Suit Could Threaten Practice of Taking Clients to Next Firm

Former commerce secretary Donald L. Evans has left the Financial Services Forum.
Former commerce secretary Donald L. Evans has left the Financial Services Forum. (By Daniel Acker -- Bloomberg News)
Tuesday, January 15, 2008; Page A11

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.

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