A Democratic Congress Spells Change on K Street

Posted January 17, 2008 at 3:44pm

The lobbying landscape has been jolted by a pair of tectonic shifts over the past year: the 2006 election temblor that knocked Republicans from power in Congress and the Democratic-driven lobbying reform that followed.

And while K Street spent 2007 adjusting, the industry is still bracing for more aftershocks this year.

“The solidification of the new majorities in Congress was a big deal that obviously is forcing firms to rethink the way they had been doing business in the past,” said The McCormick Group’s Ivan Adler, who specializes in headhunting lobbyists. Democrats with Capitol Hill ties are being paid a premium to join lobbying firms, trade associations and corporate offices — and the pressure on top Democratic staffers to move downtown is only going to get more intense, he said.

“In 2008, the competition will be greater,” Adler said. “The war for talent will be greater to get these people, because a lot of them don’t want to leave.”

Luckily, those looking will find more places to land. In one of the most dramatic examples of the downtown realignment, several powerhouse firms that built their brands on an all-Republican model decided to go bipartisan. The Federalist Group hired several Democrats and relaunched as Ogilvy Government Relations. The American Continental Group added Democrats to its roster and partnered with the upstart all-Democratic Capitol Counsel. And most recently, Barbour Griffith & Rogers, the city’s largest Republican outfit, announced its intention to bring on its first Democrats.

At the same time, all-Democratic shops — a rarity under GOP control — became a fad, with a few amassing the kinds of client lists and paydays reserved for their Republican counterparts under the old order. Capitol Counsel, founded by veteran Democratic lobbyist John D. Raffaelli, and Parven Pomper Schuyler both opened with a focus on tax and trade issues. Elmendorf Strategies, started by Steve Elmendorf, the chief of staff to former House Minority Leader Richard Gephardt (D-Mo.), quickly emerged as a new force.

The latest addition to the bunch is Franklin Square Group, headed by tech lobbyists Josh Ackil and Matt Tanielian.

Democratic lobbyists have noticed the changes, not only in the jobs they can command but also in the perks of having their party in power on Capitol Hill.

“I felt welcome in just as many Congressional offices, but my friends on the Hill were occupying much nicer offices,” said Jack Quinn, a former counsel in the Clinton administration and co-founder of Quinn Gillespie & Associates. He also was busier last year.

“There was a lot to be done, because a lot hadn’t been done in the previous Republican Congress,” Quinn said. “They were here five days a week. There was a more intense level of activity around the city.”

In addition to the legislative work, Democratic lobbyists filled out their schedules with fundraising events that proliferated to collect a newly available stream of corporate cash. Corporate and trade associations, which in the previous cycle directed 65 percent of their political action committee money to the GOP, rapidly shifted course. By the third quarter of 2007, the same accounts were favoring Democrats by a slight margin, 51 percent, according to the Center for Responsive Politics.

“It’s no surprise when money follows power,” center spokesman Massie Ritsch said. “There’s certainly potential for Democrats to increase their share of money from PACs. It may be by the end of this cycle, Democrats will have a very solid hold on PAC money.”

If the change in power didn’t give lobbyists enough trouble finding stable footing, the past year also ushered in massive lobbying and ethics reforms.

Ken Gross, a lobbying and Congressional ethics lawyer at Skadden, Arps, Slate, Meagher & Flom, said 2007 must be characterized as a the year of ethics and lobbying reforms, including provisions that hold criminal penalties for lobbyists who break the rules.

“The piece of legislation that was passed was the most comprehensive piece of legislation we’ve seen in recent history on gifts and gratuities, lobbying disclosure and perhaps more important, the new exposure to criminal liability, the likes of which we have not seen before,” Gross said.

In 2008, lobbyists will feel the full effect of those laws. Lobbyists will have to file quarterly reports as well as new semiannual disclosures and report more about their charitable and political contributions.

“This affects every nook and cranny of an association, corporate office or labor organization,” Gross added.

Not all K Streeters said they’ve felt a cataclysmic shift. And though many Republican firms are integrating, not everyone bowed to the trend.

Republican Mark Isakowitz, whose one-party firm Fierce, Isakowitz & Blalock isn’t making any changes, said his business grew in 2007.

“We saw a lot of hiring of Democratic lobbyists, but in many cases, the pot has just gotten bigger in terms of lobbying resources,” said Isakowitz, who has partnered with Democratic lobbyists on several client matters. In 2008, he added, “I don’t expect a seismic shift. There’s sort of a progressive shift that’s been in motion and will continue.”

Still, most GOPers say they’re happy to be in bipartisan shops.

“Having a diversity of practice and professionals is the only way you can survive here,” said Republican lobbyist Todd Boulanger of Cassidy & Associates. “I haven’t personally seen a ton of changes. But when there’s a changeover in Congress, there’s always going to be a shift.”