When Democrats took control of the White House and Congress, everyone knew that their friends on K Street would get a big piece of the action.
Just how sweet has it been? The Podesta Group, headed by Tony Podesta, the brother of the man who ran President Barack Obama’s transition, pulled in more than $30 million in lobbying fees last year. The 61% increase in revenue pushed Podesta Group, home to 28 lobbyists, among the 10 highest-grossing firms in Washington, according to the Influence 50, The National Law Journal’s annual survey of the lobbying industry.
His wife’s five-lobbyist shop, Heather Podesta + Partners, entered the top 50 for the first time after growing 49% to $7 million. Another newcomer to the Influence 50 is similarly sized Elmendorf Strategies, a three-year-old shop run by a one-time aid to former House Majority Leader Dick Gephardt, which increased lobbying revenue by 34% with $7.5 million. And Brownstein Hyatt Farber Schreck, whose leaders made large donations to Democrats, increased 55% to $24.4 million, leapfrogging more established lobby shops such as Cassidy & Associates and BGR Group. Some bipartisan shops with prominent Democrats at the helm, including Holland & Knight and Breaux Lott Leadership Group, also showed big boosts.
“There are ups, there are downs, and right now there is a real need and interest in having Democratic help,” said Heather Podesta, a former partner at Blank Rome who once worked for the late Rep. Robert Matsui (D-Calif.) and Rep. Earl Pomeroy (D-N.D.).
Alfred Mottur, managing partner of Brownstein’s Washington office, said the firm’s Democratic image was reinforced by name partner and firm president Steven Farber’s stint on the host committee for the Democratic convention in Denver in 2008. “I think that helped us,” said Mottur, though he added that the firm is bipartisan.
It’s clear that the ambitious legislative agenda that consumed Congress in 2009 — especially the health care overhaul, proposals for financial regulatory reform, the stimulus bill and energy and climate legislation — was a prescription for a healthy K Street, even if the wealth wasn’t spread evenly. The 50 highest-grossing lobbying practices in the country pulled in more than $1.1 billion in fees in 2009.
Every firm on the list reported lobbying on health care, with the proposed overhaul throwing off fees across the revenue categories. Big winners included the Podesta Group, which publicly reported roughly $8.2 million in fees from clients lobbying on health issues in 2009; Alston & Bird, with $3.9 million; Holland & Knight, with $4.2 million; and Capitol Tax Partners, with $3.6 million.
“You know the expression, a hundred-year flood? I think we had a hundred-year Congress. That’s the way I felt about it. I literally can’t imagine a Congress being any busier,” said Mark Ruge, co-chairman of the public policy and law practice at law firm K&L Gates, which was up 16.4% to $58.9 million.
One reason was the firm’s financial services practice. In late 2008, K&L Gates hired Dan Crowley, a financial services lobbyist who had worked for a mutual-fund industry association and for Nasdaq, and Pat Heck, a former tax counsel to the powerful Senate Finance Committee and adviser to its chairman, Sen. Max Baucus (D-Mont.). Both partners lobbied heavily in 2009 for clients that included the Financial Accounting Foundation, Pitney Bowes Inc., the Business Software Alliance, Independent Sector, and JPMorgan Chase & Co., which signed with K&L Gates in the fourth quarter last year.
“It serves to reason that there would be no recession for Democratic lobbying firms, given the amount of focus on Democratic lawmakers,” said Dave Levinthal, communications director for the Center for Responsive Politics, a nonprofit advocacy group that tracks the effect of money in politics. “So you want people who are going to know Democrats, going to be able to work with them.”
RUNNING THE TABLE
Overall revenue for the firms on the list was up 5.5%, compared to 2.3% in 2008. Thirty-three of the firms on the list posted an increase in gross revenue in 2009, and 17 reported a drop — an improvement from 2008, when 22 firms on the list experienced a gross-revenue decline.
For the second year in a row, firms known for their Republican players had weaker gross revenue. The Livingston Group’s revenue dropped by 23.6%, to $10.7 million. BGR Group ticked down by 3.2%, to $24.3 million, and Fierce, Isakowitz & Blalock fell 5.3% to $7.2 million.
Law firms continued to rake in nearly 66% of lobbying revenue, roughly the same percentage as they did in 2008. [For a breakout of law firm revenues, see Page 23.] But lobby shops on the list saw their collective revenue grow by 6.8%, more than the 4.9% growth at the law firms — due in large part to the explosion of revenue by Elmendorf, Heather Podesta + Partners and the Podesta Group. [A breakdown of lobbying firm revenue is on Page 26.]
The Podesta Group’s increase was enough to place it among the top 10 firms for the first time. But Tony Podesta, a longtime Democratic strategist and fundraiser, said he doesn’t believe its success is due to his party ties.
“I think the thing that’s most attractive about us is the sense of teamwork and bipartisanship that we bring to bear on the challenges that clients face,” he said, adding that “coming on the heels of no Republicans voting for the health care plan…it looks like only Democrats matter, but we don’t believe that’s been true this year, and we don’t believe it’ll be true in the years ahead.”
Heather Podesta said her shop’s growth in 2009 came mainly via referrals from existing clients. In 2009, her new clients includedthe American Beverage Association, Marathon Oil and Prudential Financial.
Steve Elmendorf, the founder and head of Elmendorf Strategies, said his three-year-old, seven-lobbyist firm is entirely Democratic but frequently works with other firms as part of a bipartisan team. “I think companies make a mistake if they only hire one side, and most people don’t do that,” he said.
Still, Elmendorf, a Democratic strategist and former aide to former House Majority Leader Dick Gephardt, said “one of the reasons I think we’ve been successful is that we’re small, and we’re flat, and we all know each other. There’s nobody I hired here who I didn’t work with in some fashion previously.”
Elmendorf last year hired Jimmy Ryan, a former senior adviser to Senate Majority Leader Harry Reid (D-Nev.) who jumped from Citigroup’s Washington office, and Stacey Alexander, a senior House aide to Rep. Jim Matheson, a leading Blue Dog Democrat. Elmendorf clients in 2009 included the Medicines Co., the National Association of Broadcasters, Time Warner Inc. and Northrop Grumman Corp.
LAW FIRM PERFORMANCE
The Influence 50 survey takes a comprehensive measurement of all fees related to lobbying. It includes lobbying revenues reported to Congress under the Lobbying Disclosure Act and to the Justice Department under the Foreign Agents Registration Act, and it also asks firms to provide information about state and local-level lobbying done from Washington-area offices. (This year, The National Law Journal has adjusted the 2008 gross revenue of some firms for the record, eliminating state and local lobbying revenue from offices outside the Washington area.) Finally, the survey asks firms to report other related work, such as representation of clients before federal agencies or grassroots organizing.
Akin Gump Strauss Hauer & Feld and Patton Boggs, the two firms at the top of the list, posted declines in overall gross revenue, but both firms made millions from health care. At Patton Boggs, lobbying disclosure records show that the firm reported more than $10 million in fees from clients lobbying on health issues in 2009, roughly a quarter of all fees the firm reported under the Lobbying Disclosure Act (LDA) last year. Health care clients include Wal-Mart Stores Inc. and pharmaceutical maker Bristol-Myers Squibb Co.
Patton Boggs partner Nicholas Allard said the firm’s 10.5% decline reflects a slow start to 2009 and lingering weakness in the economy. But the $40.7 million the firm reported in LDA work for 2009 was the biggest number the firm had ever reported in that category, he said, and the firm had its best fourth quarter on record.
Akin Gump’s Joel Jankowsky, who helps oversee the public law and policy practice, and partner Smith Davis, head of the firm’s legislative financial institutions policy practice, said the firm also kept busy representing clients facing congressional investigations, including Aetna, Bank of America, the New York Yankees and PNC Bank. As for why lobbying revenue dropped this year, Jankowsky said that “I’m not sure we have an answer. Smitty and I are looking at each other. We’re beat. We had a hell of a year.”
Carrie Levine can be contacted at firstname.lastname@example.org.