Starting and Operating a Lobbying Firm

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By Chris Micheli

For contract lobbyists, these individuals can either be employed by a lobbying firm (as an employee) or they can start their own lobbying firm (as an owner). If someone is joining an existing lobbying firm, then the infrastructure is in place for operating a firm including such items as office space, employees, furniture, etc.

On the other hand, if someone is starting a firm by himself or herself, or with one or more business partners, then all the usual concerns of a start-up small business in this state will need to be addressed. This article reviews some of the key issues and concerns that face a sole practitioner or a small group of lobbyists who plan to “hang out their shingle” and form a lobbying firm.

In most instances where an individual or a small group of folks decide they want to start their own lobbying firm, they individuals are likely to face relatively the same issues as those faced by many small business owners around California. To get someone thinking about starting a lobbying firm, answers to these types of questions will help guide their initial activities:

What will be the name of the firm? Will you use the last names of the owners in the firm name? Or will you determine a creative name that fits with the lobbying profession?

What corporate form will the firm take? Is the firm going to be a C corporation, an S corporation, a limited liability company? There are positives and negatives of each type of corporate entity and the individuals need to determine the liability and tax consequences of each type of entity.

Where will the office space be located? How close to (or far away from) the State Capitol do you plan to be? Is there an opportunity to have your own office space? Or will you sublet office space? How many individual offices are needed? Will you have a guest or client office? Do you want your own conference room or share one?

Will you have employees? Even sole practitioners need a legislative assistant (i.e., someone who can answer the phone, handle correspondence, manage the office, schedule appointments, etc.). But will you need a junior lobbyist? Perhaps you will utilize an intern or two? A scheduler or legislative assistant is critical because a lobbyist must meet with elected and appointed officials and their staff. An assistant who understands the process and can help draft advocacy letters is invaluable.

For what services will you contract? For example, who will handle the back-office issues (such as bookkeeping)? How about FPPC compliance?

Which will you do about office furniture? You will need to purchase office equipment and supplies, such as phones, computers, TVs, etc. In some instances, you can rent furniture and equipment?

How will you handle supplies? You will need stationary and business cards to function each day, as well as a cell phone, computer, and Internet service.

Who will oversee the paperwork? You must register with state government (the Secretary of State) before opening your lobbying business. You will also need a business license from the City of Sacramento. As an employer, your firm will have to post employee notices and have someone handle payroll.

Where will you park? Does the office space come with a parking space or two? Is parking in the office building or nearby?

While several decisions to make in starting a lobbying firm are applicable to all small business getting started in California, there are also some specific lobbying firm issues, including:

Will you do your own FPPC compliance? Or do you plan to hire a firm to handle that work, which is necessary to compile and submit your quarterly reports? FPPC compliance needs to be carefully considered to ensure proper compliance with the laws for your lobbying firm. You need to ensure your clients are also in compliance with political laws. A firm specializing in campaign/political law is a must to ensure proper compliance with the Political Reform Act. The last thing that you want as a lobbyist is to appear on the FPPC website for a violation of the PRA and a fine for that violation.

Which legislative publications and bill tracking service will you use? These must be researched and purchased with a monthly or yearly subscription.

Will you pay for premium cable stations to watch the four legislative channels? Sometimes you only need to monitor hearings or floor sessions, and lobbyists often need to do so from their office.

Some lobbying firms subcontract work and others hire associates or junior lobbyists to help staff clients. Some firms use assistants to watch hearings and track legislation. The important note is that, at critical hearings weeks, most lobbyists will have to be in multiple places and so they need help in monitoring what is happening in more than one committee hearing. Most lobbying firms are sole practitioners or two individuals who have partnered together to form a firm. Only about a dozen firms have more than five or six lobbyists.

Keep in mind that opening a lobbying firm is not like starting a law firm having just graduated from law school, passing the bar exam and having clients walk through the door. Instead, the lobbying business is based on relationships, knowledge and experience. Most private sector clients are gained through referrals or by word-of-mouth, while most publicsector clients usually arise based on RFPs.

In the end, running a successful lobbying firm is like running other personal services firms. Consistent service and results are the keys to having satisfied clients who are often the best source of future business. In other words, a fair amount of “new” business results from existing clients who bring more business or talk among their peers that results in new business.

Chris Micheli is a Principal with the Sacramento governmental relations firm of Aprea & Micheli, Inc. He serves as an Adjunct Professor at McGeorge School of Law in its Capital Lawyering Program.

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