This analysis was first available to Bloomberg Government subscribers.
The collapse of K Street powerhouse Podesta Group last year spawned at least five new firms, which have quickly become among the most successful lobbying startups.
Cogent Strategies LLC, Klein/Johnson Group, Federal Street Strategies LLC, and Lot Sixteen LLC — formed by Podesta veterans — were among the 45 new lobbying firms identified by Bloomberg Government in the fourth quarter of 2017. Those four firms captured 29 percent of fourth-quarter startup firm revenue and clients.
Another firm, Holly Strategies Inc., listed its initial clients in the first quarter of 2018, reporting four client registrations on Feb. 11.
Largest Lobbying Firm Startups by Q4 2017 Revenue
Formerly at Podesta Group
The second largest startup firm in the fourth quarter, Cogent Strategies, reported $300,000 in revenue and 17 clients. The firm was founded by Kimberley Fritts, Podesta Group’s former chief executive, and listed eight former lobbyists and 16 former clients of Podesta in its fourth-quarter filings. Cogent signed up an additional former Podesta client in 2018.
Fritts said in an emailed statement she was “grateful that many of our clients have remained loyal to us.” She attributed “quality of service” for her team’s ability to retain clients.
Israel Klein and Matthew Johnson, both formerly at Podesta Group, founded the Klein/Johnson Group. The firm reported $110,000 in revenue from five clients in the fourth quarter. Their client list includes three former Podesta Group clients, including Oracle Corp. and Civitas Capital Group, two of Podesta’s highest-revenue clients before it went out of business.
Federal Street Strategies, founded by former Podesta lobbyist Paul Brathwaite, was hired by five former clients. The firm was also hired by the NCTA – The Internet and Television Association.
Brathwaite said in a phone interview that he had worked with his clients for a number of years and helped recruit them to Podesta. Brathwaite said his lobbying skills are transferable but there are learning challenges in starting a new business.
Lot Sixteen, co-founded by former Podesta Group Principal Josh Lahey and Colin Hayes, reported two lobbying clients in the fourth quarter.
Holly Strategies is led by former Podesta lobbyist Josh Holly and is working on behalf of four former Podesta Group clients. The firm will be included in the first-quarter 2018 lobbying disclosures with the Senate and House, which are due in April.
Fate of Podesta’s Clients
Of Podesta Group’s 78 active clients in the third quarter of last year, 30 are now doing business with former Podesta lobbyists working at other firms, including four startups. Nine former clients have hired another lobbying firm, and two have started internal lobbying operations.
About half of Podesta Group’s clients, 37 of the 78, haven’t reported any new lobbying engagements as of Feb. 12. In particular, 11 former clients are no longer using any outside lobbying firms.
One way to see which companies or other entities may be in the market for lobbyists is to check recent lobbying terminations. Bloomberg Government’s Lobbying Intelligence search evaluates criteria linked to lobbying terminations to determine the relative “strength” of an opportunity — strong, moderate or weak.
Podesta Group’s Demise
The Podesta Group shuttered its operations after founder and major Democratic fundraiser Tony Podesta stepped down on Oct. 30, when his company was implicated in Special Counsel Robert Mueller’s probe of Russian involvement in the 2016 U.S. elections.
Mueller’s investigation scrutinized Podesta’s lobbying activity on behalf of the Ukraine-linked European Centre for Modern Ukraine, which had worked with former Trump campaign chairman Paul Manafort and and campaign aide Rick Gates. Both Manafort and Gates were indicted on numerous charges, including operating as agents of the Ukrainian government.
Manafort’s firm, DMP International LLC, had failed to register as a foreign agent with the Justice Department as required by law, as did the two firms working on the issue, Podesta Group and Mercury Public Affairs LLC. All three firms registered their work in 2017, three years after the termination of their lobbying activities.
The House Judiciary Committee in January approved a measure (H.R. 4170) that would change how foreign agents disclose lobbying activities and give the Justice Department additional powers to investigate foreign influence. The legislation would close a loophole has allowed agents of a foreign government to register as lobbyists with the House Clerk’s Office and Secretary of the Senate rather than with the Justice Department under the Foreign Agents Registration Act.
Federal Hall Policy Advisors LLC was the largest startup in the fourth quarter of 2017, with $345,000 in revenue and nine clients. Cliff Roberti, one of the firm’s cofounders, brought with him eight clients from his former firm, DLA Piper LLP.
Longtime lobbyists Doug Davenport and former Rep. Connie Mack IV (R-Fla.) founded Black Diamond Strategies LLC, the third largest startup in the fourth quarter, along with Hans Klinger and Rick Wiley. Black Diamond Strategies reported $135,000 in revenue from three clients.
In 2017, Mack reported work at two other lobbying firms, Liberty International Group LLC and Mack Strategies LLC. Doug Davenport, a former lobbyist at DCI Group LLC, was recruited by Manafort to work on Donald Trump’s presidential campaign.
The fourth-largest startup of the fourth quarter, Frinzi & Associates, had three clients and $134,000 in revenue. Their registered lobbyist, James Frinzi, has previously lobbied at the state level in Texas and Wisconsin.
(Jorge Uquillas is a quantitative analyst with Bloomberg Government.)
–With assistance from Johnathan Edmonds.
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