$2 Million Payment to Former Lobbyist Raises Eyebrows

Shockey's former lobbying firm, now called Copeland Lowery Jacquez Denton & White, assisted lots of California-based organizations and municipalities. One of its partners is a former California congressman, Bill Lowery (R), who, like Shockey, is close to Lewis -- so close that federal authorities in Los Angeles have subpoenaed many of the firm's clients to learn more about the relationship of the firm, Lewis and Lowery.

Publicity over the investigation has broken up the partnership. The firm's two Democratic partners, James M. Copeland and Lynnette R. Jacquez, told their Republican colleagues last month that they were leaving. The reason, they said, was that ethical and legal questions threatened to destroy their professional reputations and ruin their commercial prospects. Lewis has denied any wrongdoing, and the firm has said it has complied with all the rules.

Shockey has not received a subpoena. He has been careful to disclose his severance package and has removed himself from dealings with the firm and his former clients.

But several of Washington's prominent lobbyists question the deal. I spent a few days talking to owners and managers of lobbying firms about Shockey's $1.96 million payment. None wanted to be quoted by name for fear of angering Lewis, and many might benefit if Copeland Lowery fails. But they all agreed that the payout was far larger than was common in similar cases.

They also said a transaction that pricey might look like a conflict of interest even if it isn't. And that's a major danger in a political town.

Here's how it came to be:

After Lewis became chairman of the appropriations panel in early 2005, Shockey surprised his partners by announcing that he wanted to return to Capitol Hill. The question then became how much they would pay him for his ownership in the firm.

One answer could have been nothing. Copeland Lowery had no written partnership agreement and functioned under an "eat what you kill" arrangement. That meant its partners kept the revenue they collected from their clients less overhead costs, which were divided among them based on the percentage of total firm revenue that each of them brought in.

In other words, Shockey had already taken out of the firm everything he brought into it. Once the company got current with its receivables and gave Shockey his share, it could well have said goodbye to him and that would have been that.

But Shockey was one of the firm's main breadwinners. According to the firm's lawyers, he presented his partners with an implicit choice. He would recommend that his clients stay with Copeland Lowery in exchange for a severance or he would sell his "book of business" to a competing lobby shop.

So the partners cut him a deal at what they felt was fair market value. They agreed to give him six times the amount that his clients were producing per month at the time of his departure. They removed from their calculation the few clients that Shockey thought would not continue with the firm after he left and came up with roughly $1.5 million. Adding in revenue he was entitled to receive from bills that were still being paid, his severance package totaled $1.96 million, which was paid in installments in 2005.

Outsiders have several concerns about this transaction. One is that lobbying is very personal. When a key lobbyist leaves, his or her clients often bolt. That's why turnovers of business like Shockey's generally produce for the departing lobbyist nothing more than a "finder's fee," if that. Ten top lobbyists I spoke to said that departing partners rarely get more than two or three months' worth of retainers-on-the-books because there isn't any guarantee that their clients will continue with the firm.

Shockey's threat that he would park his clients elsewhere was probably empty because he was not going to go with them.

These lobbyists also could not understand why Copeland Lowery would shoulder so massive a financial burden. Shockey's payout ate up 26 percent of the firm's 2005 lobbying revenue of $7.4 million, based on the firm's public disclosures. Even if the firm had a 50 percent profit margin (which is possible in lobbying), that would mean that half the partners' earnings went to someone who was no longer there.

I guess keeping appropriators happy is worth an awful lot.

Jeffrey Birnbaum writes about the intersection of government and business every other Monday. His e-mail address iskstreetconfidential@washpost.com. He will be online to discuss lobbying, lawmaking and government ethics at 1 p.m. today athttp://www.washingtonpost.com.