Tax law showers cash on lobby firms

Tax reform was very good to K Street.

The successful Republican drive to overhaul the tax code, which consumed much of the legislative agenda in 2017, resulted in a bonanza of business for Washington’s law and lobby firms.

Bolstered by GOP control of Washington, lobbyists saw their business grow almost across the board last year. The quest to pass tax legislation — a bill affecting every industry — was a big reason why.

{mosads}“The biggest driver of activity in 2017 was the fact that you had a Republican White House and a GOP Congress seeking to take policy in a 180-degree different direction,” said Hunter Bates, a former chief of staff to Senate Majority Leader Mitch McConnell (R-Ky.) who is now at Akin Gump Strauss Hauer & Feld. “Tax reform and regulatory reform are the two areas where that change in direction was most pronounced.”

The 20 largest lobbying firms took in a total of $368 million in lobbying revenue last year, a 15 percent increase over 2016, according to numbers compiled by The Hill. Individual firms saw increases in revenue ranging from modest amounts to the addition of several million extra dollars. 

For lobbyists, the most intense period was the fall, when Republicans began a mad dash to get tax legislation over the finish line.

“We have never been busier on tax reform than we were in [the fourth quarter], for obvious reasons,” Bates said.

Akin Gump, which has about 200 lobbying clients, remained the top-earning K Street firm in 2017, taking in almost $39 million for its advocacy work. More than $10 million of that total came in the last three months of the year.

Meanwhile, revenues at the law and lobbying firm Hogan Lovells jumped 45 percent in the last three months of 2017 over the same time the year before. 

Lobbying work typically dries up during election years, but lobbyists said the jump over 2016 was bigger than usual.

“2017 was just that good,” said former Sen. Norm Coleman (R-Minn.), now a senior counsel at Hogan Lovells.

Hogan Lovells took in $11.44 million for its lobbying work last year, working for clients such as Nissan, Xcel Energy and TPG Capital, a giant private equity firm.

Lobbying on taxes is always a profitable niche, given the impact the code has on the profits of businesses large and small.

But the tax overhaul passed by Republicans was something different — a once-in-a-generation opportunity to reshape every aspect of the code. That spurred more tax lobbying than ever before, often by advocates who specialize in other things.

An analysis from Public Citizen, a government watchdog group, showed that more than half of all the registered lobbyists in Washington worked on tax reform, which equates to upwards of 6,000 people pounding the marble on Capitol Hill to influence tax policy in some way last year.

Washington Council Ernst & Young, a lobbying firm that specializes in tax issues, had a 44 percent increase in its fourth-quarter revenue over the same time in 2016, bringing in almost $4.5 million in the three-month period. It was up 19 percent for the year overall.

Firms like Ernst & Young have more tax work ahead. While Trump signed the bill into law in December, the implementation is only beginning.

“The reality is, anytime there is any piece of major legislation, for a period of time afterwards, there is a need for adjustments on implementation, a need for technical corrections, a need for understanding of impacts on provisions and consistent look-backs for ways to fix or improve pieces of it,” said Geoff Gonella, president and managing director of Cornerstone Government Affairs.

Cornerstone experienced a 15 percent increase in its 2017 lobbying revenues from 2016, taking in $19.3 million. Gonella credited the increase to Congress’s work on health care and taxes, in addition to the firm bringing on new talent, including a GOP staff director for the House Appropriations Committee, a policy adviser to Rep. John Shimkus (R-Ill.) and a senior adviser to Sen. James Inhofe (R-Okla.). 

The Trump administration has been a boon for the lobbying industry generally, with clients trying to capitalize on the sweeping regulatory reforms and new policies floated by Congress.

Shops are anticipating even greater growth in 2018, when lawmakers will grapple with government funding, immigration, trade, reauthorizing the farm bill and potentially an infrastructure bill. 

There’s also a lingering desire among Republicans to continue dismantling ObamaCare and the Dodd-Frank financial reform law and to start a discussion on welfare reform.

“There will be a lot of issues out there; what crystallizes sooner will dictate what moves,” said Chris Giblin, a Republican lobbyist at Ogilvy Government Relations. “[The North American Free Trade Agreement] could be very big.”

It’s unclear, though, what bills will be able to pass Congress before the midterm election season shifts into high gear and lawmakers are spending most of their time on the campaign trail.

“We live in an environment where it is politics 24/7,” Coleman said, of how early political campaigning begins to distract from the legislative process. 

“I do think that — and this should be a bipartisan perspective — both sides feel pressure, especially on infrastructure, to show they can work together,” he said. “I’m hopeful that this is the one area we can transcend the partisan divide and come up with something good for the country. Beyond that, it’s very difficult.”

In the first year of the Trump era, multiple lobbyists said not much has changed for them. While there were some early challenges navigating an administration where the lines of authority aren’t always clear, Elizabeth Gore of Brownstein Hyatt Farber Schreck calls it the “new normal.”

“We’ve settled into the way the administration operates, which is so different than any other administration has,” she says.

Brownstein earned $29 million in lobbying revenue last year, a 14 percent increase from 2016. In the fourth quarter, it took in 46 percent more than it did during that same period the year before.

Republican firms or those with ties to President Trump are among those that saw numbers jump the most dramatically. BGR Group, which is an almost exclusively Republican firm, earned 35 percent more in 2017 than it did in 2016. During the last three months of 2017, its revenue was 53 percent higher than the year before.

American Continental Group had its overall revenue jump 83 percent in 2017, to $12.7 million. David Urban, who helped Trump in Pennsylvania during the campaign, runs the firm.

Brian Ballard, a veteran Florida lobbyist who helped Trump fundraise in the Sunshine State, opened a Washington office after Trump’s election. It pulled in $9.91 million last year.