What Top Lobbyists Can Do for You—And For How Much
from March/April 2003
by Peter Keating
“When I tell people I’m a lobbyist, they think it involves surreptitious dealings of large sums of money in smoky back rooms in the statehouse,” says Gene Mulroy, a partner at Holt Ross & Mulroy Government Relations LLC, a lobbying firm with offices in Trenton, New Jersey, and Washington, D.C. “I tell them that’s not true; you can’t smoke in the statehouse.”
The old joke reflects the stereotype of the lobbyist as a shady character straight out of Mr. Smith Goes to Washington who can alter billion-dollar legislation with a flick of his cigar. But it also reflects the distaste many Americans feel for politicking. Carried over into the corporate world, that aversion leaves too many top executives and directors befuddled about how government really works—and how it affects their businesses.
“CEOs and directors are generally encumbered with a deal of ego. What they don’t understand is that the politicians they run into are equally encumbered with ego. Each group disdains the other, and they don’t speak the same language,” says former House Appropriations Committee chairman Bob Livingston, who founded his own lobbying firm in 1999 (and took in $1.14 million his first year). “A good lobbyist translates.”
Once upon a time, that translation was simpler. Post-Civil War railroad lobbyist Samuel Ward, who believed that “the way to a man’s ‘aye’ is through his stomach,” was known for serving politicians breakfasts of ham boiled in champagne. Alexander Hay, gunmaker Samuel Colt’s man in Washington 150 years ago, supplied members of Congress with free revolvers—and women.
These days lobbying has gone corporate, and local too (see “Lobbying at the State Level” on page 78). Traditional lobbying techniques are still with us, but a whole new way of doing business has grown up alongside them. Far from being publicity-shy, lobbyists today are often famous figures who take to the airwaves to shape public opinion. Lobbying firms are among Washington’s most profitable, fastest-growing, and most rapidly consolidating businesses. And lobbyists increasingly cooperate with the public-relations and advertising industries to execute comprehensive plans for their clients.
Consider Cassidy & Associates, which often tops all other lobbying firms in annual income. The company hauled in some $33 million in 2002 from such clients as Adelphi University, Major League Baseball, and United Space Alliance, a joint venture between Boeing Co. and Lockheed Martin.
Directors need to help their CEOs understand that today’s lobbyists are far more than just political fixers or crisis managers. Nobody bridges the old and new worlds of lobbying better than Thomas Hale Boggs Jr. Tommy Boggs has always been surrounded by power. He was born the year his father was elected to Congress from Louisiana; Hale Boggs rose to the rank of House majority leader before his plane disappeared while he was campaigning for a fellow congressman in 1972. Tommy’s mother, Lindy, assumed his father’s seat and later served as ambassador to the Vatican during the Clinton administration. His surviving sister is ABC and NPR newswoman Cokie Roberts.
When Tommy Boggs was about 10, a magazine writer interviewed his family and asked the children what they wanted to do when they grew up. Boggs’s siblings said they planned on having political careers; young Tommy quipped, “If they’re all going into politics, I’d better be the one to make some money.” In 1966 he joined the law firm of James Patton Jr., who had served in the diplomatic corps in Indochina. By 1972 Boggs’s name was on the door, and the outfit was building a reputation as a successful lobbying firm. Since then Patton Boggs LLP has represented nearly every kind of concern touched by Uncle Sam, including big oil, insurance, and telecommunications companies, state governments, and foreign countries.
As the elevator doors slide open on the eighth floor of Patton Boggs’s M Street office, cigar smoke wafts by, and the trail leads straight to Boggs, who enjoys several smokes a day. A large, soft-spoken man of 62, Boggs is a master of the inside game. Over the years he has built personal relationships with dozens of key members of Congress on both sides of the aisle, so that when a client needs help, he can target exactly the right lawmakers for assistance. He greases the skids by fund-raising for more than 100 political candidates in both parties every election cycle; he and members of his firm also personally make campaign contributions and soft-money donations. In the ’80s and ’90s, Boggs reportedly raised money for more congressmen than any other lobbyist. Members of Congress and the White House staff consider him a peer. He literally has a front-row seat reserved for key markup sessions on legislation affecting his clients.
Boggs describes the technical part of his job this way: “Seventy-five percent of what we do you’ll never read about in the newspapers. Our first step is to tell someone whether what he or she wants is doable. Then we work on how to get the problem solved in the federal system. You need to know the agencies, such as the Federal Trade Commission. You have to know the members of Congress and their personalities. And you need to know the rules. Half the members of Congress don’t know the rules, because they haven’t been there very long.”
Since the mid-’70s, Boggs has watched the other 25% of his work—the mounting of high-visibility campaigns—assume greater prominence. “Sunshine laws meant that markups of bills began to take place in public, which gave lobbyists much greater access than before,” he says. “Committees began electing chairmen rather than choosing them by seniority, so all of a sudden you had to pay attention to different members. And campaign finance reform took money away from the system, so that labor or oil couldn’t finance a campaign.” Cumulatively, these changes meant that corporations needed to connect to a wider range of lawmakers, while congressmen had to tap broader sources of campaign cash. Lobbying firms obligingly stepped into the breach as middlemen, eventually developing sophisticated fund-raising and public-relations strategies. The battles over Bill Clinton’s health-care proposals in 1993 and 1994 further accelerated corporate spending on lobbying and related advertising. “Right now, if you’re a pharmaceutical company and you can’t reach the White House or Congress through direct lobbying campaigns, you’re going to spend $35 million on media and PR campaigns through newspapers and TV. That would not have happened pre-Clinton,” says Boggs, who charges $700 an hour for his services.
The shifts in the lobbying industry have been lucrative for Patton Boggs, whose total revenues reached $200 million in 2001 (the firm doesn’t break out revenues from lobbying). Clients include Mars (which paid Patton Boggs $1.06 million last year), AOL Time Warner ($880,000), the Association of Trial Lawyers of America ($800,000), and Metabolife, a maker of dietary supplements ($400,000).
For all his high-profile victories, Tommy Boggs laments the passing of a cozier time. When he registered as a federal lobbyist in the ’60s, he was No. 62—the 62nd lobbyist in Washington. Now there are around 17,000. “In the old days Congress had some discipline, and the relationship between the executive and legislative branches was much better,” he says. “Today the work of government is being done by outside folks, because the inertia of government is such that things wouldn’t get done otherwise.”
Other lobbyists agree that their industry now supplies the raw materials that enable government to function. In addition to campaign cash, they provide polling data (to tell lawmakers what the voters think), the nuts and bolts of draft legislation (to help them turn wishes into law), and even institutional memory (to instruct them on how to get bills passed). Says one: “We see freshmen coming in, and we think, ‘We know how this place works. We know where the bathroom is.’” Sometimes companies are as lost as the freshmen lawmakers. “CEOs get into trouble because they don’t know who to contact when they need a lobbyist,” says Jim Albertine, president of the American League of Lobbyists and of his own Washington, D.C., lobbying firm. “So they call a big name, or someone they saw on TV, or a former member of Congress. But the person they hire may not be able to get their issue on the right officials’ agenda.”
What can directors do to help? First, they can encourage the CEO to consider some basic issues. For starters, what’s the budget? Lobbyists’ monthly fees can range from $10,000 for smaller firms to $50,000 for the top power brokers (prices that once led a congressional staffer to lament, “I could make more money knowing me than being me”). Next, is it necessary to hire a lobbying firm that also provides legal work, as many do? Law firms are helpful for drafting legislation and navigating through the tax code, but they can also be more expensive.
Second, directors should urge the CEO to shop around until he or she finds someone with enough access and insight to quarterback the company’s specific political goals. No lobbyist can be top-ranked on every issue; some firms specialize in legal niceties, such as formulating the precise words a client should include in legislation, while others are experts in working with particular agencies. A lobbyist who can find support for new tax legislation might be a disaster on environmental issues. Moreover, the lobbyist you choose should know what your opposition is up to, cautions Albertine, because “as soon as he walks out your congressman’s door, the opposition is going to walk in.”
At least until January 2005, effective lobbying in Washington also demands that a firm have strong Republican contacts. Under Dick Cheney’s leadership, the Bush administration has scored legislative successes by keeping Republicans coordinated and disciplined, and the White House staff and regulatory agencies have rigidly favored pro-GOP interest groups and lobbyists. While a Cheney task force was formulating the administration’s energy policy in 2001, for example, it met with 103 representatives of the energy industry and zero environmental groups.
As a result, the hottest lobbying firms in D.C. feature GOP stars—including firms headed by Democrats. Boggs, for instance, is a Democrat, but his partners include former Republican congressman Gregory Laughlin of Texas and the former general counsel to the Republican National Committee, Benjamin Ginsburg, who also served as national counsel of the George W. Bush for President Committee. Haley Barbour, a partner at Barbour Griffith & Rogers Inc. and a former chairman of the Republican National Committee, now ranks with Boggs as an influence kingpin.
Third, directors should insist that their company integrate its government relations into its community-relations and legal work, thus creating a sustained effort to advance its interests. If you build lobbying capacity into your company’s long-term public relations, the lobbying firm will have a chance to mobilize public opinion on your behalf—and to build trust between you and key lawmakers.
Wait for a crisis, however, and you will pay dearly. For example, Bridgestone/Firestone didn’t even have a Washington office before the National Highway Traffic Safety Administration demanded a massive recall of its tires in August 2000. It rushed to put crisis manager Barney Skladany on retainer, and it started a political action committee, or PAC, with which to fund congressional persuasion. Altogether, the company spent $7.7 million in the 18 months following the recall. A longer-established plan might have produced better relations with Congress—thereby avoiding highly embarrassing public hearings—and saved the company millions.
“The most important thing I would tell directors is ‘Think ahead to your next potential problem, and if it could possibly involve the government, hire a lobbyist,’” says former House committee chairman Bob Livingston. He points to Microsoft, which largely ignored Washington and irritated Congress and the Justice Department in the early days of its antitrust battles.
Fourth, remember that lobbying makes for surprising bedfellows among clients. Everywhere else, Merck and Bristol-Myers Squibb are fierce competitors. But in Washington they play on the same team. That’s because big pharma has learned a key lesson about the new world of lobbying better than any other industry has. Securing a break for your individual company may be worth millions, but winning a broad regulatory fight on behalf of your entire industry is often worth billions. Witness the campaign by the drug industry, helped by Boggs and Barbour, to extend monopoly patents on many pharmaceuticals.
Not every lobbying effort is an unqualified victory, however. The Bush administration resisted lobbyist pressure and blocked manufacturers from extending patents on prescription drugs. But big pharma maintains an impressive influence network: According to a report by the watchdog group Public Citizen, the drug industry has 625 registered lobbyists, more than half of them former members of Congress, congressional staff, or government employees. Drugmakers spent a total of $177 million on lobbying in 1999 and 2000, and another $26 million on campaign contributions during the last election cycle. This two-stage prescription almost always works.
Bottom line: It’s a new world out there. The days (and nights) when lobbying consisted mostly of knowing a local congressman’s favorite bourbon are long gone. They have been replaced by a furious, continuous arms race of public-relations campaigns. The stakes are higher than ever; so is the spending. And for lobbying to be effective, not to mention cost-effective, companies have to be smarter than ever too.
Who Ya Gonna Call: Eight Guys With D.C. Juice
Jack Abramoff
Conservative Rainmaker
If you think passionately held beliefs and lobbying don’t mix, you haven’t met conservative—and controversial—Jack Abramoff, 43, a former Hollywood producer with such action films as Red Scorpion to his credit.
He’s picky. When his former law firm settled on a redesign of its business cards that used a red background, he objected—not for political reasons, he insists, but for aesthetic ones. A diehard Republican and close ally of House GOP majority leader Tom DeLay, he’s just as choosy about his clients, looking for challenges that can serve as laboratories for his own ardent free-market conservatism.
His attitude hasn’t hurt business. Among the roster of high-paying clients Abramoff took with him last year to his new home at the bipartisan firm of Greenberg Traurig were two that draw fire from a number of compass points. Primedia Inc., which owns Channel One, an in-school television network, has scored F’s from consumer activist Ralph Nader and conservative Phyllis Schlafly for airing ads in schools. The Northern Mariana Islands, a haven for garment manufacturers because U.S. labor standards are not enforced there, is on the enemy lists of doctrinaire unionists.
So why aren’t the liberals at Greenberg Traurig squealing? The lucrative book of $1,000-an-hour clients that Abramoff has built doesn’t hurt. Thanks largely to his skills as a rainmaker, the firm shot from No. 35 to No. 6 in National Journal’s 2001 ranking of the biggest Washington lobbying concerns.
Haley Barbour
GOP Power Broker
“That’s my favorite,” says veteran GOP lobbyist Haley Barbour, 55, pointing to a series of framed photos of himself as a young White House political director yukking it up with President Reagan aboard Air Force One. The smooth-talking Mississippian survived some bumpy in-between years—he was embroiled in (and cleared of) a fund-raising scandal while he served as chairman of the Republican National Committee—and has emerged as the hottest GOP power broker in Washington. His memos are must reading for the White House officials who receive them.
Barbour’s clients include big corporate names with big political problems. Among them: Microsoft (he helped derail congressional efforts to break up the company) and Delta Air Lines (he helped persuade President Bush to end a strike by its pilots). Barbour also played a key role in Lockheed Martin’s victory over Boeing for a $200 billion contract to build the Pentagon’s Joint Strike Fighter. Other current clients, which pay between $10,000 and $75,000 a month, include Citigroup, Comcast, Bristol-Myers Squibb, and Brown & Williamson Tobacco.
The keys to Barbour’s success? Longevity, fund-raising verve, and a combination of Southern charm and political smarts. “Always tell the truth,” he says. “You don’t have to agree. But you never want anyone to say you sandbagged them.”
Gerald Cassidy
Master of the Appropriations Game
To see Gerry Cassidy in his trademark hand-tailored pinstriped suit, starched pocket hankie, and gold shamrock cufflinks, you might think him a dandy from Dublin. But don’t be fooled by his duds. At 62, this tough-talking, Brooklyn-born Democratic lobbyist is still one of Washington’s savviest street fighters—and the master of the congressional appropriations game. Among his corporate clients: Estée Lauder, Tiffany, Ocean Spray, Nokia, General Dynamics, and Digimark.
Cassidy is particularly bullish on the prospects of winning government contracts for clients in the antiterrorism and defense fields. He believes that “we will probably see the biggest change to date in defense spending within a generation or two” as the federal government shifts its emphasis from nuclear weapons to electronic warfare and homeland defense. “We bring our clients’ interests to the attention of decision-makers within the government who can purchase things,” he explains. For that service, the clients typically pay $15,000 to $50,000 a month—and Cassidy & Associates often earns more yearly income from lobbying than any of its competitors.
Don Fierce
GOP “Sherpa”
Ask any GOP pol to name the most effective lobbyists in Washington, and Don Fierce’s name is almost always on the short list. His six-person lobbying boutique, whose office has an imposing view of the Potomac, is pure Republican. “Very few firms approach lobbying this way, but we do because of our belief structure,” says Fierce, 55. In 1997 he brought in fellow Republican and former small-business lobbyist Mark Isakowitz to form Fierce & Isakowitz. Today Isakowitz is the sole owner, but Fierce is still a highly active partner. “We spend 30% of our time helping Republicans with strategy and ideas,” he says. “Trust comes with that. GOP members know we aren’t going to go back to the office and share intelligence with Democrats.”
That approach has worked well for such Fierce & Isakowitz clients as an association of generic-drug manufacturers that wanted to block Bristol-Myers Squibb from extending its patent for the diabetes drug Glucophage. The firm’s winning tactic involved building support among GOP congressional leaders, many of whom had traditionally supported the brand-name companies. Other major clients include Coca-Cola Enterprises, Fannie Mae, WorldCom, and Southern California Edison, as well as trade associations representing credit unions, rubber manufacturers, hospitals, and health insurers. Clients pay monthly retainers of $15,000 to $20,000.
“We act like Sherpas to get our clients up the mountain,” says Fierce. “They have their own gear and wherewithal. But we show them the way up: ‘Don’t take this pass, take that one.’”
Ed Gillespie
The Bush Insider
“It’s the best in the world,” says GOP spinmeister Ed Gillespie, 41, referring to Crystal Dasani water. Then, with an impish grin, the man The New Republic once called “the most powerful Bushie you’ve never heard of” adds, “It’s made by Coca-Cola. They’re a client.”
So are an eye-catching crowd of other corporate giants, including Microsoft, Instinet, Verizon Wireless, DaimlerChrysler, PricewaterhouseCoopers, Silverstein Properties (which holds a 99-year lease on the destroyed World Trade Center), and, until a couple of years ago, Enron.
Best known for his golden GOP Rolodex, Gillespie began his political career in the House, where he helped mastermind majority leader Dick Armey’s rise to power and was a prime architect of the House GOP’s 1994 Contract With America. By 2000 he had emerged as a key Bush campaign communications strategist. Today no Washington lobbyist is more firmly plugged into W’s inner circle. Yet his three-year-old company, Quinn Gillespie & Associates, bridges the partisan divide: His partner, Jack Quinn, is a former Clinton White House counsel.
“We don’t just set up meetings,” says Gillespie as he sprints off to a working lunch. “We advocate for our clients.” He charges companies a retainer of $20,000 to $60,000 a month.
John Merrigan
Bayou-Blooded Dealmaker
If you had asked most corporate government-affairs types to name a lobbyist at the former K Street mega-firm of Verner Liipfert Bernhard McPherson & Hand, they would probably have cited one of its major stars, such as ex-senator Bob Dole or George Mitchell. But ask a member of Congress, and you’d be more likely to get the name of John Merrigan, 54, who headed Verner Liipfert’s lobbying practice—and did its political heavy lifting—from 1996 on. Merrigan now chairs the federal affairs and legislation practice group at far larger Piper Rudnick, with which his previous firm merged in September.
A master of the fine art of money and politics, Merrigan began his political career as a summer intern to the legendary Russell Long, a friend of his Louisiana family and chairman of the powerful Senate Finance Committee. Since then he has specialized in lobbying congressional centers of power, including the Finance and the House Ways and Means committees, where tax, trade, and health-care bills are born—and where, for better or worse, campaign contributions are the coin of the realm. “I enjoy raising money,” says Merrigan, who chaired the Democratic Business Council, the Democratic National Committee’s chief fund-raising arm, from 1998 to 2001.
Merrigan’s client base contains many investment bankers and a group of Florida developers anxious to defuse environmental opposition to the building of an airport near the Everglades. He also represents a group of firms in lower Manhattan that are seeking emergency help to cope with the aftermath of the World Trade Center disaster. Other clients include Citigroup, Merrill Lynch, and Freddie Mac. Merrigan’s hourly rate was $550 in December 2002 but could go up this year—a stipulation mentioned by several of the other lobbyists profiled here as well.
Tony Podesta
Democratic Fixer
Look up in the entryway of Tony Podesta’s 10th and G Street office in northwest D.C., and you’ll see an arresting sculpture by Marina Abramovic in which five giant whips made of brass and “virgin” (never previously cut) Korean hair are suspended above five peach-colored crystals. Move into Podesta’s inner sanctum, where he plots political strategy for corporate heavyweights including AOL Time Warner, Vivendi Universal, Genzyme, Genentech, Textron, GE, and Lockheed Martin, and you’re faced with a startling collection of surrealistic photography. “Surrealism is a theme in lobbying as well,” says Podesta, 59. “It’s the only way to adapt to this place.”
And so he does. Back in the Clinton years, when his brother John was the president’s chief of staff, Tony Podesta was representing the California Poultry Association. In that capacity, he helped build political opposition to an administration rule that allowed Arkansas-based Tyson Foods to export frozen chickens to California, defrost them, and then sell them as “fresh.” Podesta organized a Capitol Hill bowling event using Tyson’s frozen chickens as the balls. “The theory was, if you can bowl with them, they ain’t fresh,” he explains. The stunt won wide attention from Congress, consumer groups, and the media, and the administration backed down.
Podesta’s current campaigns include helping technology companies and the insurance industry win some legislative protection in case of another terrorist attack. His retainer at the bipartisan firm of Podesta & Mattoon (his partner, Dan Mattoon, is a Republican) ranges from $20,000 to $50,000 a month.
Barney Skladany
Crisis Manager
Imagine this nightmare scenario. Your company has just recalled 14 million tires after government regulators charged that they were linked to more than 100 highway deaths. A senator implies that your executives may be guilty of second-degree murder. Trial lawyers are smacking their lips. Your stock is imploding. And with congressional hearings fast approaching, your PR firm quits; soon after, your two outside lobbying firms walk away too.
Who to call? Bridgestone/Firestone dialed the well-connected Washington law firm of Akin Gump Strauss Hauer & Feld. The assignment went not to Democratic partner and former ambassador Robert Strauss, who provides public-policy and strategic advice to the firm’s clients, but to GOP lobbyist Barney Skladany, 57, the firm’s go-to guy for those with a crisis in the nation’s capital.
Besides Bridgestone/Firestone, for which he helped to engineer a back-from-the-brink political revival, Skladany’s clients include AT&T, Dow Chemical, Human Genome Sciences, Johnson & Johnson, Corrections Corp. of America, the Motion Picture Association of America, and a bevy of smaller technology companies eager to sell their wares to the Pentagon and other government agencies. Says the 28-year veteran lobbyist: “I love the rough-and-tumble of a battle.” His rate in 2002: $500 an hour.
—Ann Reilly Dowd
Lobbying at the State Level: Why It’s a Big Deal
Increasingly, statehouses are where crucial legislation is being passed. In 2000, the first year for which anybody tried to add up the numbers, lobbyists spent $565 million influencing state legislators and gubernatorial staff, according to a 2002 report by the Center for Public Integrity. Total lobbying expenditures at the state level actually come to much more than that: 15 states do not provide annual spending totals, and of those that do, 11 don’t require lobbyists or their employers to report compensation data. Larry Sabato, a University of Virginia political scientist, calls state lobbying “a growth industry.”
Why do the states matter? Let us count the ways. First, Congress and the Supreme Court have been transferring legislative responsibility away from Washington for a generation. Second, by law as well as by tradition, state governments have dominion over a variety of industries, including insurance, utilities, education, and public safety. Third, they also have power over businesses important to their regional economies—coal mining in West Virginia, forestry in Washington, elder care in Florida. Fourth, they have been in the vanguard of major lawsuits against various industries, including tobacco and asbestos.
Finally, there’s this: “Lobbyists typically have greater influence in the states, where their targets are usually part-time, often underpaid legislators with little staff help,” as the Center for Public Integrity report puts it. Statehouse ethics rules are frequently much less stringent than in Congress, and events in state capitals are often underreported by the media—think of the sparse media coverage Albany, New York, gets vs. what is covered in New York City. And remember, it was New York state attorney general Eliot Spitzer, not the feds, who pursued Merrill Lynch and other securities firms in the recent Wall Street trading scandals and who is now focused on Citigroup. It’s the California state senate that has passed greenhouse-gas limits, which could force automakers to increase fuel efficiency even though Congress voted not to hike national standards. And while the federal government has done little to restrain the costs of Medicaid, three dozen states are cooperating on a task force to pressure the pharmaceutical industry to keep prices down.
Some companies have learned to use state-level lobbying as a way to keep rivals embroiled in antitrust litigation. Oracle, for example, has made campaign contributions to California attorney general Bill Lockyer, a Democrat, and Kansas attorney general Carla Stovall, a Republican—two of the nine attorneys general who broke with the Justice Department’s decision to settle with Microsoft. Oracle says its contributions had nothing to do with the Microsoft case. —P. K.
