Is the three-year slump on K Street coming to an end?

After a three-year slump, the lobbying industry is showing signs of growth.

The District’s 10 largest lobby shops by revenue reported a collective 3 percent increase in lobbying fees during the first quarter of 2014 compared to the first quarter of 2013 — $56.3 million, up from $54.6 million.

Eight of the 10 firms posted gains in lobbying revenue, with two of those firms — K&L Gates and Capitol Counsel — growing by double-digit percentage points. But two firms — Patton Boggs and BGR Group — saw revenue fall, by 10 percent and 8 percent, respectively.

The gains mark a turnaround from the past several quarters, during which most of the same firms saw flat or declining revenue. In 2013, the 10 largest firms reported a collective 1 percent drop in lobbying revenue — the third year in a row of declines, following a 10 percent drop in 2012 and a 3 percent drop in 2011.

“We do feel the market slowly coming back,” said Don Pongrace, head of the public law and policy group at Akin Gump, which posted a 7 percent bump in revenue compared to the same quarter last year. “What we’re seeing in the market is improved health in demand. It’s not yet vigorous, but it is getting healthier.”

The most recent gains, though, are a far cry from those of 2009 and 2010, when many firms were bringing in record profits.

“It’s uneven across K Street,” said Rich Gold, head of public policy at Holland & Knight, which grew about 9 percent during the first quarter compared to the same period last year. “There are firms that have done better, but firms that are down. There aren’t too many folks up 10 percent or more. In the go-go years, 10 to 15 percent was the norm.”

Some of the growth in the most recent quarter is being driven by the midterm elections in November, some lobbyists said. Members of Congress tend to scramble to pass bills they can tout in their reelection campaigns, which means companies and their lobbyists have to work on those bills in the early part of the election cycle.

“At some point, Congress will tap the brakes on activity and turn its attention away from legislation and toward the election,” said Kevin O’Neill, deputy chair of the public policy group at Patton Boggs. “That tapping of the brakes seems to come earlier and earlier each election cycle. What you’re trying to do in the early part of an election year is establish the boundaries for legislation that probably won’t get finalized until after the election, but where the important work has to get done early.”

Patton Boggs’ lobbying revenue was down nearly 10 percent compared to the same quarter last year, but O’Neill said “the biggest encouraging factor” is that revenue per lobbyist is up 8 percent. The firm, which last year underwent major restructuring including shrinking attorney head count and staff significantly, has 21 fewer registered lobbyists now compared to a year ago, and has been in merger talks with Squire Sanders since February.

“The people we have are working harder and bringing in new business,” he said. “We’ve had as good of demand in new business in the public policy sectors as we have in the last couple years.”

Industry-wide, tax reform, trade, financial services and health care continue to be policy areas that businesses are interested in shaping, and thus paying lobbyists to work on.

Catherine Ho covers law and lobbying for Capital Business, which she joined in 2011. She was previously a reporter at the Daily Journal in Los Angeles, covering LA civil courts and labor and employment law.
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