Law Review: Health-care debate is good business for lobbyists

Is it possible that the election of the first Republican senator from Massachusetts in more than a generation will boost revenues of select Philadelphia law firms?

Scott Brown's upset win changed the dynamics of the health-care debate overnight. Depending on your point of view, the possible collapse of Obamacare may or may not have ill portents for the nation's health-care system.

But there's one group that almost surely will benefit. The thousands of lobbyists on and off Capitol Hill who labor on behalf of health-industry clients can now count on at least a few more monthly retainers.

Nothing stimulates the flow of lobbying dollars like uncertainty on Capitol Hill.

One little-known fact about Washington lobbying is that a goodly number of lobbyists are employees of law-firm subsidiaries. The biggest firms in Philadelphia have Washington offices, and most have lobbying contingents there and in the region's state capitals.

For these firms, lobbying doesn't generate anywhere near as much revenue as high-end legal work. But it is a steady source of income that's all the more important now that legal revenue for many firms is flat or down and the gains from cost-cutting have been captured.

You can, after all, lay off only so many first-year associates before there are no more first-years left.

As they say in New York, the beauty part is that it costs these law firms relatively little to offer so-called government-relations services, and it's a way of keeping legal clients' spending for lobbying in-house.

Health-care reform is dead! Long live the health-care debate!

One notable exception to the legal-industry downturn is Cozen O'Connor, once looked down upon by the city's white-shoe firms as a mere insurance-defense firm, without the depth or sophistication to handle more complex, high-end work.

That description of Cozen ceased to be true at least 20 years ago, if it ever was, and yesterday the firm released 2009 results suggesting it will be an even tougher competitor for larger law firms that historically have had more diversified practices.

In one of the worst years on record for the legal profession as a whole, Cozen said revenues were up 22 percent; profits per partner of $650,000 were up nearly as much.

But at Cozen, it isn't just legal work that's bringing in revenue. Like many of its peer law firms in Philadelphia and around the country, it has been hustling to bolster its government-relations (lobbying) practice in Washington.

Last year, it brought in Mark Alderman, the former chairman of Wolf Block and a top fund-raiser for President Obama, to help oversee that effort. Three weeks ago, the firm announced the hiring of Howard Schweitzer, former chief operating officer of the government's financial-bailout fund, the Troubled Asset Relief Program.

Neither Alderman nor Schweitzer are lobbyists, but they can set up meetings.

"The scene right now is completely chaotic," Duane Morris lobbyist Stephen Schachman said of the prospects for further health-care legislation.

The fight over health care has been a particularly scrambled legislative battle, in which traditional alliances have disappeared and surprising new matchups have emerged.

Notably, Big Pharma agreed to support the Obama plan in exchange for concessions on its legislative agenda.

"Most of the major stakeholders felt that, given the strong victory of the president and the large margins in the House and the filibuster-proof Senate, that the wiser course of action was to work with the president," said Jim Greenwood, the former Bucks County congressman who now heads the Biotechnology Industry Organization, the main biotech association in Washington.

Greenwood's group bolstered its lobbying on health care during the last year by taking on additional contract lobbyists. If the health-care debate revives, he expects lobbying overall to spike again.

"I am sure this has been a record year for lobbyists," he said.

In Washington, nothing abhors a policy vacuum so much as an industry in need of a lobbyist. What generates the work is clients' need for information.

And the market for information on health-care policy likely will be robust in coming months. Based on years covering Capitol Hill, my sense is that Obama's health-care plan is pretty much done.

Given the election of Brown, whose chief counsel during the Senate campaign was a Duane Morris partner based in Boston, and other Democratic setbacks in New Jersey and Virginia, the political karma for Democrats on this issue is not good.

Yet Obama has retreated to Plan B by reaching out to Republicans with a plea to work on a bipartisan solution. He is urging a Feb. 25 White House conference, where the two sides supposedly will try to fashion a common approach.

After complaining for a year that the president failed to include them in health-care talks, Republicans will be hard-pressed not to make some gesture of compromise. Setting up roadblocks might induce voter wrath.

Quite apart from Obama's prescriptions or anyone else's, the system needs fixing if for no other reason than to address its galloping costs.

For lobbyists, that's lunch.

"Public-strategies work thrives on public debate," said Alderman. "No debate, nothing to do. The more robust the debate, the more there is to do."