Capitol Counsel, the youngest and fastest-growing firm among the city’s most profitable lobby shops, got its start at a late November meeting at Fogo de Chao.
It was 2006, and the firm’s founder, veteran Democratic tax lobbyist John Raffaelli, had asked four of his friends in politics and policy — whom he’d spoken to individually about joining his new firm — to meet for lunch at the District steakhouse. But none of them knew the others were coming.
“I was talking to many friends I had worked with, and each one said, ‘Yeah, I’d be interested,’ but I forgot I hadn’t told each one about the other one,” Raffaelli said. “We met for lunch, and they started looking around and saying, ‘What’s he doing here? What’s she doing here?’
“We still laugh about it,” Raffaelli said. “When you’re moving quickly ... I’m notorious for not communicating as well as I should. I’ve gotten better at it.”
The five people sitting at the table — Raffaelli, Shannon Finley, Denise Henry Morrisey, Jim Gould and David Jones — became the firm’s original equity partners.
Since then, Capitol Counsel, which now has 16 lobbyists, has become a leading tax and health boutique firm. It earned nearly $10.7 million in lobbying revenue during the first nine months of the year — enough to catapult it, for the first time, into an elite group of the industry’s top-earning lobby shops. It is one of only two firms in that group that has seen revenue grow steadily since 2010 — the year many firms peaked because of lobbying work driven by health care and financial services reform. While much of the industry has seen revenue flatten or decline in the years since, Capitol Counsel grew revenue 5 percent between 2010 and 2011, and nearly 13 percent between 2011 and 2012, according to the Center for Responsive Politics. It is on track to continue growing this year.
Raffaelli and his team have done it by sticking to a narrowly defined strategy focused on tax, health and trade issues and the congressional committees that have jurisdiction over them: ways and means; judiciary; energy and commerce; banking; and financial services.
“We’re old-style,” Raffaelli said. “We’re very heavily focused on the Capitol. We make our living under the dome.”
Raffaelli likes to espouse one formula that he says has made his firm successful. He calls it “the three P’s.”
“The idea of starting a firm that focused on understanding policy, politics and the process in a particular area seems to work,” he said. “The ones that are good and successful have those three pieces of the puzzle.”
Raffaelli had the technical background as tax counsel for then-Sen. Lloyd Bentsen (D-Texas). Finley and Jones came from the political world, as finance director for Senate Finance Committee Chairman Max Baucus (D-Mont.) and finance director for then-House Majority Leader Richard A. Gephardt (D-Mo.), respectively. Gould, who has since left to start his own tax lobbying firm, GDS Strategies, was chief tax counsel to the Senate Finance Committee under Bentsen. And Henry Morrisey is a longtime health lobbyist.
“That was putting the P’s together,” he said. “Everyone I talked to about joining with me came with some experience or connection to that world.”
Raffaelli couldn’t bring his clients over from his previous firm, the Washington Group, which was sold to public relations firm Ketchum in 2001. But he found new ways to drum up business.
“I had represented Delta Air Lines forever, so I could go to the general aviation association [National Business Aviation Association] and go after them because they knew who I was,” he said. “If you have a reputation in your industry, if one doesn’t hire you, someone else in the industry might if you’ve done a good job. Every client comes out of an industry that has another company in the industry or association or competitor that has Washington needs.”
Raffaelli says he doesn’t foresee expanding into public relations or digital branding, a route that many lobby firms, including Cassidy & Associates and McBee Strategic, have been taking in recent years to diversify sources of revenue. Instead, he sees more potential growth in grabbing more work that clients will be farming out of their in-house lobbying operations.
“As corporations and trade associations start analyzing their own budgets and have to start cutting back, hopefully the way the firm will grow in part will be by us getting a bigger piece of what remains because of the depth of areas we can cover,” Raffaelli said.