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The Who, When, and How Much of Hiring a Lobbyist
By Bill Kisliuk
Doing business with lawmakers and regulators in Washington, D.C., is not like doing business anywhere else. Whether looking to stifle a set of proposed regulations or snare appropriations to boost the bottom line, companies run into obstacles unique to the political process. That's where lobbyists come in, bridging the gap between politics and profits. The difference between influencing lawmakers or government regulators and being a subject of their actions can often turn on whom you hire in Washington, when you make the hire, and how well your lobbying team plays the game. Here, several veterans of lobbying and lawmaking answer key questions for corporations looking to hire lobbying talent.
WHEN DO I NEED TO HIRE A LOBBYIST?
John Castellani, president of the Business Roundtable, which represents 150 chief executives from top U.S. companies, says deciding when to start lobbying in Washington is simple: "When the outcome of the regulatory or legislative process is going to affect your profits or your viability on an ongoing basis."
Companies in heavily regulated industries - e.g., energy, air travel, telecommunications - have a constant presence in Washington to monitor the legislative and regulatory process. But when you are starting from scratch, the first thing to do is get to know your neighbors. The most important neighbors are those representing your district and state in the House and Senate.
Companies can't expect to succeed in Washington if they rush in when a major tax bill is already being marked up or the subpoena to testify before a congressional committee has arrived. The best time to hire outside lobbyists or open a D.C. government relations office is when key issues are on the horizon. The payoff will come later.
Ruth Ravitz Smith, a former aide to Republican John Rowland when he was a representative from Connecticut and later when he became governor, has opened Washington offices for two companies. In 2001, Citibank spinoff Travelers Property Casualty asked her to open a D.C. office, where she is vice president for federal government relations.
She says that company leaders had immediate legislative goals, but also wanted to establish a D.C. presence for the long haul: "With Travelers, they looked at it at a few levels. They were going to have this huge issue of asbestos reform. But they also realized, as a new company, that the corporation needed to have visibility in Washington with policy-makers."
WHAT DO I LOOK FOR IN A LOBBYIST?
"You want a Washington insider," says Smith, "but somebody who is comfortable making your cause their own." She acknowledges that corporate executives know their business better than anyone, and she says they should visit the Hill and open their doors when lawmakers return to their congressional districts. But lead lobbyists have to have command of the lawmaking process and clear-eyed takes on the political landscape.
Castellani cites three qualities of good lobbyists: They must be seen as honest brokers of information, not only to their clients but to lawmakers. They must be knowledgeable about the issue at hand. Finally, because law making does not work "the way it's written in books," they have to know where to find a political edge.
"Which committee members have the ear of the ranking minority member or the chairman, and which do not?" asks Castellani. "Lobbyists need to understand what the media thinks about the issue, what academics think, who your opponents are. Do they understand who is going to be against you and why?"
When hiring, companies should consider several factors. Many lobby shops have better connections on one side of the aisle or the other, so clients must determine whether they need a shop that is better at lobbying Democrats or Republicans, or one that has real ties to both parties. Do they want a big-name firm with an impressive client roster, or a smaller, more entrepreneurial one? Does the lobby firm already work in the area - tax or defense or approps - where the company wants help? Is the star lobbyist who showed up at the pitch going to do the work, or hand it off to colleagues?
Jade West spent more than 20 years on the receiving end of lobbyist entreaties as staff director for Sen. Larry Craig (R-Idaho) and as a longtime staffer to GOP steering and policy committees. She says that the best ways to find a good fit are by talking to Hill staffers and researching who represents your industry rivals.
West, now the senior vice president of government relations at the National Association of Wholesaler-Distributors, says, "The people who get the best reception on the Hill, in general, are the lobbyists you already know, former Hill colleagues that you have an established and a trusted relationship with."
Finally, it is risky to rely on lobbyists who tout personal relationships with just one or two key lawmakers or executive branch contacts.
"People are transitory," says Castellani, "but the process remains."
HOW MUCH AM I GOING TO PAY?
There are several fee structures on K Street, from annual retainers and lump sums for specific projects to monthly and even hourly rates.
"It's not like a fixed-price defense contract," says Castellani, noting that prices change considerably based on client needs and how the firm operates.
Some firms with stellar reputations for gaining access to high levels of government charge annual fees and usually take on whatever lobby efforts, large or small, are required during the term of the contract.
Sometimes, when things are heating up in Washington, clients will often drop big money to make sure that their Washington representatives have the pedal to the floor until the race is run.
But it is most common to find clients paying a monthly rate. Universities, local and municipal governments, and companies that are most closely focused on the appropriations process pay fees of between $5,000 and $30,000 a month.
Ferreting out a firm's pricing structure is not hard.
"They'll tell you," Smith says with assurance in her voice. "They are not shy about what they charge."
Several lobbyists say prices are negotiable, depending on the length of the lobbying relationship, the intensity of the work, and the client's perceived ability to pay. But Smith, who says she sat down with a dozen firms before choosing her outside lobbyists for Travelers, notes that such matters often depend on whom you are dealing with. Larger, more established lobby firms, she says, are "less negotiable, while smaller startups are more negotiable."
HOW DO I KNOW I'M GETTING WHAT I PAID FOR?
Lobby work may be unique in that success is often measured by what doesn't happen: A proposed regulation is blocked, or a tax provision scheduled to sunset gets extended for a few more years.
Sometimes, a company faces a policy or legislative threat driven by factors that no lobbyist can influence. When Sen. Jim Jeffords (I-Vt.) left the Republican Party in 2001, the power in the Senate switched to the Democrats and the Bush administration's agenda on everything from tort reform to environmental policy lost some steam. The Sept. 11 attacks radically altered regulation of airlines. The collapse of the Enron Corp. and other companies prompted an avalanche of regulation on accountants.
West says that after Enron blew up, "The accounting industry and their lobbyists came to the Hill aggressively with issues about overreaching [in the Sarbanes-Oxley bill] that were probably very legitimate. But it was way too little and way too late. The damage that Enron and others did was so great that Congress was going to overreach. No amount of effective lobbying was going to stop that train."
Says Castellani: "There are a lot of reasons why things don't happen in Washington. You can waste a lot of money pursuing something that can never be achieved politically."
Lobbyists say the keys to monitoring a consultant's progress are to have rational expectations for what can be achieved and to simply stay on top of your team in Washington.
"A good lobbying firm will report back to a client usually on everything they do," says West. "If I were a corporate entity hiring a lobbyist, I would look for detailed reports on who the lobbyist met with, what the discussions were, what level of staff attended, what kind of information was exchanged. A one-time meeting with a Hill staffer or regulator is not what you need."
She says this is just as true when the bill you are monitoring isn't scheduled to come up for months. "Even when there's nothing going on, you don't forget it's there," she says.
DO I HAVE TO GIVE POLITICAL CONTRIBUTIONS?
Money is power in Washington, there is no doubt about it. But lobbyists say the political money game is much more nuanced than outsiders believe.
West, who spent two decades as a Senate aide, says political donations help companies "to be a presence, to get a phone call returned. It doesn't get you legislation. It doesn't get you a vote."
West says candidly that "there are no quid pro quos, or if there are, they're minor."
West, Castellani, and others note that while political action committees (PACs) are common ways for corporations and industry groups to leave a calling card, they are not strictly necessary.
Castellani says that lawmakers seek opportunities to rise in power and to work with people who can help them get re-elected. That doesn't always translate directly into campaign cash.
"Individual contributions, access to employees, knowledge around the plant that this particular lawmaker was helpful, . . ." Castellani runs through the possibilities. "Those things represent a prospect of more votes for that member."
Knowing how to set one up and who can participate requires legal expertise, and mistakes can prompt unwanted attention from the Federal Election Commission, investigative bodies, the press, and watchdog groups.
But it is the rare lobbyist who would say a PAC is a bad idea.
HOW MUCH CAN I RELY ON TRADE GROUPS?
The geography of Washington says a lot about who is an institutional political power. The U.S. Chamber of Commerce is across a small park from the White House, and the AFL-CIO is around the corner. Trade associations for everything from movie studios and car manufacturers to corn growers have permanent offices in Washington, and they link up in an ever-changing cast of ad hoc coalitions.
Seasoned policy-makers say these groups are often the best way for new players to learn the ways of Washington.
"If I was a medium-sized company and the federal government is starting to have more impact on my business," says Travelers Property VP Smith, "the first thing I would do would be get involved in my trade association, get a feel for what can be done, how it's done, what the group's political strengths are."
Trade groups can often attract top lawmakers to face-to-face meetings, and the big ones have the resources and the media savvy to do independent research and influence policy.
Coalitions also combine resources for big battles that cross industry lines.
Castellani, West, and others played a role in the Tax Relief Coalition, which held back nothing as it charged for elimination of the double taxation on dividends, which was at the heart of President George W. Bush's 2002 tax bill.
Castellani reels off a dazzling array of lobbying, media, and ancillary talent that was brought into the effort: Tax experts at PricewaterhouseCoopers and the University of Maryland analyzed the bill. Burson-Marsteller did media and advertising work. Grass-roots lobbying, where advocates get local lawmakers and business leaders to intensify the drumbeat, was handled by Direct Impact. Lobby firms working the Republican side in D.C. included Fierce & Isakowitz and Quinn Gillespie & Associates, while lobbyists working the Democrats included Bergner, Bockorny, Castagnetti, Hawkins & Brain and the Duberstein Group's Michael Berman.
But coalitions are not always there. Industries that seem like allies on an issue may splinter as a detailed resolution nears. Some lobbying battles, such as the fierce war between telecom companies, are simply an extended fight for market share. That's when a trade group can't get the job done. Instead, a company must rely on its own lobbyists, fighting for its unique interests.
"There are times when the issue is company-specific, not industry-specific," says Card. "If something is so important to the company, either as an opportunity or a risk, it needs its own representatives working on that particular issue."
Bill Kisliuk is a former editor of Influence. A version of this article first appeared in the November 2003 Influence Client's Guide to the Business of Lobbying. For more about Influence, visit www.influence.biz.
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