Inside Influence Inc.: Welcome to Washington's lobby firms—they represent the capital's fastest-growing industry, one increasingly controlled by American and foreign conglomerates - Policy and Politics

Chief Executive, The, Nov, 2001 by Mary Hager

IN WASHINGTON, more than one CEO has learned the power of the checkbook. With a few well-placed campaign contributions--preferably to members of both parties--and the help of a high-profile lobbyist or two, a CEO can meet with key lawmakers and perhaps get the kind of attention he or she wants.

But it can be expensive, as Samuel Heyman, chairman of GAF Corp., a building materials manufacturer in Wayne, NJ, found out. Heyman spent more than $7 million to hire a slew of lobbyists, including former Arizona Democratic Senator Dennis DeConcini and Scott Hatch, son of the powerful Senate Judiciary Committee member Orrin Hatch, in what has been an unsuccessful legislative effort to limit the liability of former asbestos producers. GAF, which stopped making products with asbestos before Heyman took control in 1983, has already paid more than $1.5 billion in legal expenses and claims to workers suffering from asbestos exposure, and some 100,000 claims are still outstanding. The company filed for bankruptcy last January to limit its liability.

Heyman is far from alone. Most CEOs have learned--sometimes the hard way--what Bill Gates failed to understand when he stayed home as the Justice Department started its antitrust investigation of Microsoft: Corporations ignore Washington at their peril. Like it or not, the Capitol's tangle of laws, rules, and regulations affects everyone.

"You can't just keep your head down and escape the government," says Jim Albertine, president of the American League of Lobbyists and a partner in Albertine Enterprises. "The government is a behemoth. Government at all levels has become part of life."

Today's persuasion tactics typically involve teams of lobbyists and experts on both sides of an issue, as Heyman's experience on asbestos demonstrated when his team's efforts were effectively countered by lobbyists for the trial lawyers.

"You simply can't lobby an issue anymore without it being part of an overall triad of issue management," notes John Stauber, executive director of the Center for Media and Democracy, a nonprofit public interest group that keeps tabs on the public relations and lobbying industries. Issue management, Stauber explains, incorporates lobbying, public relations, and mass media advertising--remember the Harry and Louise advertising campaign that helped defeat the Clinton health plan?--to mold public opinion and mobilize grassroots constituents to put pressure on important members.

Much of the most visible lobbying is carried out by mega firms like Cassidy and Associates; Patton Boggs; and Verner Liipfert. And these big names are becoming even bigger because of a wave of consolidations and buyouts. For instance, the public relations firm of Shandwick International (now Weber Shandwick Worldwide) purchased three major lobbying firms, including top money earner Cassidy and Associates, and then in turn was taken over by Interpublic Group, a New York communications conglomerate.

WPP Group, a British advertising holding company, purchased seven Washington-based lobbying and public relations companies, including the Wexler Group and Timmons and Co., both consistently ranked among the most effective. Accounting firms have also become powerhouses. PriceWaterhouseCoopers owns the sixth-largest lobbying practice and, not to be outdone, Ernst & Young recently merged with Washington Counsel, the eighth-largest firm.

Washington's Most Lucractive Industry

With some 17,000 registered lobbyists working in Washington, corporations have access to a vast talent pool. However, any count invariably underestimates the scope and extent of the business, since so much activity falls below the radar screen. Twists in the law mean that some of Washington's most influential movers and shakers never have to register. Bill Shingleton, the lobbying expert at the Center for Responsive Politics, a nonpartisan, nonprofit research group that tracks money in politics and elections, explains that the legal definition is very narrow and only counts money spent on direct contact with members of Congress, the executive branch, or their staffs. Legal fees are not counted, nor is money spent on grassroots efforts. That's one reason the representatives of the National Rifle Association, for instance, a group that relies on grassroots persuasion, has surprisingly few registered lobbyists. Nor does it take into account the substantial contributions of public relations specialists who mold p ublic opinion and focus press attention on issues but, technically, are not lobbying.

Corporations with deep pockets have made lobbying Washington's fastest-growing and most lucrative industry. The Center for Responsive Politics reports that lobbying revenues topped $1.4 billion in 1999 (figures for 2000 are due in late fall). Nearly 130 firms collected more than $1 million each in fees.

For all the money CEOs spend there, though, Washington remains foreign territory. Some "think there is something smarmy about politics," observes Leon Billings, president of Leon G. Billings Inc., a public policy consulting concern, and a Democrat in the Maryland legislature. He learned his way around the corridors of power years ago as a top aide to the late Senator Edmund Muskie, a Maine Democrat. He says many CEOs have "deep antagonism toward government," and "are inclined to be pig-headed when dealing with Congress and regulatory agencies."