Vanderbilt Law Review

Article Title

"Gouging the Government": Why a Federal Contingency Fee Lobbying Prohibition is Consistent With First Amendment Freedoms


Washington Post writer David Segal once observed, "[f]or most Americans the words 'Washington lobbyist' have roughly the same cachet as, say, 'deadbeat dad."" Both lawmakers and the public regard lobbying as an unsavory part of the political process. Much of this perception stems from the vast sums of money spent each year on lobbying activity. For example, in the first half of 2004 alone, mortgage funding companies Fannie Mae and Freddie Mac reported spending over $11 million on lobbying activities, General Electric spent $8.5 million, and the U.S. Chamber of Commerce spent $20.1 million-and these were only three of the 600 groups that spent more than a quarter of a million dollars in that six-month period. The amount spent just on direct lobbying, where a lobbyist communicates directly with officials rather than pursuing other persuasive tactics, is estimated at almost $2 billion a year.

The belief that lobbying is more about connections and favors than sound policymaking is also not without support and further contributes to the lobbying industry's poor reputation. Although the "legislator-turned-lobbyist" was not viewed favorably thirty years ago, members of Congress now frequently move into the lobbying arena when they retire or lose re-election bids. Even little-known members are able to earn over $300,000 as lobbyists in their first year out of Congress. Critics claim that the flood of legislators into lobbying heightens the perception that lobbyists use personal contacts to take home big paychecks, and that taxpayers pay the price in the end.

These are not the only unsavory aspects of the lobbying profession in Washington today. Corporations and interest groups seeking access to government officials at all levels have found an interesting way to make high-powered lobbyists work even harder for their money: the contingency fee. Contingency fee lobbying contracts have become surprisingly common, particularly in situations where corporations seek government contract work or appropriations for a particular program that would put money in their pockets. Savvy clients are increasingly deciding that they do not want to pay full price when they do not get a desired result, and contingency fees force lobbyists to risk failure or success along with them.

While contingency fee arrangements are not widely reported, the media has uncovered various examples at the state and local levels. A recent contract dispute in Florida revealed that the city of Tallahassee's official lobbyists accepted a $50,000 contingency fee, or "success fee" as they are sometimes called, for securing approval to build a luxury resort on public land for their entertainment mogul client. The 2000 presidential election in Florida led to a contingency fee lobbying controversy when it was revealed that lobbyists in Broward County received $500,000 to help a Nebraska corporation procure a multi-million dollar contract to supply the touch screen voting machines used in the election fiasco. Broward County Commissioner Ben Graber said that he heard officials discussing their desire to pass certain measures only to help lobbyist friends who were in financial trouble and who would directly benefit from the initiatives because of a contingency fee contract. According to Miami-Dade County Commissioner Katy Sorenson, the problem with these contracts is that "[w]henever you have somebody who's going to get a real jackpot in exchange for winning a vote, the ethics might slide."

State and local laws that prohibit contingency fee lobbying sometimes result in sanctions for prominent lobbyists who influence state legislatures and push for government contracts on behalf of their clients in exchange for a contingency fee. While the federal government has regulated these arrangements for lobbyists trying to influence the executive branch in awards for government contracts, lobbyists are still free to receive contingency fees for lobbying members of Congress. Some members of Congress have tried to regulate this behavior, but thus far none of the proposed legislation has passed.