Despite the fact that the firm will be closing its doors shortly, the PMA Group has filed several lawsuits against its clients in recent weeks for failure to pay a combined $150,000 in fees the firm believes it is owed, and more suits are apparently in the works.
It is uncommon but not unheard of for lobbying firms to file suit against their clients. Van Scoyoc Associates and Cassidy & Associates, two major appropriations lobbying firms, have apparently never sued a client for failure to pay. Court dockets in the Washington, D.C., area include a handful of breach of contract cases brought by other firms against their clients in the past decade, including Holland & Knight, Alcalde & Fay and Akin Gump.
PMA, on the other hand, has filed suit against more than 20 of its clients in the past decade.
PMA’s longtime attorney, Carmen Jacobs, said there is nothing unusual about a company going to court to enforce its contracts.
“That’s the only way to get people’s attention,— Jacobs said. PMA has had “probably over 150 clients over that time— and has filed suit against around two dozen, according to court records. “Averaged out, it’s a couple of people a year,— Jacobs said. “It’s not a big number.—
Sometimes, Jacobs said, “You’ve got to go after people to get your money … you try to cut people slack and they take advantage of you.—
The FBI raided the PMA Group offices in November and is reportedly investigating whether some of the firm’s campaign contributions were improper.
The firm has provided millions of dollars in campaign contributions, particularly to senior House Democrats, and has secured millions of dollars in earmarks for its clients.
The firm will close its doors at the end of the month, but Jacobs said he is likely to file additional failure-to-pay claims in the next few weeks.
Last Monday, the firm filed two cases in Arlington County court against clients for allegedly failing to pay their fees. PMA is seeking about $120,000 from Windber Research Institute, a medical research facility in central Pennsylvania, and $25,000 from Quallion, a California lithium-ion battery manufacturer.
The week before, the firm had filed a third case against Ohio solar panel manufacturer Xunlight in a lower county court reserved for claims of less than $15,000.
ABC News on Feb. 9 first reported the story about the November FBI raid on PMA’s offices. On Feb. 25, Quallion wrote a terse letter to PMA serving notice of “termination of PMA’s services, effective immediately.—
PMA’s contract with Quallion requires 30-day notice of termination, and the lobbying firm’s suit alleges that Quallion failed to pay its monthly fees for January and February. Quallion executives did not return calls seeking comment for this story and the company has not yet filed a response in court.
The Windber institute did not sever ties with PMA, though “we thought about it,— Chief Administrative Officer James Bates said.
PMA’s suit against Windber alleges that the institute has failed to pay its $13,000-per-month fees since July 2008.
Bates said the institute has not seen the lawsuit, and a reporter’s phone call was the first he had heard of it. “I have heard they are closing their doors,— Bates said. “I am sure that they are going out to their clients and saying Give us what you’ve got.’—
PMA’s suits against their clients mostly follow the same pattern. The firm alleges that the client failed to pay several months worth of fees, or that the client tried to terminate the contract before the mandatory one-year term was up. Most of the cases end up being settled out of court.
In one case, a client argued in a brief on file in the Arlington County circuit court that PMA had never provided time sheets detailing what work the firm was doing on behalf of the client. The client, Adsil Inc., claimed that when they asked for time sheets, PMA founder Paul Magliocchetti responded “You are paying us for who we know.—
Adsil ultimately settled its case for about $80,000.
In another case, the client turned around and counter-sued the lobbying firm.
In March 2005, PMA sued kSero, a Richmond, Va.-based education company, for $58,000 in unpaid bills. But firm founder Susan Hardwicke filed a countersuit, alleging that PMA had promised to work for free for the cash-strapped startup until the lobbyists could secure an earmark for the after-school program she was developing.
Hardwicke claimed she had an unwritten agreement with PMA that she would only have to pay the firm if it managed to get her an earmark — a “contingency agreement.— Hardwicke argued that the arrangement was illegal, therefore PMA could not enforce it.
PMA officials vigorously denied the charge and noted that Hardwicke could produce no documentary evidence to back up her claim.
Hardwicke and the lobbyists ultimately settled their dispute in a confidential agreement. Jacobs told Roll Call that PMA settled only to avoid dragging Appropriations Committee staffers into court to testify on the matter.
Several of the cases indicate that PMA allowed some clients to miss many months of payment before filing suit, and other cases indicate that PMA negotiated lower monthly fees for clients that were having cash-flow problems.
But Jacobs flatly denies that PMA ever had a deal with any client to take payment only after an earmark had been obtained.