Hanging onto business: Bigger is not better

Client retention in the lobbying industry has little to do with size, name recognition or earning power, according to an analysis by lobbying analytics firm Capitol Metrics.

Most of the 10 lobby firms with the best client retention rates are relatively small, have affordable rates, specialized expertise and lots of clients in the nonprofit or government sectors. Only one of those 10 firms is a major U.S. law firm (Reed Smith), and only one also ranks among K Street’s 20 biggest lobby firms by revenue (Fierce, Isakowitz & Blalock), according to 2013 publicly disclosed lobbying revenue.

The analysis examined lobby firms that had at least 20 clients in the first quarter of 2008 that are still active today. A client is considered “retained” if the firm represented them in the first quarter of 2008 and still represented them in the first quarter of 2014. That does not necessarily indicate the firm has represented the client continuously since 2008 — they may have terminated the relationship with the client at one point and then signed them again later.

Marcus G. Faust, a solo practitioner who founded his firm in 1981, has retained 77 percent of the clients he had in 2008 — more than any other firm during that period, according to the analysis. Faust works almost exclusively for cities, counties, water districts and regional utilities companies in California, Utah, Colorado and Nevada. The drought in that region has pushed many of those entities to interact more with federal agencies that own or manage land on water conservation projects and other initiatives, Faust said. Most of Faust’s clients pay between $10,000 and $50,000 a quarter, according to lobbying reports. In 2013, Faust’s firm reported about $2 million in lobbying revenue.

“There are other business models out there among lobbyists trying to maximize revenue on each individual account, but the clients we have are long-term relationships,” Faust said. “They are getting value for their dollar, particularly as many are public entities who have to justify their expenditures.”

Lobby firms with the highest retention rate from the first quarter of 2008 to the same quarter in 2014.

Health and Medicine Counsel of Washington, a seven-person health lobbying boutique that works primarily for associations and nonprofits in the health care industry, has kept 75 percent of its clients from 2008, according to the analysis.

“We have to keep our rates modest and moderate because we’re dealing with nonprofit organizations,” said Dale Dirks, the firm’s president. “That’s one of the reasons they continue to retain us ... The other thing is some organizations come to us and want a Washington presence, but they’re not sure what they should be doing. We spend a lot of time on the front end putting together a plan that includes realistic goals and a time frame, and as we go along, they can see we’re hitting benchmarks. One thing that contributes to high attrition rate in clients is organizations having unrealistic expectations.”

Most of the firm’s clients pay $20,000 or less a quarter, and the firm in 2013 earned $895,000 in revenue, according to lobbying reports.

Dirks said his firm aims for long-term business, not “one-off” work. One of its longest-standing clients is the Association of Minority Health Professions Schools, which represents historically black medical, dental and veterinary schools in the United States. The firm has lobbied on the group’s behalf since the early 1980s, on issues including securing appropriations for training physicians and health care professionals.

“We’re more in the business of securing work with organizations that have an ongoing need or a long-term need in the appropriations process, or some sort of health-related policy area,” Dirks said. “They don’t have specific needs immediately, but know they’ll need someone to represent their interest in Washington in the long term.”

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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