Hiring A State Contract Lobbyist

Hiring a State Contract Lobbyist

By Constance Campanella

Finding a contract lobbyist who is right for your organization is one of the most challenging assignments faced by state government affairs professionals — whether you are a beginner or a veteran. And knowing how to put a lobbyist under contract — for the right fees and terms — is an essential skill if you are going to succeed at the state level.

THE INTERVIEW

After you have secured several recommendations for lobbyists, you will need to interview them. It is not necessary to interview lobbyists in person — although you should always welcome such an opportunity. Unfortunately, given the distances and the frequent need to hire multiple lobbyists quickly, it is not always feasible.

Besides, since you will likely be managing lobbyists by phone or email, it is perfectly appropriate to interview them by phone. Feel free to include in the interview process any of your colleagues who will be regularly involved with the particular state or issue you're hiring the lobbyist to address.

Use the interview to gauge how this lobbyist approaches a new issue, how well he communicates and how comfortable you feel with the person. He will be your partner as well as a retained lobbyist, so make sure that you have good rapport. If a lobbyist tries to overwhelm you with legislative jargon or appears disinterested in your issues — look elsewhere.

While the main purpose of interviewing a lobbyist is make sure you are hiring the "right" person for your needs, you can also learn more about the state government you are addressing — if you listen carefully. Exhibit 1 (below) contains fifteen questions you should ask when interviewing prospective contract lobbyists:

Exhibit 1 — Direct Interview Questions 1. What is the primary focus of your practice? 2. How many lobbyists does your firm employ? 3. What are your areas of issue or committee specialization? 4. How long have you been lobbying? 5. How long have you been with your firm and are you planning any moves? 6. How many active clients do you expect for the next session? 7. Are you available to take on more clients? 8. Describe your most recent experience with pro-active legislative efforts. 9. Do you represent "national" clients? 10. What kind of monitoring service do you provide to clients? 11. Have you had any ethics violations of any kind — however small? 12. What factors go into making a fee proposal? 13. Are you a Republican, Democrat or Independent? 14. "Knowledge of the process" questions. 15. Tell me about the politics in your state's legislature.

Let's look at each question in more detail: 1. What is the primary focus of your practice?

The primary focus of the candidate's practice should be lobbying. If their primary focus is legal work, public relations, grassroots or general consulting, they may not have the dedication to lobbying that you need.

2. How many lobbyists does your firm employ?

This is an issue of capacity. One lobbyist with twelve active clients worries me. I feel better when firms have a minimum of two to three lobbyists on staff. If there is only one lobbyist available to help you, he should be managing fewer client projects than a multi- lobbyist firm.

3. What are your areas of issue or committee specialization?

Almost every lobbyist will describe himself as a "generalist." That's fine, but special expertise with tax issues, utility regulation, telecommunications issues or health care might be valuable to you. That special issue knowledge should be considered a plus if it fits your scope of work.

4. How long have you been lobbying?

There is no right answer here, but it does go to track record. Are you willing to take a risk on a first-timer? Maybe so — for a reduced price — but make sure you factor this lack of actual experience into your negotiation.

5. How long have you been with your firm and are you planning any moves?

Lobbyists change firms. Sometimes, they do so mid-session. In response to a direct question, you might force them to reveal their plans. You may not care if they hang out a new shingle or switch firms, but that is your choice to make.

6. How many active clients do you expect for next session?

This is another capacity question. How many is too many depends upon the work involved, but you need to consider this: committee meetings can occur at the same time. Can they cover all of them?

7. Are you available to take on more clients?

Near the end of session, with many deals being cut and days stretching into late nights, ethical lobbyists know they are at capacity and will tell you. I appreciate that and always call them the next time I'm looking for a lobbyist.

8. Describe your most recent experience with pro-active legislative efforts. Here is where I expect details. I do not expect client-confidences to be broken, but I want to hear exactly what the lobbyist did to make the client's dream come true. Have them describe their most recent experience with defensive legislative efforts as well.

9. Do you represent "national" clients?

You should have already checked their registrations. If the only client names you saw start with Ohio Association of... then find out why. Perhaps they had out-of-state clients before. Ask about that experience and how they interact with clients who are long distance.

10. What kind of monitoring service do you provide to clients?

Many lobbyists consider monitoring to be a throw-away — or at least it looks like that. Review examples of regular monitoring reports and see for yourself if the "reports" are just print-outs from introduction lists or something more targeted and more substantial. After all, you can get your own introduction lists online — for free. You should not be paying for them.

11. Have you had any ethics violations of any kind — however small?

You will have checked this independently before making the call, but this question gives the lobbyist a chance to explain how strongly she feels about ethical practices. Listen carefully.

12. What factors go into making a fee proposal?

Let them talk about how they determine how much to charge. Some lobbyists have minimum flat fees and make no bones about them. Others play "LET'S MAKE A DEAL" and you have no idea what's behind Curtain #1. I especially like to hear lobbyists talk about factors that go into fee-setting — for example, offensive vs. defensive campaign, level of controversy and coalition vs. go-it-alone.

13. Are you a Republican, Democrat or Independent?

Ask the candidate to describe how other people would regard him in terms of partisan affiliation. This did not used to be all that important. Now it is a crucial question in many states. With thin partisan majorities, lawmakers are far more sensitive to your hiring "one of them."

14. "Knowledge of the process" questions

How early can a bill be introduced prior to the session? Is there a crossover deadline? If you have discussed a committee, then ask who chairs that committee? What has your relationship with the Chair been like? What leadership changes do you expect in the legislature next year? Where is the power center in each chamber? If you wanted to get a bill passed in [that committee], who would be your ideal sponsor and why?

It is unlikely that your prospective lobbyist will not know these things, but how they react to your asking about them is important. If they are impatient or try to put you off by saying that they will share all of that with you when the time comes, then don't hire them.

15. Tell me about the politics in your legislature?

Again, this is where I expect an excellent lobbyist to try to impress you with her knowledge, but also to help you understand what you are up against. She should demonstrate that she wants to educate you, that she is articulate and interesting, and that she is having fun doing it.

And when you're finished with the interview, you'll want to take a moment to capture your impressions. Ask yourself questions like:

• Did the person sound bright and interested?

• Did they volunteer knowledge about the issue? And were they correct?

• Did they appear eager for the contract?

• Were they vague about their experience?

• Did they make you feel that you were important to them as a client?

There are myriad attributes that seasoned professionals come to expect or desire in a lobbyist. Some of these attributes are just matters of preference. For example, some people prefer to hire attorney-lobbyists. Most lobbyists are not attorneys, but there is no reason why you cannot insist upon one if that background makes you feel more comfortable and confident. In contrast, I have known clients who would never consider a large law firm to manage their lobbying. They prefer a smaller firm.

Other sought-after lobbyist attributes are more clearly tied to the work itself. They include the size of the firm's lobbying team, capabilities to provide coalition building, grassroots and media management expertise.

Conflicts are also a major consideration in selecting candidates for your lobbying assignment. What's a conflict? A conflict is whatever you say it is. Typically, a conflict is an existing client that is opposed to or is likely to oppose your position. For example, if you represent a tort reform coalition, you are not going to consider a lobbyist who works for the plaintiff's bar.

Competitors may also represent conflicts — particularly when your focus is on public sector sales. Conflicts can be matters of preference, too. For example, a health care company may not choose to hire a lobbyist who also represents smokeless tobacco — even if the engagements are entirely separate. You decide.

ACID TESTS FOR LOBBYISTS

There are two basic tests I expect every lobbyist I consider to pass with flying colors:

1. Are they a respected professional with successful experience managing problems or opportunities similar to yours?

2. Are they a lobbyist who helps the client contribute to the process?

To pass Test 1, a lobbyist needs direct experience and they should prove that with specifics during the interview. Your success is too important to risk on a lobbyist who's learning on the job.

That experience should involve a lot of winning, too. No one wins every time, but I look for experience taking projects all the way through to the end. Many legislative battles are lost on the last day of session. Competition gets extreme, hours get short, last minute "glitches" arise and only the strongest and best survive. Getting the bill 90% passed — repeatedly — is not sufficient.

The next factor to consider is whether that winning experience was earned doing something similar to my project. There are so many different challenges in state government and they are not interchangeable. A great "bill killer" — a fantastic resource to have, by the way — is simply not my first choice to lead a long-term positioning campaign.

Finally, in order to pass Test 1, a lobbyist must have no substantive ethical violations. While forgiveness is a virtue, it needs to come from someone other than me and you. I am not recommending a felon and you shouldn't accept one, either.

Passing Test 2 (finding lobbyists that help you contribute to the process) is equally important and often ignored. Some government affairs executives who are anxious and inexperienced forget that lobbyists work for them.

Lobbyists are respected messengers — but they work for their clients. Lobbyists must help the client contribute to the process. They must educate the client about the process, place facts and opinions into perspective, present potential courses of action, know who should testify and advise the client about the need for a coalition and/or supportive media or grassroots campaign. If you ask a lobbyist to just "take care of it" you may find the problem back on your desk bigger and badder than before. And you'll have only yourself to blame for not staying involved and protecting your interests.

The more confident the client, the better the decisions. And better decisions win.

Finally, there is another aspect of educating the client that must be part of this equation and that is the proper role and timing of political or campaign contributions. This is a very sensitive topic and the lobbyist must be capable of helping his or her client engage legally, thoughtfully, respectfully and wisely.

DETERMINING HOW MUCH TO PAY A LOBBYIST

Lobbying fees are entirely negotiable, but many state government relations professionals experience the equivalent of "sticker shock" when contemplating professional lobbying services. As you can see from Exhibit 2 (below), most lobbyists work on a session retainer basis. Retainers can be as low as $12,000, but are typically in the $15,000 to $80,000 range for an active lobbying program. Typical monthly retainers range from $1,500 to $12,000 — and beyond. Monthly retainers are often subject to a minimum term of two to six months and come with or without termination clauses. That is a negotiable item.

It is not a good idea to hire a lobbyist for legislative work on an hourly rate. The only hourly arrangement exception I ever make is for non-session work that is clearly defined, such as arranging meetings with state regulators to secure support for a statutory change during the next session.

Exhibit 2 — Predominant Method for Paying Contract Lobbyists Predominant Payment Method Percent of Companies Retainer basis 88% Project basis 12% Source: State Government Relations Benchmarking Project, Public Affairs Council, 2004.

When discussing fees, be sure you know the laws governing lobbyist compensation tied to success. Success fees, commissions, brokerage or contingency fees for legislative lobbying are illegal in 37 states and subject to reporting requirements in others. However, they are legal in many localities and are legal in many states for public sector sales support.

For a quick tour of the state rules governing lobbying and lobbyists, the National Conference of State Legislatures (NCSL) maintains a section on its Web site, which is very helpful. But always contact the state office responsible for regulating lobbying and lobbyists to make sure you are complying with all the applicable laws.

When to hire the lobbyist is also an important factor when deciding how much to pay your lobbyists. Is July too soon for next year? Is January too late?

Emergencies make their own timetables and relationship-building is clearly a year-round effort, so the timing debate is usually focused on offensive campaigns. In this case, earlier is always better. Waiting until the last minute to hire a lobbyist will not save you money, can increase the cost dramatically and will severely decrease your chances for success. Qualified lobbyists understand the process, the players and the issues and can be the best investment you will ever make.

Before leaving the fee topic, one final bit of advice. Do not overpay or underpay for lobbying services. Overpaid lobbyists are a waste of resources. Paying an excellent lobbyist 50% more than the going rate is not any guarantee of success. Lobbying is a competitive business and there are usually a variety of people who can be equally successful for you — without breaking the bank.

Underpaid lobbyists are not always a good deal either since lobbying is a value business. If a lobbyist low balls a fee just to get you on his client list and then cannot afford to spend his political "chits" for such a low-paying client, you made a bad deal. Your best protection against overpaying or underpaying is good research.

BRINGING THE LOBBYIST ON BOARD

Once you have decided whom to hire, you will need to negotiate the terms of your relationship. After you have discussed the essential elements, the scope of work, the fee, the term and how you will deal with expenses, all of these elements should be captured in a written contract. Some states even require lobbyists to have contracts or letters of engagement in place before they start work.

There are ten common elements to the standard lobbying contract, including:

1. Scope of services — This section should strike a good balance between being specific enough to describe what you expect, but not be so specific that every twist and turn of the process requires an a la carte fee supplement.

2. Warranties and representations — Your lobbyist should warrant that he is in good standing with the ethics laws of the state and that he will use his best efforts in representing you. 3. Registration and reporting — Your lobbyist should promise to register on time and to use his best efforts to ensure that you do likewise, if required by law.

4. Fees and expenses — The monthly fee, the number of months covered and your policy regarding expense reimbursements should be covered.

5. Billing and payment — Be clear about how the invoicing process will work. If you want a monthly invoice, then state that plainly in the contract and feel free to state that you will not pay any bill presented more than 60 days late.

6. Term and early termination — Include specific start and finish dates for the contract, plus any automatic extension clause. Early termination should require advance notice, be "with or without cause" and provide for payment of fees and expenses through the end of the termination notice period — usually 30 days. Early termination is usually a two-way street — meaning the lobbyist can also leave your employ. If you want to foreclose that option, it should be discussed upfront.

7. Confidentiality — It seems like common sense, but make sure it is explicit that everything you tell a lobbyist is a secret unless you say so. And, the confidentiality requirements should survive in perpetuity and without exception.

8. Conflicts — The lobbyist must warrant that she has no conflicts of interest based on her current client list and the organizations and positions you have identified as conflicts. Should a conflict arise during the term of the contract, your lobbyist promises to bring the matter to your attention immediately and also promises to use her best efforts to resolve the situation to your benefit. This situation is especially common with law firms who represent clients in the legal and legislative arenas.

9. Non-competition clause — You may want to also include a provision that prevents the lobbyist from working for a named competitor for a period of time after your engagement is concluded. These are perfectly valid provisions, but should be raised with the lobbyist before you present the contract.

10. Third party contacts — This is usually a prohibition against talking to the media, but you can state it more broadly to include anyone outside the legislative or regulatory arena (e.g., a Wall Street analyst looking for a political assessment).