Powerful law firms step up Lansing lobbying efforts

Dennis Muchmore moved immediately from Gov. Rick Snyder’s office to a lobbying position with the powerful Detroit-based firm Honigman Miller law firm in January, a move that might not be allowed in many other states.

LANSING — At times during the past few years, leaders of the Detroit Institute of Arts regularly invited Michigan lawmakers to tour the Midtown museum.

The invitations were strategic. In 2013, the museum was in survival mode to keep its city-owned collection amid fear and speculation the art might be sold in federal bankruptcy court to appease Detroit’s creditors.

Strategic lobbying and negotiating were invaluable during a sensitive time.

Preserving the DIA art would require hundreds of millions of donated dollars, including from the state, where approval from outstate legislators wouldn’t be an easy sell. The “grand bargain” was not an easy pitch to make, even with influential nonprofit, city and judicial leaders involved.

To aid in making that pitch, museum leaders enlisted the help of their lawyers and lobbyists — namely, Detroit-based law firm Honigman Miller Schwartz & Cohn LLP and Governmental Consultant Services Inc., a Lansing-based lobbying firm — to convince lawmakers that saving the DIA was of statewide, just not local, necessity.

“It’s pretty hard to do that sitting at a table in Lansing,” said Gene Gargaro, the DIA’s board chairman. Once lawmakers can see the art for themselves, he said, “the case gets a lot more meaningful to them.”

Increasingly, lobbying isn’t just the work of traditional multi-client firms in state capitals. Some law firms with offices in Michigan are hiring more in-house lobbyists or forming other partnerships to handle meetings with legislators, prepare testimony for committee meetings and build the relationships needed to help swing the pendulum in favor of their clients.

The investment in lobbying bandwidth isn’t without its critics, but nontraditional shifts in hiring — and consultants who serve as these behind-the-scenes dealmakers and educators — are a trend as clients seek to save money on litigation or influence policy decisions. Another motivation is to educate existing staff on legislative issues of the day.

Honigman, for one, is bulking up its government relations practice by hiring Dennis Muchmore, Gov. Rick Snyder’s former chief of staff and a founder of Lansing lobbying firm Muchmore Harrington Smalley & Associates LLC. Honigman plans to create a “faculty” that can educate its younger attorneys, lawmakers and others in public policy and the legislative process.

Milwaukee-based law firm Foley & Lardner LLP, which employs two attorney lobbyists in Michigan, said last month it has retained Lansing-based Michigan Legislative Consultants Inc. as its Michigan lobbying firm for an undisclosed fee.

The partnership, described as an “affiliation,” is expected to generate referrals in both directions for legal and advocacy work, said Rob Nederhood, who is senior counsel in Foley’s Detroit office and a former manager in Snyder’s administration.

To be sure, lobbying isn’t new to law firms. But it is a way to diversify their revenue streams; the billable hour common to legal work, for instance, often is replaced with monthly retainer contracts for lobbying work.

The activity also comes at a time of increased spending — and heightened scrutiny of Michigan’s lobbying disclosure laws. The state earned an F for transparency in a report last fall published by the Washington, D.C.-based nonprofit investigative news organization The Center for Public Integrity.

Lobbying in Lansing is dominated by traditional multi-client firms, led for years by GCSI, according to the watchdog Michigan Campaign Finance Network. Michigan lobbyists last year spent more than $21 million through July, the most recent data available, up more than 1 percent from the same period in 2014.

The big legal players in the Capitol — Honigman, Dykema Gossett PLLC and Clark Hill PLC — in general have spent more on lobbying each year, according to state lobbying records. Attorneys say their interest in increasing this part of their business is to offer clients options for solving problems that don’t require a courtroom.

Sometimes litigation can take years and years and years and be very, very expensive,” said Sandra Cotter, who leads the government policy and practice group for Dykema. The firm’s ninth-floor office is across the street from the Capitol.

“If you can change the law to do what you need more efficiently and effectively, for less money, that’s a service to the client.”

Different paths

A law firm’s lobbying activities commonly take one of several forms — employing its own non-attorney lobbyists, or attorneys who also are registered lobbyists with the state, to retain legal clients or attract new ones; working with established multi-client lobbying firms that share clients on major issues or campaigns; or forming affiliations with lobbying firms to refer clients to one another.

The goal of all law firms that expand their lobbying practices is to keep legal clients with governmental affairs issues in-house.

“That’s what we’ve been trying to say: ‘We’re a one-stop shop,’” Cotter said.

Dykema has three lobbyists in Lansing, she said. The firm also has added three lobbyists in Washington, D.C., two in Chicago and one in Minneapolis, in addition to attorneys who also are registered lobbyists, she said.

Dykema counts numerous automakers as legal clients. Toyota Motor Corp. was interested in hiring the firm to do some lobbying work, the first carmaker to do so, Cotter said. Yet that poses other challenges: Because it was hired to advocate for Toyota, she said, Dykema probably wouldn’t agree to lobby on behalf of sales competitors Ford Motor Co. and General Motors Co.

At Clark Hill, Del Chenault, the firm’s Lansing-based governmental affairs director, said lobbying revenue has grown an estimated 300 percent in the past seven years. He would not disclose revenue figures.

The firm has 25 people in its governmental affairs practice group in seven offices, Chenault said. Twelve lobbyists work out of Lansing, three of whom are not attorneys.

“Having a law degree is a great background,” he said. “Having experience in parliamentary procedure, having experience in the political dynamics and the political environment, understanding the arena from not only the issue perspective but also a campaign perspective — that provides a lot of depth.”

Lobbyists with multi-client firms say teaming up with law firms can be advantageous for clients with complex issues, since lawyers can offer both legal advice and an understanding of the political environment.

Yet even as the industry evolves and law firms increase their share of the business, multi-client lobbying firms have retained their influence because they focus 100 percent of their efforts on lobbying, said Mike Hawks, a director with GCSI. It’s difficult to account for the day-and-night work of meeting with lawmakers and staffers when billing by the hour, he added.

Some lawyers told Crain’s they don’t attend such events, preferring to leave them to non-attorney lobbyists on staff who specialize in relationship-building.

Adding horsepower

Several firms said Honigman appears poised to boost its lobbying work, in large part because of Muchmore’s hire.

Muchmore joined Honigman last week after roughly five years as Snyder’s chief of staff. He will be chairman of the firm’s government relations and regulatory practice group, with oversight of a team of attorneys that focus on health care, gaming and hospitality policy.

“Certainly, there’s a lot of intellectual horsepower at Honigman, a lot of built-up experience and persuasion,” said Rich Robinson, the former director of the Michigan Campaign Finance Network. “It’s quite a natural (thing) for a law firm to exert itself in that way.”

The new faculty concept, of which Muchmore will be part, “is really to add value,” said David Foltyn, Honigman’s chairman and CEO. “For us, it’s not just billing time to clients. We’re bringing value to clients.”

Muchmore, though, is not the only lobbyist to translate his experience in the Snyder administration to private practice.

Nederhood and Steven Hilfinger, both attorneys and lobbyists for Foley & Lardner in Detroit, left the law office to work for state government before returning to the firm a few years ago. Both spent time with the Michigan Department of Licensing and Regulatory Affairs, while Hilfinger also was an administrator with the Michigan Economic Development Corp.

That experience led the pair to approach Michigan Legislative Consultants about a possible partnership. The firms work in similar areas, such as cutting through bureaucratic red tape.

Critics of ‘cozy’

Some critics, though, say Michigan law is too cozy toward lobbyists who previously worked for state government.

The lack of prohibitions in Michigan against state government workers moving directly into a lobbying firm, often called “revolving door” laws, are one reason the state ranked last of the 50 states in a national transparency scorecard last fall by the Center for Public Integrity.

Michigan law prevents legislators who resign from office from lobbying for the rest of the term they vacated, but makes no such provisions for administration employees.

At least 33 states have some version of a revolving door law. Some prevent lawmakers, other elected officials or state department heads from lobbying for a period of a year or two after leaving government, according to the National Conference of State Legislatures.

“(In) a lot of states, Muchmore wouldn’t even have been allowed to take that job with Honigman,” said Chad Selweski, a former reporter at The Macomb Daily and freelance journalist who wrote Michigan’s transparency report. “The concern there is that if you know you’ve got a job lined up with a lobbying firm … you can start to push things a little bit in favor of that lobbying firm and clients before you even walk out the door.”

Lobbyists are required to report only their total spending and their client lists, not how much they spend per client or per issue.

Muchmore said he planned to register as a lobbyist this week.

“I’m not interested in going out and going over to the Legislature and eyeballing people and then going to a client and saying, ‘I can beat these guys,’ ” Muchmore said. “I’m not interested in that kind of stuff, and that’s not Honigman, anyway.”

Gargaro, of the DIA, would not say how much the museum paid its lobbyists on what would become the “grand bargain,” a deal topping $800 million that preserved the museum’s collection against being leveraged for city debt payments.

State records show the museum paid $16,236 in 2013 and $64,207 in 2014 on “other lobbying expenses.”
The DIA was “very close” to filing a lawsuit to defend the collection, but held off because its attorneys recommended trying to negotiate a solution, Gargaro said. That decision ultimately led to the grand bargain.

“What you’re really saying is clients today are paying for results,” Gargaro said. “When you have firms like that … the ability to talk about and resolve issues is enhanced and it’s not simply, ‘See you in court.’ That’s the least favorable option today.”