Cassidy hires an important Republican, who reshapes the firm.
By Robert G. Kaiser
Early in 2003, an influential but decidedly un-famous aide to one of the most powerful members of the House of Representatives concluded -- with his boss's blessing -- that it was time to "go downtown." This move had become almost routine for aides to senior congressmen. More than two dozen assistants to the longtime House Majority Leader, Tom Delay, had moved from his office to lobbying jobs downtown. Now it was the turn of Gregg Hartley, the alter ego of Rep. Roy Blunt of Missouri, the House majority whip and a DeLay protégé. At the age of 50, Hartley was ready to try the private sector.
At that moment, Cassidy & Associates was in the market for new talent. Things had gone badly for the InterPublic Group (IPG), the conglomerate that bought the Cassidy firm at the end of 1999. From a high of $58 a share that December, IPG shares had fallen to less than $10 early in 2003. A series of accounting problems had repeatedly forced the company to restate earnings and write off losses.
This grim news actually had a positive effect for Gerald Cassidy, he later explained in an interview. He let a number of people go at no cost to his own firm's budget by writing off their severance packages as part of IPG's financial restructurings. "It gave us a lot of space in our budget to go out and hire people," Cassidy said. He would need to use a lot of that space if he wanted to hire Gregg Hartley.
Hartley's relationship with Blunt raised his value as a lobbyist. The two men had first met in the 1970s, when Blunt was county clerk and elections officer of Greene County in southwestern Missouri; Hartley campaigned for him. In 1985, when Blunt was Missouri's secretary of state, Gov. John Ashcroft hired Hartley and assigned him to work with Blunt. From then on, Hartley ran Blunt's political operations, including an unsuccessful run for governor in 1992 and a successful House race in 1996. Hartley accompanied Blunt to Washington as his senior aide.
With DeLay's guidance and support, Blunt moved up quickly in the House Republican hierarchy. In November 2002, Republican members unanimously chose him as their majority whip. Hartley found himself the chief of staff to the third-ranking member of the House.
Hartley was popular and successful on Capitol Hill -- a plain-talking Missourian, open and friendly, who spoke with a slightly nasal Midwestern twang. He was a loyal member of the DeLay machine, but he also had soft edges. He'd grown up as a Democrat and didn't demonize the "Democrat Party," though he used that term, which infuriates Democrats. He put on no airs, made friends easily, and he was bright. He could see that people with experience like his were making big money in the booming lobbying industry.
In 2003, Hartley decided that he "couldn't really afford to stay" on the Hill, where his salary was then about $150,000 a year. He had three children, including two in high school who had college in mind. College was expensive. He talked to Blunt.
"He and I both concluded that I could still be a valuable part of his team, and there was no reason for us not to continue our personal relationship and our political relationship," Hartley recalled. The prospect of a continuing relationship was a selling point downtown. So Hartley started talking to lobbying firms, trade associations and the Washington offices of large corporations. Many were interested.
Hartley chose Cassidy & Associates, which had joined the bidding war for his services quite late in the process. Cassidy offered Hartley the role of chief operating officer and a salary of just under $1 million a year plus a substantial percentage of the lobbying fees paid by clients Hartley could bring to the firm. When they learned these numbers, competitors who had bid for Hartley's services were surprised and impressed. Hartley's arrival in June 2003 marked another turning point in the history of Cassidy & Associates. He had sought a significant role in management, and Cassidy, then 63, was ready to give it to him. Almost immediately, Hartley began making changes.
First he began hiring -- former Hill aides and executive branch officials, Republicans and Democrats, but mostly Republicans. Within the first two years he had added more than two dozen lobbyists. What had been a bipartisan firm became increasingly Republican. Today, Cassidy & Associates and its predominantly Republican affiliate, the Rhoads Group, employ 36 Republicans and 15 Democrats.
At the same time, Hartley began diversifying the client base. In 2003 Cassidy & Associates still made 60 percent of its money from its traditional appropriations practice, helping institutions and local governments win earmarks from Congress. Cassidy had long been trying to reduce the proportion of the appropriations business, which had become crowded with competitors. Hartley quickly began to change the firm's focus from winning earmarks to helping large companies deal with legislative and regulatory issues. He brought in a string of corporations as new clients, beginning with three of the former "Baby Bell" telephone companies that were strong Blunt supporters: Bell South, SBC Communications (the two are now part of AT&T) and Verizon. Hartley also signed up Freddie Mac, American Airlines, Emerson Electric, Miliken and Co., Univision and the Walt Disney Company. Gerald Cassidy long coveted such blue-chip clients. By 2005, about half of Cassidy & Associates' $27.8 million in revenue came from the category of clients referred to inside the firm as "not appropriations," and that category kept growing.
Morale was poor when Hartley arrived, according to many employees. Many of the old-timers had left, often with their clients. There were dozens of Cassidy alumni in lobbying and PR organizations around town, many of whom gossiped about "the asylum," as they called their old shop ("because we all escaped," one explained). The word among them was that Cassidy & Associates had fallen on bad times in the first years of the new century and had become a grim place to work. Hartley set out to revive it.
He did away with the "matrix meetings" that had been a hallmark of the firm for a quarter century. These were the weekly sessions where all staff reported on the status of their appropriations requests and explained what they planned to do next to advance them. Now, with appropriations diminishing in importance, Hartley devised a new structure.
"We changed the firm so that there are clusters of lobbyists that work together, anywhere from one person to five people led by one senior lobbyist," he said. "They work together on a set group of clients. When a client comes in, generally they are serviced by one cluster."
But if a particular client "needs something that is not within the skill set or the relationships of that team, all they have to do is walk down the hall and ask somebody else to help." Hartley likes to mention this feature when he is pitching potential clients.
Gerald Cassidy got rich largely because of the success of his marketing operation, for years a self-contained unit that lured clients to the firm, then turned them over to the lobbying staff for "servicing." Today, Hartley requires the individual clusters to do their own marketing: "I expect all senior people here to market their team and encourage young people to develop their abilities as a lobbyist by marketing as well."
In the Hartley era business has been good -- but not great. Cassidy & Associates' reported lobbying revenue was just shy of $28 million in 2003, Hartley's first year, and earnings remained flat in 2004 and 2005. Last year the revenue number dipped to $24.6 million. Cassidy's share of overall lobbying revenue, a number that climbs inexorably year after year, has steadily fallen. For the first time since the numbers have been kept, Cassidy was not the top-earning lobbying firm in 2006. An outfit called Van Scoyoc Associates, one of many to borrow Cassidy's techniques and emphasize earmarked appropriations, had $28.7 million of revenue in 2006. The lobbying practices of two big law firms, Patton Boggs ($35.3 million) and Akin Gump ($25.9 million), also surpassed Cassidy last year. So the firm that spent many years as number one found itself in fourth place.
Still, $24.6 million in revenue for a firm of 51 lobbyists is a number many of Cassidy's rivals would envy. And, as Cassidy pointed out, if the total had included the $4.9 million earned by his wholly owned subsidiary, The Rhoads Group, the Cassidy number would have been $29.5 million, "second only to Patton Boggs."
Hartley's new model seems to be working for the sorts of clients he wants to cultivate. One is Bombardier, the Canadian company that makes regional jet airplanes, railway and subway cars, all-terrain vehicles and many other products. A. Oakley Brooks, the Washington representative of Bombardier, hired Cassidy in 2004. The next year, Bombardier was Cassidy's single most lucrative client, paying a retainer of $680,000 for help with many different issues, from selling Bombardier aircraft to federal agencies to calming a storm over cracking brake discs on the Acela high-speed train, the pride of Amtrak's fleet and a Bombardier product.
When Amtrak discovered the cracks in many of the Acela's brake discs in April 2005, it decided to take the 20 high-speed Acelas out of service on the Boston-Washington corridor. It was a traumatic moment for Bombardier. Members of the House and Senate representing states served by the Acela wanted to know what had happened and why.
Brooks's gratitude for the help he got from Cassidy lobbyists was palpable. A key player was former Rep. Jack Quinn, a moderate Republican from Buffalo who joined Cassidy & Associates at the beginning of 2005 after giving up the House seat he had held for six terms. Quinn had been chairman of the railroad subcommittee of the House Transportation and Infrastructure Committee. A big man with a thick head of white hair and a joyous personality, he was enormously popular on the Hill; his easy manner with colleagues was an ideal asset now that he was a lobbyist.
"We went on a one-month walkabout" on the Hill, Brooks recalled in an interview, trying to explain the problem and what Bombardier was doing to fix it. "There's no way I could have done that on my own." Gerald Cassidy personally took Brooks to see Sen. Arlen Specter (R-Pa.), a member of the Senate Appropriations Committee, which funds Amtrak, a meeting Brooks didn't think he could have gotten by himself.
Daniel J. McNamara is the Cassidy lobbyist who leads the cluster assigned to Bombardier. He came to the firm in the early 1990s from the staff of Sen. David Durenberger (R-Minn.), a moderate Republican. McNamara and Brooks hold a meeting in the Cassidy offices every second Wednesday at 8 a.m. to discuss the company's issues and opportunities. Another Cassidy associate important to Brooks is retired Marine Brig. Gen. Terry Paul, who built relationships on the Hill during a 10-year assignment as the Marines' official liaison to the Senate.
Paul's team at Cassidy specializing in marketing goods and services to the federal government became an extra sales force for Bombardier, "a real force multiplier," Brooks said.
In 2006 Bombardier's fee fell from $680,000 to $530,000, because, Brooks said, he needed fewer services after the Acela crisis passed. The fee is still large by the standards of Washington lobbying, but for a company with annual sales of $14.7 billion, Bombardier's retainer to Cassidy was not expensive.
Hartley now shares top billing at the firm with Cassidy, former Rep. Marty Russo and Quinn. Finding an impressive title for everyone wasn't easy. Cassidy is called executive chairman; Hartley is vice chairman and chief operating officer; Russo is chief executive officer and senior vice chairman; Quinn is president. Hartley is running the office.
Cassidy is delighted that his Democrats are back in control of Congress. He brags to potential clients that Russo is "like family" to Speaker Nancy Pelosi, and he's pleased that his own pals are back in chairmanships after 12 years in the minority. Divided government is good for the lobbying business, he believes. New ethical rules will actually be helpful, he says, though they will make it harder to exploit Cassidy & Associates' sky box at the Verizon Center. And Russo has been expelled from the House gym -- where he used to hang out with his old pals. Lobbyists are no longer welcome.
Washington Post research editor Alice Crites contributed to this report.
In Sunday's Post: Citizen K Street Conclusion
Key Related Materials
An overview of Gerald Cassidy's life and career.
A "cast of characters" in the life and career of Gerald Cassidy.
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