By Thomas Heath
Monday, June 7, 2010; A12
I know Andrew H. Friedman from my previous life covering the business of sports.
Friedman was a partner and tax expert at the law firm Covington & Burling in Washington. He spent half his time counseling the leagues for the four major U.S. sports -- baseball, hockey, football and basketball -- and often walked me through the intricacies of how football stadiums were depreciated or how various states taxed visiting baseball players.
It was complicated stuff. But Friedman had a good gig. He was the go-to tax lawyer for the sports industry. He had access to the best sports tickets. Attended all-star games, playoff games and Super Bowls. Schmoozed with league commissioners, players, coaches and team owners. To top it off, partners at Covington bring in more than $1 million a year.
At the top of his profession, he could have cruised for the next decade or more (he is 54, same as me), making lots of money, attending elite sporting events and basking in the admiration of his peers.
"I got to live vicariously," said Friedman, who lives in leafy McLean.
But a dormant entrepreneurial gene burst forth two years ago, and Friedman decided to go out on his own. He quit Covington (on good terms, he insists) after 28 years and reinvented himself.
I am fascinated by people who have the guts to walk away from something they know and love (especially earning that kind of money) and to try something different. I don't have that gene, but entrepreneurs like Friedman do it every day.
He now gives speeches for up to $12,000 a day -- plus expenses -- to investors and financial firms on how Washington's laws and regulations affect their investments.
He gave more than 200 speeches last year, which by my calculation would net him around $2 million.
"I'm an entrepreneur now," said Friedman, a frugal guy who drives a Jeep Wrangler.
Quitting wasn't that hard. He was already giving speeches, and requests kept coming.
"It really stemmed from the demand that arose as more people saw me speaking. The demand built on itself. I realized I was having far more fun speaking and answering questions than I was practicing law, which by then I'd been doing for a while and had little more to accomplish."
Besides, he said, "my two choices were to sit at my desk and do the same thing for the next 15 years. Or I could go out and do something different."
At the end of 2007, he walked into the managing partner's office and resigned.
He incorporated as a single-member limited liability corporation, which shields his personal assets -- home, car, savings -- from business liabilities. The key to avoiding liability, however, is having adequate business insurance. He recommends that every business make sure it is covered.
Friedman said his niche is offering information in an analytical, nonpartisan fashion. In an era of talking heads and politicized television shows, he seeks to stay objective and talks about how people can improve their investment returns.
"My normal audience is financial advisers who have a pretty good client base. Two hundred clients will come in, and I will give a presentation of what is happening in Washington and how they should invest. These are usually affluent, high-net-worth investors."
Friedman writes his own speeches, and sometimes gives the same speech over and over, depending on how quickly Congress is moving. He speaks on a variety of subjects, from the estate tax to the stimulus bill's effect on municipal bonds.
"During the health-care debate, I was changing my speech weekly. I was telling what the implication of the health-care law will have on their business, how it will affect health-care service companies, how it will affect individuals and health savings accounts."
Or take oil. President Obama said he wants to reduce dependence on foreign oil. His plan is to take away tax advantages for oil companies, such as depletion allowances and subsidies. If taxes go up on oil companies and profits are squeezed, Friedman points out that investors should look away from oil and toward alternative energy.
To stay current, he reads tax nerd publications such as the Daily Tax Report and arcane reports covering Capitol Hill legislation. He reads The Washington Post (yay) religiously to keep on top of Capitol Hill, including updates during the day on his BlackBerry. He also reads USA Today on the road. He ignores TV. Too politicized, he says.
I am always interested in life on the road, so I asked Friedman for some travel hints. He employs one part-time scheduler, flies first class and keeps a laptop handy.
"I download all the things I need to read before a plane trip and read them on the screen. I carry no paper with me. I never write anything down; I take notes on my BlackBerry. It occurred to me today the only time I pick up a pen is to sign my name to credit card receipts."
In addition to his experience and everything else he gained at Covington, Friedman took something else with him.
He owns season tickets to the Nationals, eight rows off the field -- thanks to his connections at Major League Baseball.