K Street bouncing back under Trump
Washington’s top-grossing lobbying firms are expecting a banner year, with Republicans in control of the federal government for the first time in a decade.
The 2016 election slowed work in Washington, but revenues for many firms in the first three months of 2017 showed a massive jump over the closing months of last year.
While not every firm enjoyed big gains in the recent quarter, K Street anticipates the situation will only improve as President Trump and congressional Republicans settle in and press ahead with an ambitious agenda.
K&L Gates, for example, had roughly the same revenues in the first quarter of 2016 and the same period in 2017 — roughly $4.3 million. But revenues jumped almost 25 percent between the final quarter of 2016 and the beginning of this year.
“The year has certainly started with a bang, a ton of clients want to know what it all means,” both in the legislative space and within the administration, said Darrell Conner, a government affairs counselor at K&L Gates. “A lot of [the work now] is strategic guidance to clients who are trying to figure out, where do we go from here?
“The potential exists for it to be a robust year for the lobbying industry,” he said.
K Street giant Akin Gump Strauss Hauer & Feld still leads the pack, bringing in $9.13 million during the first quarter — a slight decline from the same time a year ago.
“We are seeing, broadly speaking, a renewed interest from the business community and others to engage in the policy environment, and that’s something that I think will carry on,” said Don Pongrace, the head of the public law and policy practice at the firm.
The prospect for massive amounts of legislative and regulatory actions has led to a frenzy of lobbying hires on K Street.
There have been more than 1,500 new lobbying registrations — most commonly firms and individuals picking up new clients — posted between Jan. 1 and April 20, according to disclosures to the Senate. During the same period in 2016, there were roughly 1,100.
While hundreds of clients have terminated relationships with firms over the last four months, there has still been a net increase in registrations.
Brownstein Farber Hyatt & Schreck, for example, signed 22 new clients during the first quarter, according to Elizabeth Gore, who chairs the firm’s government relations department.
In the first three months of this year, Brownstein earned $6.64 million, a slight decrease from the same time in 2016, but a 16 percent jump over revenues at the end of last year.
“There was an expectation of a high level of regulatory and legislative activity, which drove a lot of new registrations. While that hasn’t been borne out on the legislative side, there’s certainly been more activity on the regulatory side, as well as shifts in priorities and policy directions from the administration,” Gore said.
A difficult start gave some reasons for concern. GOP lawmakers suffered a setback on ObamaCare, pulling a repeal-and-replace bill because it lacked support.
But leaders have resumed talks on a new bill and the Trump administration and lawmakers have kept working to dismantle Obama-era regulations.
In addition to facing a major deadline to fund the government, policymakers have an aggressive agenda for the year, including tax reform, passing a massive infrastructure bill, and possibly renegotiating trade issues.
Hogan Lovells, which earned more than $2.6 million to start 2017, also has a large roster of foreign clients — which are not included in the federal lobbying number.
In all of 2016, the firm had $10.2 million in lobbying revenue, and an additional $7 million in fees from foreign government advocacy clients.
Mike House, who leads the legislative practice group at Hogan Lovells, says that there will also be activity around routine spending bills, as they work with clients to ensure prized agency programs don’t get the axe.
“There should be an uptick in organizations and entities making sure their program doesn’t get cut,” he said.
Cornerstone Government Affairs, which does a great deal of appropriations work, boosted revenues from $4.19 million the first three months of 2016 to $5.02 million the same quarter this year.
Another firm with roots in appropriations work, Cassidy & Associates, increased its revenues by 11 percent over this period last year, taking in $3.35 million from January through March 2017.
All of this, half-dozen lobbyists told The Hill, foretells even greater amounts of advocacy — and cash — to keep firms busy this year.
“The same hopeful expectations of pro-business tax and regulatory reforms that have been propelling the stock market have been driving a boom in government relations engagement,” said Bruce Mehlman, of Mehlman Castagnetti Rosen & Thomas.
His firm earned $3.59 million in the first quarter — a near 21 percent increase over the same period last year.
Squire Patton Boggs, which has seen revenues decline over the last few years, has been slowly recovering and enjoyed a bounce in 2017’s first quarter.
The firm earned more than $5.8 million from January through March, a 27 percent increase from the year before.
“The increase in our [lobbying] revenues corresponds with what we’re seeing throughout our public policy practice: even with some of the early challenges the administration and Congress have encountered, people see the potential for real movement on policy matters large and small in Washington,” said Dave Schnittger, a spokesman for the firm’s public policy practice.
The law and lobby firm has many prominent players, and has recently expanded its roster with high-level names, though neither of them are registered lobbyists.
Schnittger’s former boss, former Speaker John Boehner (R-Ohio), is now at the firm. Squire Patton Boggs has also formed a strategic partnership with Michael Cohen, President Trump’s longtime personal lawyer.
Covington & Burling also saw a big bump in lobbying fees during the first quarter, jumping up 33 percent from the same time in 2016 — taking in upwards of $4.2 million.
Muftiah McCartin, the vice chair of its public policy and government affairs practice, attributes the growth to the “extremely chaotic” first months of the Trump administration, which left clients scrambling to figure out how to navigate the new environment.
While there is a sense that Republicans eventually need some legislative wins to show voters, K Street doesn’t think the slow start will sideline clients.
“Any prudent company is going to invest in government relations and advocacy to ensure that they’re perspective is taken into account,” said Brownstein’s Gore.
“Even if there’s not significant legislative process in the first three months of this year, that doesn’t mean they’re… willing to risk a fundamental shift in policy without being at the table.”