Suit Could Threaten Practice of Taking Clients to Next Firm

By Jeffrey H. Birnbaum
Tuesday, January 15, 2008

Lobbyists switch jobs all the time and usually take their clients with them. But a lawsuit in D.C.'s federal district court is challenging that practice, in a way that could rock the capital.

Without fanfare late last year, the Washington Group, a lobbying subsidiary of the multinational advertising firm Omnicom Group, sued one of its senior vice presidents for filching corporate clients when he jumped to another firm. The plaintiff is seeking more than half a million dollars in damages.

U.S. District Judge Reggie B. Walton has refused three times to prevent the transfer of clients. But the case against Harry A. Sporidis, now lobbying for the law firm Powell Goldstein, continues to march toward trial.

Experts expressed astonishment that the dispute had gone to court at all. In those rare cases where firms try to hold on to clients, the lobbyist usually agrees by contract in advance not to take clients with him to another shop. He therefore does not even attempt to do so; otherwise the conveyance of clients is quietly worked out between the parties.

Lobbying is a very personal business. Clients tend to stick with their lobbyists like glue. When lobbyists move, one of their calling cards is almost always the "book of business" they bring with them to the new job. And firms that employed those lobbyists often do not have any chance of keeping clients once the lobbyists leave.

In court filings, Sporidis contends that is essentially the case with two of his clients at the Washington Group (who are now with him at Powell Goldstein): Mentor, a supplier of breast implants, and the American Society of Clinical Oncology. Sporidis even asserts that his ex-boss, former congresswoman Susan Molinari (R-N.Y.), suggested that he ask the clients to terminate with the Washington Group before he switched jobs in the fall. Molinari does not dispute the claim.

Molinari's corporate masters, however, took a different view. Sporidis, who earned $230,000 annually plus $40,000 in bonuses over two years, had earlier signed up to receive shares of Omnicom stock. In clicking online through the stock purchase agreement from Fidelity Investments, the suit alleges, Sporidis agreed not to ask his clients to go elsewhere either while he was still with the Washington Group or for a year after he left.

Sporidis denies that he agreed to any such restrictions. In fact, he said he had been assured that he did not have a "non-compete" agreement.

Whatever its outcome, the lawsuit is a warning to anyone thinking of joining one of the many corporate-owned lobbying and PR firms that have become commonplace on K Street. Companies that large have more ways than independent firms to encumber their employees and extra incentive to do so. A defection of clients in a conglomerate can be an expensive precedent, especially when its business goes beyond lobbying and includes, say, advertising, which brings in millions of dollars a month. Lobbying clients also pay well, an average of about $20,000 a month.

But lobbying is a difficult business to control in that way.

"Lobbying firms are a little like shopping centers," said Jan W itold Baran, a lobbying expert at the law firm Wiley Rein. "They're a collection of stores that operate under one roof, but usually each has its own clients. Stores open and close all the time -- just as lobbyists move around quite regularly -- and they both tend to take their clients with them."

It's hard to see how a court case can alter that situation much, but stranger things have happened.

A PR Challenge

One of Washington's oldest independent public relations firms has downsized significantly. Aker Partners, a fixture on K Street for a quarter-century, has gotten out of its long-term lease and dispersed its four partners, mostly to their homes.

Colburn Aker, the firm's head, works out of a small office near his residence in Georgetown. He blames the cutback on increased specialization in public relations and the proliferation of much larger firms. At its height, Aker Partners had only 20 employees and was a generalist. Its competitors are much bigger and often focus on issues that are hot with corporate clients, such as health care.

"It's very hard for companies our size to do well," said Aker, 63. "You have to be more specialized today."

Over the years, the company's clients have included newspapers and oil pipelines as well as companies such as Honeywell and Ford. It continues to hunt for business, though in decidedly reduced circumstances.

"We're still attractive to the right people," Aker said, "but it's become very difficult to be competitive."

Non-Hire of the Week

Former commerce secretary Donald L. Evans has stepped down as chief executive of the Financial Services Forum, a high-powered lobby group that represents 20 Wall Street chieftains. In his place, for the foreseeable future, will be no one.

Evans's resignation was expected. His lack of a replacement was a surprise, though maybe it shouldn't have been. After all, he was only a part-time CEO who came to Washington about once a month.

For now, the forum's staff will be headed by Robert S. Nichols, the group's president, who has actually been running the place, anyway. No word on whether Nichols will get a raise for handling two jobs -- though times have been lean on Wall Street lately, so, Rob, I wouldn't count on much.

Three of the forum's 20 members resigned recently in the wake of the credit and housing meltdown .

Hire of the Week

The lobby firm Timmons and Company has recruited one of the keepers of Congress's deepest secrets to be its new chairman. Martin P. Paone, 56, has been the secretary for Senate Democrats since 1995 and has worked behind the scenes in the Senate for more than 30 years.

In his current job, Paone is the ringmaster for everything that happens on the Senate floor. He works closely with the majority and minority leaders in scheduling legislation, briefs senators on bills, and supervises the Democratic cloakroom. Each of those tasks makes Paone, in effect, a personal assistant to Congress's most finicky members and privy to their foibles, small and large.

Paone said that role let him in on "secrets you can't use in business" and promises to keep them to himself. Nonetheless, knowing senators so well vaulted him to the top of Timmons, the city's oldest lobbying firm. What senator would refuse to see him? Paone replaces Democrat Richard J. Tarplin, who left last year to start a new business.

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