Lobbying firms say debt-ceiling issues are keeping clients away. (Jeffrey MacMillan/For Capital Business)

The lobbying industry took a hit in the third quarter, with all but one of K Street’s top 10 firms reporting declines in quarter-over-quarter revenue. A third of them saw their year-to-date lobbying revenue dip by double-digit percentage points.

Lobbyists attribute the slump — which follows a mid-year lobbying slowdown — to legislative gridlock that has many clients holding off until Congress can resolve the debt ceiling.

“The focus on the budget and debt ceiling has put other traditional legislative activity on the back burner,” said Nick Allard, head of the public policy practice at perennial lobbying powerhouse Patton Boggs, which kept its top spot among locally based firms but saw a 7 percent dip in lobbying revenue in the third quarter (from $12.2 million in 2010 to $11.3 million in 2011, according to quarterly Senate filings required by the Lobbying Disclosure Act). “The lingering weak economy has had an impact on the ability of clients to be active.”

Patton Boggs reported a 10 percent boost in nine-month lobbying revenue, from $32.8 million in the first three quarters of 2010 to $36.1 million in the first three quarters of 2011. However, 2011 figures include revenue from Breaux Lott Leadership Group, which Patton Boggs merged with in July 2010. Last year’s figures only include Breaux Lott revenue from the third quarter.

Law firms with lobbying arms said they compensated losses from lobbying work with litigation, regulatory work and efforts representing clients in congressional investigations.

“Major legislation begets major regulatory activity,” Allard said. “We had health care law and Dodd Frank [Wall Street reforms], which have generated a large demand for ... participating in the regulatory process.”

Akin Gump, which saw drops in third-quarter revenue (down 13 percent from $9.3 million in 2010 to $8.1 million in 2011) and nine-month revenue (down 6 percent from $27.5 million in 2010 to $25.8 million in 2010) said the declines were in part because of a shift to congressional investigations (the firm represents Bank of America, which acquired Countrywide in 2008, in the probe into the defunct lender’s home loan program) and some major lobbying representations ending. The firm lobbied for the Coalition for 21st Century Patent Reform on patent reform legislation that Obama signed in September.

“It was a big project,” said Smitty Davis, co-chair of Akin Gump’s policy and regulation practice group. “It ended successfully. But it’s now behind us.”

Rich Gold, head of Holland & Knight’s public policy and regulation practice group, said the lobbying drop-off reflects a change in focus from the Hill to the executive branch. Holland & Knight’s lobbying figures (down nearly 12 percent quarter-over-quarter and year-to-date) were offset by a 10 percent uptick in regulatory work, he said.

“There’s so much going on on the executive branch, that’s where we’re spending most of our time,” he said.

One firm bucking the trend was Ogilvy Government Relations, which saw third-quarter revenue jump nearly 25 percent, from $4.3 million in the third quarter of 2010 to $5.3 million in the third quarter. The firm also reported a 13 percent growth during the first nine months of 2011 compared with the first nine months of 2010, from $13.2 million to $14.9 million. Ogilvy CEO Drew Maloney tied the growth to signing major new clients including the National Retail Federation ($80,000 in fees). The firm’s biggest client in the third quarter was private equity firm Blackstone Group ($1.25 million) and the law firm Sprenger + Lang ($350,000).

The fourth quarter may pick up if clients begin strategizing on corporate tax reform — a key issue that could come before the supercommittee. House Ways and Means chair Rep. Dave Camp (R-Mich.) last week introduced a plan to change how businesses are taxed on overseas income.

“That will be the beginning dialogue on more comprehensive tax reform,” Maloney said.

Still, 2012 is an election year — which means it’ll likely be slower for lobbying until the fourth quarter.

“Election year fourth quarter tends to be crazy because people have a sense of what’s going to happen and will put together a strategic plan,” Gold said. “I expect next year to be as quiet, if not quieter, if it follows the traditional pattern. I’m not expecting next year to be gargantuan until we get to the fourth quarter.”