On Saturday, Dec. 19, 1998, Rep. Robert L. Livingston stood in the well of the House of Representatives and rocked the Washington establishment. He was all-but sure to take over as speaker of the House, but instead he said he would resign over reports that he had had extramarital affairs.
At the time, he faced a painful reality. "I knew when everything fell apart that I had to opt for a different career," the Louisiana Republican said. "There wasn't any question: I had to survive."
In the years since, he's gone well beyond survival. The Livingston Group LLC, which the 62-year-old lawmaker formed in 1999 with his three top aides, is one of the capital's 10 largest non-law-firm lobbying shops, with annual revenue of $13 million. Livingston and his growing company have had such far-flung clients as the nation of Turkey, the city of New Orleans, Lockheed Martin Corp. and the Girl Scouts.
"A lot of members of Congress don't make the transition easily to lobbying, but Bob did. He's very good at it," said Charles R. Black Jr., chairman of BKSH & Associates, a Livingston Group competitor. "He has a great client list and he does very good work."
Livingston has done more than go to riches from ruin, a pattern that by now is familiar along the Potomac. He has also invented a new way of running a lobbying company. Unlike other firms, Livingston has relatively few employees. Most of the people who say they work at Livingston Group are actually consultants who are loosely affiliated with the former congressman.
He likes to call this arrangement "the Re/Max of lobbying," referring to the real estate sales company made up of independent agents. Livingston also jokes that he has a few workers "in house" and a bunch of others -- the consultants -- in the "outhouse."
Livingston came up with this odd, co-op-like configuration after studying the companies that were run by his many lobbyist friends. He knew that he wanted to go out on his own. And the more he talked to established lobbyists, the more he became convinced that a flexible, low-fuss system was what would work for him.
The Livingston Group has four partners, 13 employee lobbyists and 43 lobbyist-affiliates, six of whom are overseas. The Washington-based workers occupy three floors of a building on the House side of Capitol Hill. Insiders there say that their numbers will expand as their space does.
Space is the key. Livingston charges his consultants what amounts to rent, making them pay essentially what the footage, and the office help, costs him. In exchange, the consultants share their clients -- and their fees -- with Livingston and his partners.
"People come to us who are not affiliated with a larger firm and they already have their own business. If they want to affiliate with us on one or two ventures that's fine; we'll provide them with space if they need it, at cost virtually," Livingston said. "They don't need a salary; they don't need benefits; they don't need anything. But when they want to pitch a potential client with a team of lobbyists, they use us. We pitch together and then we eyeball the fee and try to split it fairly."
The Livingston Group usually takes a third or more of a shared lobbying fee, he said, but it also sometimes accepts as little as 20 percent. As a result, its growth is essentially risk-free because there's no cost to the company of adding workers and only the upside of additional fees. This year, the Livingston Group added six people, two of whom were former members of Congress and all of whom were consultants.
"We devised the system with one word in mind: overhead," Livingston said. "I don't see a lot of point in having a lot of people on staff if I don't have a lot of business for them."
Another reason is the precarious economics of appropriations lobbying, which was Livingston's initial specialty. He is the only former appropriations chairman actively lobbying. So delivering appropriated money to clients was and remains a strong part of his company's practice.
But it isn't the sole practice -- by design. Appropriations work is a volatile, relatively low-margin business compared with more general types of lobbying. Not that it's bad. It just isn't as stable or as lucrative as other sorts.
For one thing, the field is crowded with former appropriations staffers, which keeps fees down. And despite the huge increase in granting money for specific projects called earmarking, federal grants are hard to come by.
"It's a long shot to get an earmark," Black said. "No lobbying firm can get one without a powerful champion on the Hill."
What's more, lobbyists who fail to obtain the earmarks their clients seek are quickly dropped. Those who do get what their clients want also are likely to lose their retainers, because the clients are satisfied.
Livingston said there is another reason not to base a business solely on appropriations lobbying: Earmarks (also known as pork-barrel spending) are likely to fall out of favor in the years ahead. "Congress has gone to so many earmarks that there's going to be a rebellion," Livingston said. "I foresee a downscaling of earmarks. With the war, Katrina and Rita, with all the demands on the federal budget, it's going to be difficult.
"It's a tenuous practice," he said. "It's better to have different eggs in the basket."
The Livingston Group has lots of eggs. It is has been organized into seven separate practice areas -- including science, defense, energy, health care and transportation -- each with its own director. Appropriations lobbying has actually been declining as a percentage of the company's overall revenue.
Those changes have been undertaken in part to make the company more attractive as a potential acquisition. With its unusual structure, potential buyers might be reluctant to invest. An acquirer might not know exactly what it would be getting in terms of people. Personal-service companies are valuable only as long as they keep key employees. Livingston's loose arrangement with its affiliates undermines that kind of longevity.
So management experts brought in a few years ago recommended that the company divide itself into more traditional departments, to improve efficiency and communication as well as to make suitors feel more comfortable.
"We have had a lot of people try to make overtures to buy us in one fashion or the other," Livingston said. "The right deal hasn't come by, but I won't say that it's impossible."
That's a long way from the day that rocked the capital.
Jeffrey Birnbaum writes about the intersection of government and business every other Monday. E-mail him at email@example.com.