by Anna Palmer
K Street is suffering a slowdown, and business may not pick up much until after the November election.
Many firms reported only modest gains or even a drop in revenue for the first half of 2012, according to reports that were due Friday at midnight.
“[CGCN Group]…bucked the trend.”
The numbers aren’t wholly surprising — lobby shops almost never see a boom in business during a presidential election year. But the disappointing reporting period reflects a continuing slump in the K Street economy, where double-digit growth for the biggest revenue generators has often been the norm.
Lobbyists blame corporate belt-tightening on Washington offices, business slowing to a crawl on Capitol Hill and focus on the election for the slowdown. And things aren’t expected to pick up until the lame-duck session.
“No one expects a busy third quarter,” Patton Boggs’s Kevin O’Neill said. “There’s not a lot of people who are going to be lobbying from Ocean City on Aug. 15.”
But even the lame-duck session isn’t expected to bring a windfall.
“The thing the lame duck does is [it] keeps business steady,” said Steve Elmendorf of Elmendorf Ryan. “The Congress may not be doing much right now, but everybody wants to make sure they have everything lined up.”
Heather Podesta of Heather Podesta + Partners agreed.
“Right now,” she said, “people are locked in for the rest of the year.”
Some of K Street’s biggest rainmakers argue that business itself isn’t down and say they are busier than ever on the regulatory side, which public filings don’t account for.
“Lobbyists are beating a path to the agencies more than the House and Senate,” O’Neill said. Lobbying revenue “more and more reflect less of the reality of the marketplace because so much activity, especially Dodd-Frank and the Affordable Care Act, has moved to the regulatory areas.”
Patton Boggs reported billing $24.2 million during the first half of 2012, down 2.5 percent from the same time period in 2011.
Akin Gump Strauss Hauer & Feld saw lobbying revenue fall nearly 12 percent. The firm brought in $15.6 million during the first half of 2012, down from $17.7 million for the first half of 2011.
Smith Davis, who leads Akin Gump’s lobbying practice, said a drop in the law firm’s hourly billings accounts for much of the decrease, and he cited limited project work as another factor. Davis said the firm’s regulatory work that isn’t captured in the lobbying reports remained steady.
“Our practice has basically been centered upon congressional activity, regardless of which party occupied the White House. If Congress isn’t doing much either way, you are sustained by retainers, but your hourly work drops,” Davis said.
Cassidy & Associates and Van Scoyoc Associates — which for years were among the biggest non-law firm lobby shops with giant appropriations practices — also saw significant decreases in revenue as Congress continued to hold strong to its earmark ban.
Cassidy dropped 24 percent, bringing in $7.9 million in lobbying revenue so far this year compared with the $10.4 million the firm billed over the same time period in 2011. Van Scoyoc was down 11 percent, reporting $11 million in revenue for the first six months of 2012, down from $12.4 million over the same time period last year.
K&L Gates saw a 3 percent drop, bringing in $9.3 million over the past six months.
Podesta Group, which saw big gains after President Barack Obama’s election, also hit a speed bump. The shop’s lobbying earnings were flat at $13.7 million during the first half of 2012, the same as in 2011.
There were some bright spots. Brownstein Hyatt Farber Schreck was one of the few big law firms to grow more than 5 percent. The firm’s $11.5 million haul was buoyed by new clients, including AMC Entertainment, Apollo Group, CIM Group and HEB Grocery Co., among others, according to the firm’s Al Mottur.
“Despite the typical slowdown our industry sees in a presidential election year, we have remained very active across a broad spectrum of issues and industries,” Mottur said.
Among other firms posting small gains: Ogilvy Government Relations; Fierce, Isakowitz & Blalock; and Elemendorf Ryan.
Ogilvy Government Relations reported bringing in $9.8 million, up from $9.5 million during the first half of 2011. Fierce, Isakowitz & Blalock was up 2 percent, billing $100,000 more in the first half of 2012 and bringing in $5.3 million. Elmendorf Ryan was up almost 4 percent, billing nearly $4 million over the past six months, up from $3.8 million over the same time period in 2011.
Elmendorf said the uptick at his shop is, in part, because people are anticipating a very active 2013.
“We are a mature business, so I don’t think you’ll see wide swings up or down,” Elmendorf said.
Other smaller shops, including Franklin Square Group, [CGCN Group] and Heather Podesta + Partners, bucked the trend. Franklin Square was up about 24 percent, bringing in nearly $1.8 million for the first six months of 2012, up from $1.4 million over the same time period last year. [CGCN Group] also had a significant uptick, jumping from $1.7 million during the first half of 2011 to $2.3 million this year.
Heather Podesta attributed the firm’s almost 16 percent jump to new clients, client renewals at higher rates and the addition of tax lobbyist Steve Bailey. Her shop billed nearly $4 million in the first half of 2012, up from nearly $3.4 million during the first half of 2011.
“We were pruned back at the beginning of this Congress, and so, sort of since then, we have just been growing naturally,” Podesta said.