Lobbying Is Lucrative. Sometimes Very, Very Lucrative.
Lobbyists, as they say, make the big bucks. That's why so many lawmakers, congressional staffers and political appointees move downtown when they leave government.
So just how lucrative is it? Well, pretty lucrative. According to new data from the Center for Responsive Politics, 22 clients paid $1 million or more in lobby fees to individual lobbying firms last year.
Three of the biggest payments went to the usual suspects: Patton Boggs, Hogan & Hartson and DLA Piper -- all major law firms. But two of the top five recipients were small shops you have probably never heard of: Canfield & Associates and New Frontiers Communications Consulting.
New Frontiers has the best story of all. Its lobbying disclosure report says that its principal, R. David Wilson, spoke to not a single person in Congress or at a federal agency in 2006, yet collected $1.9 million for his trouble. Now that's a job that any lobbyist would love. Better yet, the client, YCO Inc., is a McLean consultancy that no longer exists.
How can that be? A few telephone calls revealed that YCO was the corporate entity for Clay T. Whitehead, one of the pioneers of satellite television. Now 68 and retired, Whitehead was the first director of the U.S. Office of Telecommunications Policy, under President Richard M. Nixon. He later founded and became president of Hughes Communications, which created the model for satellite TV.
About 20 years ago, Whitehead got into a multimillion-dollar dispute with SES Global and the nation of Luxembourg after he helped them put together the first pan-European satellite TV operation. He later hired Wilson, a former telecom aide to then-Sen. Robert J. Dole (R-Kan.), to assist him. "We retained Mr. Wilson to give us some guidance; it was as much consulting as it was lobbying," Whitehead said. "That went on for quite a number of years."
Eventually, the legal battle was resolved (terms undisclosed), and Wilson was paid the money due him. Paying lobbyists based on the success of an effort -- as was the case here -- is banned in more than 40 states and for lobbyists representing foreign entities. But the practice is permitted for federal lobbyists, who must disclose how much they were paid but do not need to say that it was a contingency fee.
Canfield & Associates collected $2.1 million from the Consumer Mortgage Coalition, a group of lenders and mortgage servicers that favor reining in Fannie Mae and Freddie Mac, the federally chartered home finance giants. The coalition also prepares technical briefs on such eye-glazing topics as data security and mortgage regulation. Out of an excess of caution, Anne C. Canfield, the coalition's executive director and head of the lobbying firm, listed almost the full amount the coalition spent last year on its lobby disclosure form.
But the whole fee, she noted, did not go to her as income. "Not even close," she said. "We wish!"
DLA Piper received a windfall because its client was a day late and many millions of dollars short. Back in February 2001, Medicines Co. filed for an extension of its patent on the promising blood-thinning drug Angiomax a day after a deadline, and says it lost 4 1/2 years' worth of patent protection -- a very expensive omission. After years of trying to extend the patent administratively, the company turned to Congress and last year paid DLA Piper $1.7 million for its expertise and big-name lobbying clout from former House majority leader Richard K. Armey (R-Tex.), former representative Jennifer Dunn (R-Wash.) and former Michigan governor James J. Blanchard (D).
The House voted to restore the "lost" years, but the Senate remained mute. That means DLA Piper is back on the anticoagulant gravy train this year.
Hogan & Hartson is Nissan North America's lone outside lobbyist in D.C., which helps explain why the automaker forked over an eye-catching $2.3 million to the law firm last year. Other car companies have multiple lobby firms, and a few of them spend more in total on lobbyists. But because Nissan North America gives all its Washington business -- on issues such as safety and mileage standards -- to Hogan, its billings look massive. And were those payments unusually large last year? "I don't think so," said W. Michael House, the head of Hogan & Hartson's lobbying practice.