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Tony Podesta and Bob Livingston have both been in Washington for decades, but they’ve hardly been hanging out at the same cocktail parties. While the prominent Democrat and the former Republican congressional leader both run eponymous lobbying firms, that seems pretty much the extent of things they had in common. At least, that was the extent of it until six months ago. That’s when Podesta and Livingston announced they were launching a joint lobbying venture (look for the item “Spinoffs Galore” in the Full Disclosure column from March 19, 2007): the PLM Group, headed by former Democratic Rep. Toby Moffett, a longtime member of Livingston’s firm. Since then, the new partnership has scored four clients, including an electric car company; Egypt, which is paying the venture $1.1 million; the Information Technology Association of America, which became a client last week; and South Korean electronics giant Samsung, which has so far generated a small amount of work. The PLM Group has signed contracts for more than $1.6 million so far — not enough for a big beach house in the Hamptons, but real money nonetheless, especially for a venture that’s almost entirely virtual, with minimal startup costs. So how did these strange bedfellows get together? And, more importantly, should other firms be paying close attention to a business model that requires minimal up-front investment but has yielded new clients? A DEMOCRATIC RESURGENCE With Democrats back in control on Capitol Hill and a politically weakened Bush administration, Livingston and Podesta’s announcement last March drew attention. While the Livingston Group had Democrats on its roster (including Moffett) and had set a goal of becoming more bipartisan, firm leaders knew they were viewed as solidly allied with the Republican right. Podesta, on the other hand, was an A-list Democrat who had recently split with his longtime Republican partner, Dan Mattoon. The firm still has Republican partners, but none as well-known as Livingston. The two firms are of comparable size. The Podesta Group reported $13.2 million in gross revenue in 2006, and Livingston reported $16 million. But that wasn’t enough for either to crack the top 20 in The Influence 50, Legal Times‘ annual list of top-grossing lobbying firms. The idea to collaborate, both men say, originated with Moffett, a former Connecticut congressman who is one of the most well-connected Democrats at the Livingston Group. Moffett had taken four months off in 2006 to campaign for congressional candidates in Connecticut, and after the election, he started reviewing his options. He started talking to several firms and to Podesta, someone he’d known for years. It was his adult daughter, Moffett says, who first suggested coming up with some “new concoction” with both Livingston and Podesta. Moffett says he furiously typed up a proposal. Sometime after the first of the year, he brought Podesta to the Livingston offices to meet with Livingston and Jim Pruitt, the firm’s chief operating officer. As Livingston had already determined to become more bipartisan, losing Moffett obviously “would not fit in with our strategic plan,” Pruitt says, a bit wryly. For his part, Podesta says he liked the idea of joining resources to compete with bigger firms. All of those factors added up to a deal that made sense to Livingston and Podesta, though it raised some eyebrows — and a few questions — on K Street. Could a lobbying firm without offices, without dedicated staff, and led by such a partnership actually work? Would the fact that the two firms have vastly different business models and specialties cause problems? Was this the first move towards a full merger? And would anyone hire PLM? VIRTUAL REALITY? Everyone involved says they were a little uncertain of what the venture could yield. “I walked into it with some degree of healthy skepticism,” Livingston says. Podesta says, “We sort of hoped to have a client or two the first year.” Livingston, Podesta, Moffett, Pruitt, and Kimberley Fritts — Podesta’s second in command — hammered out the details of the deal in a few meetings around the conference tables at both firms. Moffett chairs the new firm, named PLM for Podesta, Livingston, and Moffett. The real question, Moffett says, was whether the new firm would be “virtual or real,” and how much startup money everyone would have to commit. The answer: some initial legal and accounting fees. The PLM Group was incorporated as a limited liability company in Virginia. Pruitt and Fritts say the total start-up expense was less than $5,000, which was split between the two firms. The PLM Group’s name is on a sign in the lobby of the building where Podesta has its offices, and Fritts signs off on registrations. There’s a phone line in her office that goes straight to voice mail. Moffett has an e-mail address and business cards, and there’s another generic e-mail box for inquiries. But there are no separate offices, which is just as well, as Moffett has plenty of workplaces already: He already has space at the Livingston Group and continues to represent Livingston clients. He’s working to cultivate a relationship with public relations giant Edelman, hoping the firm will refer its clients to PLM; the firm’s work for Samsung is through a subcontract with Edelman. He’s also working on Democrat Chris Dodd’s presidential campaign. And Moffett has his own firm, Private Public Solutions, and represents clients such as the Interactive Gaming Council. His multiple roles keep things interesting. Most days, Moffett says, he starts his day at Edelman at about 7:30 a.m., before heading over to a Dodd campaign staff meeting, and later in the day, to his Livingston office. Then, of course, there are trips to the Hill and other meetings. He often travels from place to place in an electric car, the product of PLM’s first lobbying client, Miles Automotive Group. The company — headed by Miles Rubin, a wealthy businessman and philanthropist with strong Democratic ties — signed up with PLM in June. Moffett is lobbying for tax credits for the purchase of all-electric cars. He was a few minutes late to an interview with Legal Times because he was showing the small red auto off to Rep. Lloyd Doggett (D-Texas). Last week, an aide drove the electric car up to the horseshoe in front of the Rayburn House Office Building before a Judiciary Committee hearing tied to Moffett’s Internet gaming clients. It gave him another opportunity to show the car off to members and anyone interested. PLM shares staff with both Livingston and Podesta. Every time PLM signs a new client, the two firms decide who will work on the account and how the retainer will be divided between them based on the amount of resources each provides to that client. Both firms say they are targeting clients for PLM that will pay a monthly retainer of between $20,000 and $30,000 — slightly more than the minimum Livingston retainer, which is $15,000 to $20,000. The average Podesta retainer is about $20,000. Miles Automotive pays $20,000 per month and has a yearlong contract. The Information Technology Association of America pays $25,000 per month and also has a yearlong contract. Samsung, which has so far only retained the firm on a short-term basis, is paying $15,000 per month. PLM is still working to finalize its contract with Egypt, but both sides say they expect that to be done soon, and the contract will be for a year. PLM has already filed required disclosure forms for the Justice Department, indicating that it will be working on Egypt’s behalf. The business model, Pruitt and Livingston say, is similar to that of the Livingston Group, which, Livingston notes, began working with lobbyists as consultants rather than hiring them because “it’s cheaper that way.” Livingston has 20 staffers, including five lobbyists, and 40 consultants, about half of whom rent space in the Livingston Group offices. Podesta, by contrast, has a roster of lobbyists on staff. When asked, Podesta and Livingston, in separate interviews, both said they have never even discussed the possibility of a merger of their two firms. “Their model and their practice is different from ours,” Podesta says. Livingston stresses that a merger “was never even an option” and says his firm is doing well, despite shifting political winds. He acknowledges that his firm saw a downturn during the first half of the year, with revenues dropping 14 percent, but says the past two or three months have been better. “We’ve had the good fortune of having good success with some of our clients,” he says, referring obliquely to his work for Turkey, which resulted in the shelving of a controversial resolution on the Armenian genocide and a lot of publicity. The partnership with Podesta, Livingston says, is a way to attract new clients, “not a desperate move to stay alive. We’ve had a pretty good last two or three months.” Asked whether he would have partnered with Podesta had Republicans kept control of Congress after the November 2006 elections, Livingston says, “I guess it depends on the deal.” Podesta says he liked the venture because it opens up a world of clients who usually are just willing to consider the biggest firms. “I think the reality,” he says, “is that a lot of people end up going to behemoths.” It was all upside, he says, because “it wasn’t like we were spending a lot of capital.” Podesta says he’s happy about PLM’s contract with Egypt, the first time Podesta has worked on behalf of a country. There’s evidence that having the joint venture in place did, indeed, strengthen both firms’ ability to help win the Egypt contract, PLM’s largest so far. Amr Ramadan, the deputy chief of mission with the Egyptian embassy, says he liked the bipartisan nature of the consortium. The embassy also wanted lobbyists with experience representing countries in the same region (as Livingston has) and with good contacts in Congress. Ramadan and Moffett both say they are still finalizing the formal contract, but have been working together informally for a few weeks. “We are quite impressed, actually,” Ramadan says. “It looks good.” In the meantime, even as Podesta and Livingston continue to work together for PLM clients, they are competing for others. Podesta last week registered on behalf of the Chocolate Manufacturers Association, a client Livingston pursued. The two firms don’t have any type of noncompete agreement. Podesta says the goal is to keep attracting interesting clients. “I don’t want to glamorize our few lunches into a business plan,” he says of the goals for the venture. “I think it’ll be interesting.”
Carrie Levine can be contacted at [email protected].

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