rush for government procurement in a rapidly Westernizing country. The firm is exploring strategic partnerships in Buenos Aires, Argentina, and in Ottawa, with Canadian lobby firm Prospectus Associates. Stateside, Irion says he’s looking at offices in key cities like Atlanta and Chicago. So is the competition keeping its eyes on Dutko? Not as closely as you might think. Appropriations are the staple crop for the biggest lobby practices in town. In that practice, dominated by giants such as Cassidy & Associates and Van Scoyoc Associates, Dutko remains a second-rung player. In terms of federal lobbying fees, Dutko is sizable, but its $21 million in federal fees lags behind Cassidy’s $28.3 million and Van Scoyoc’s $27.1 million. Add to that the fact that Dutko’s strategy of opening far-flung offices is extremely capital intensive, and it’s clear that few Washington shops seem interested in imitating Dutko’s blueprint. “Their business model is very good, and they’re going to be successful,” says Rich Gold, who heads Holland & Knight‘s lobby practice and competes with Dutko in the District and in Florida, where Holland & Knight is based. But while he admires Dutko’s acumen, he says the firm’s vision of a global lobby firm isn’t feasible. Dutko’s lobbyists concede that they can’t be all things to all people, but they see a clear competitive advantage in being many things to many people. When asked what differentiates the firm from the rest of the lobby crowd, more than one Dutko lobbyist cites a quotation of Dan Dutko’s: “We have multiple arrows in our quiver.”
Andy Metzger can be contacted at [email protected].

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