Gerald Cassidy's troubles continue as his firm falls out of first place in revenue rankings for Washington lobbyists. One important client protests that Cassidy has exaggerated his lobbying revenue in 2001.
By Robert G. Kaiser
As the lobbying business in Washington boomed in the 1990s and early 2000s, the highest-flying firms competed to see who could finish nearest the top of the rankings kept by The National Journal, Legal Times and others that compared lobbying firms by their revenue. For many years, Cassidy & Associates stood alone at the top of those tables.
The "revenue number," as lobbyists call it, became both a measure of accomplishment and also a marketing device. Gerald Cassidy, was intent on staying at the top of the table, according to numerous former employees. "Rankings were terribly important to him, and to the business," said Dale Leibach, who worked at Cassidy for a decade until 2002. "It was very reassuring to clients to be able to say, 'We picked the biggest and the best lobbying firm.' Being at the top of the table is Washington's version of the Good Housekeeping Seal of Approval."
Geoff Gonella worked throughout the '90s in Cassidy's marketing operation, a critically important unit that found new clients for the firm. "Once we were number one it mattered to stay there," Gonella recalled. "It always provided a PR hit every six months" when those numbers came out. For a competitor like Cassidy, driven to succeed from an early age, sitting in first place on a list that contained all of his peers was an entirely satisfactory situation.
The numbers behind the rankings would not qualify as monuments to statistical precision. For a host of legal, practical and human reasons, reported revenues regularly depart from the actual facts. The basic measurement is known as "LDA revenue;" the acronym refers to the Lobbying Disclosure Act of 1995. The act requires everyone who lobbies the Congress or top officials in the executive branch to file reports twice a year recording how much it has been paid by clients, and what government programs or Congressional legislation they are trying to influence.
Stanley M.Brand, a Washington lawyer who specializes in the law of lobbying, explained in an interview why LDA revenue numbers can be misleading or confusing: "There is no 'generally accepted' way, in the parlance of accounting jargon, of defining precisely what lobbying revenues are. If you define it as everything related to and supporting a lobbying effort, it's one number that is huge. If it's simply the numberrelated to the actual communications or contacts involved, then it's a much smaller number."
Moreover, there are no mechanisms to ensure accurate reporting. "There's very little enforcement," Brand said, and misreporting is not a criminal violation. "It's just a civil matter." The law only requires lobbyists to make a "good faith" effort to account for their earnings.
Finally, there is no watchdog keeping an eye on this reporting or raising questions about it, unless the client in question has a problem with the lobbyist's report. On one occasion still notorious among veterans of the Cassidy firm, this happened with one of its biggest clients.
In April 2002, Rudy DeLeon, then vice president of the Boeing Corp. in charge of its Washington office, was surprised to see a reference to Boeing in the National Journal, a weekly magazine that covers official Washington for a small but elite audience of Washington insiders. National Journal regularly reports on the lobbying competition. In its issue of April 13, 2002, it listed the most lucrative clients of the top lobbying firms for 2001. It showed Boeing paying Cassidy $1.12 million for the year -- the number Cassidy & Associates reported in their LDA filings.
DeLeon had taken over Boeing's Washington operation in mid-2001. Boeing was not booming at the time, and DeLeon was instructed to hold down costs. One of his first decisions was to cut back significantly on the company's use of Washington public relations firms and lobbyists. So when he saw the $1.12 million number in the National Journal he was angry. "I got annoyed. It was a misrepresentation," DeLeon said.
Boeing's invoices recording payments to Cassidy in 2001 totaled $502,000. But in DeLeon's view, only $12,500 of that represented "traditional lobbying" in Washington. The rest paid for efforts by Cassidy lobbyists to win international customers for Boeing aircraft -- an activity not covered by the Lobbying Disclosure Act's reporting requirements. (Cassidy had employed former congressman and ambassador to Italy Thomas Foglietta to act as a sort of super salesman for Boeing planes, particularly F-15s the company was trying to sell to South Korea.) DeLeon called Larry Grossman, the Cassidy lobbyist primarily responsible for Boeing, to complain. Grossman said later that he had no idea where the $1.12 million figure had come from.
Asked about this , Cassidy denied overstating what the firm earned from Boeing. Yes, he acknowledged, not all of the money was paid to Cassidy & Associates. As Boeing's records confirmed, the company also used the services of three Cassidy affiliates in 2001: the public relations firms of Powell Tate and Shandwick, and a newly-acquired grass-roots lobbying firm called Lunde & Burger. Boeing's records for 2001 showed $502,000 paid to Cassidy, $249,900 to Powell Tate, $224,000 to Shandwick, and $125,000 to Lunde & Burger. That totals $1,100,900. "We report all of our activities that are in any way related to our lobbying work," Cassidy said. "We never overstated our numbers. Never."
But DeLeon said that most of the activities paid for with this money were well outside the realm of lobbying as defined by the Lobbying Disclosure Act. The law specifically states that information conveyed "in a speech, article, publication or other material that is ..... made available to the public" does not constitute lobbying under the act -- an exclusion that appears to cover most forms of public relations. All but $12,500 of the money paid to Cassidy & Associates in 2002 was for lobbying overseas, to try to persuade South Korea to purchase Boeing's F-15 fighter-bomber, DeLeon said. This was clear from Boeing's records, he added.
Cassidy insisted that all the work done by these other entities was directed at members of Congress to persuade them to pressure South Korea to buy the F-15. Others then at Cassidy & Associates who were involved in this work said DeLeon's memory was correct; most of the PR work was not directly part of the lobbying effort, Grossman said.
Employees of the Cassidy firm understood the importance of staying at the top of the rankings. They had long been used to putting the revenue numbers in the best possible light. Cassidy acknowledged that being at the top of the table was a helpful marketing tool.
But DeLeon had an interest in appearing to spend less on lobbying, not least because he was spending less on lobbying. He thought he knew what he was paying for. In his accounting system, the last money paid Boeing paid to Cassidy for traditional Washington lobbying was $12,500 early in 2001. The $1.12 million Cassidy had reported for 2001 was almost precisely one hundred times greater. Soon afterward, DeLeon ended Boeing's relationship with Cassidy. "The Cassidy relationship had run its course," DeLeon said.
The disagreement with Boeing concerned a relatively small amount in the scheme of Cassidy & Associates' total revenues. The firm had the highest cumulative LDA revenues for the 1998-2005 period. In those eight years, Cassidy's total reported revenues were $211.3 million -- $13 million more than the New York Yankees' 2006 team payroll.
Cassidy's revenue did go down significantly from 2001 to 2002 -- a consequence of the lobbyists and clients who left the firm after it was acquired in 1999 by IPG -- and 2002 was the last year that Cassidy's number was the highest in the industry. But the firm continued to report more than $25 million year after year.
On the other hand, from 2002 onward Cassidy did not keep pace with the lobbying industry. The total of lobbying fees paid to all registered lobbyists jumped from $1.82 billion in 2002 to $2.42 billion in 2005, when the firm had fallen to third place behind the law firms of Patton Boggs and Akin Gump. For the industry, that was an increase of 33 percent. Over the same four years, Cassidy & Associates' reported revenues fell by $2.3 million, or about eight percent, to $26.7 million. [View a database of top lobbying firms from 1998 to 2006 at OpenSecrets.org]
One reason was increased competition. Over the years, Cassidy's success had encouraged new competitors to launch rival firms. Some were created by Cassidy alumni, including Gonella's Cornerstone Government Affairs, James Fabiani's Fabiani & Co., and Vincent Versage's National Group. Those three, all exploiting training acquired and contacts made by principal lobbyists at Cassidy & Associates, had combined revenues of about $15 million in 2005.
H. Stewart Van Scoyoc, a boyhood friend of Fabiani, created a lobbying powerhouse even faster than Gerald Cassidy did. Starting in 1990 with just two employees, Van Scoyoc & Associates now employs more lobbyists than Cassidy & Associates and in 2005 was barely $2 million behind Cassidy in reported revenue.
Cassidy and Van Scoyoc talked about a merger around the time the IPG took over Cassidy & Associates, but no deal was reached. "Stu Van Scoyoc has built a really good operation, and he really copied us," Cassidy said in an interview.
Washington Post research editor Alice Crites contributed to this report.
Tomorrow: Cassidy loses it.
Gerald Cassidy Responds to This Chapter
I thought it important for readers of The Washington Post to have access to the full quote I provided Mr. Kaiser on this subject:
"As I expressed to you on a number of occasions, Cassidy & Associates maintains its long-held commitment to a high standard of ethics and transparency by ensuring we report all of our activities that are in any way related to our lobbying work. As you know, we provide our clients comprehensive lobbying strategies that may include meeting with Congressional or Administration staff, activating grassroots networks, or engaging media. These are all elements that are key components to our larger lobbying strategy and in the spirit of the law, we file this information under the Lobbying Disclosure Act."
An overview of Gerald Cassidy's life and career.
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