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Business Law Today

You Must Be Present to Win
What Business Lawyers Need to Know About Legislative Advocacy
By James R. "Jim" Daughton, Jr.
Question: What's wrong with lawyer jokes?

Answer: Lawyers don't think they're funny and other people don't think they're jokes.


We belong to a profession that has long been the subject of bad jokes, which unfairly paint the lawyer as a person who cannot be trusted. Being a lawyer whose practice is almost exclusively directed at lobbying leads to an entirely new level of ridicule and suspicion. With voter approval of elected officials at an all-time low, and lobbyist ethics scandals still the subject of much media scrutiny, business lawyers may not think about actively seeking a legislative solution for their clients that involves the use of a lobbyist. Yet, any business lawyer is doing his or her client a disservice if that lawyer does not consider the importance of governmental affairs to any business operation. Not only does legislation impact a business' bottom line, but representation by a lobbyist before the legislature can provide a business with an opportunity to accomplish what it may not be able to do in another forum such as a court of law. The legislative arena provides a business with the opportunity to create new law or change existing law.

Identify Problems and Opportunities
If you are considering advising a client to pursue a government affairs strategy, ask yourself the following questions:

  • At what level of government is the business most impacted by regulation and licensure issues?

  • Are there pending contractual or litigation issues that hinge upon a particular statutory scheme or the judicial interpretation of a particular statutory scheme?

  • Can the business gain or lose a competitive advantage based on a change in statute or administrative rule?

  • How do varying state regulations and licensure requirements rather than a single federal standard affect business?
Each year state legislatures consider thousands of proposed bills that directly impact business. The media reports on only the major issues of the day and the five or six pieces of legislation that stand out in the public's mind. The reality of government is that hundreds of the non-headline-grabbing issues are the real oil that runs the machine of government. Many of these issues directly impact how a business client operates.

Whether a business seeks to avoid a negative impact of legislation or governmental regulation, or sees opportunities to clarify or create new law to positively impact its bottom line, influencing the actions of government is now a factor that should regularly be part of any business' planning and risk/opportunity analysis.

Recall the old adage that if a lawyer has bad facts, the lawyer will argue the law, and if a lawyer has bad law, the lawyer will argue the facts. Lawyers who are lobbyists have a modified adage--if you have bad facts and bad law, change the law!

Live and Let Live? Not So
Many business clients, especially small and medium-sized businesses, may not understand the level of government interest and activity in private-sector matters. Business clients generally prefer to be left alone to serve customers and to generate a profit. It is only when government starts creating a problem for the business that government action gets any attention. This reactive approach is very shortsighted.

Many businesses incorrectly assume they can never impact the actions of government. Today, the dynamic has changed as state and local governments are more directly involved in policies that affect businesses operating within a particular jurisdiction.

State activity on environmental regulation, consumer privacy, global warming, health care, and myriad other issues has increased dramatically. States also regulate hospitals, restaurants, builders, barbers, and electricians. Literally thousands of businesses and professionals fall within state purview.

The vast majority of state legislatures only meet for a portion of the year. The legislators themselves often hold other full-time jobs in addition to their legislative positions. Most legislators have few if any staff working for them, and staff are only likely to decrease given our country's current economic situation. Legislative committee staff are frequently overwhelmed with hundreds of bills to research and analyze. In a typical state, legislators spend the final days of a legislative session filing and voting on hundreds of amendments, many of which have never been independently vetted or voted upon in committee.

Another more recent dynamic of many state legislators is legislative term limits. Unlike at the federal level, voters in several states have adopted limits on the length of time a legislator may serve in office. "Eight is enough" was the motto of term-limit proponents around the country, and such efforts were successful in limiting legislative terms to eight years in several states. While legislative term limits allow for fresh ideas, they also potentially limit the amount of time an elected official has to develop issue expertise, not to mention learning and becoming comfortable with the process and procedural issues. Compared to the slower pace and heavily staffed federal government, state legislatures have less time and less access to information in which to make decisions.

The law of unintended consequences certainly applies to government regulations. For example, in 2005 a midwestern state rewrote its auction laws and inadvertently included individual citizens who sold goods online via an auction-based Web site. Imagine over one million consumers located within the state having to take an exam, take auction-calling lessons, post a $50,000 bond, and obtain a license, just to sell a pair of golf clubs online! The unintended consequences of legislation adopted in a vacuum lead to political fallout as well as business fallout. While the potential for unintended consequences is greater at the state level, so is the ability of a business to help pass favorable legislation.

To Know Us Is to Love Us
A colleague who is also a lawyer/lobbyist often reminds me that those of us lawyers who lobby government for our clients are really First Amendment lawyers. Included within the freedoms specified within the First Amendment to the U.S. Constitution is the right to petition government. Lobbyists navigate the legislative process while other lawyers, such as litigators, navigate the judicial process. Much as a successful litigator trains to learn the courtroom, the Rules of Evidence and Procedure, the idiosyncrasies of a particular judge, and the dynamics of a jury, a lobbyist can only be successful if he or she fully understands the legislative and political process, as well as the particular issue that he or she is lobbying. To be effective, we must understand the state's budgeting process, amendment filing deadlines, single-subject and germaneness requirements of legislation, committee schedules, and staff analyses. As with a successful litigator or business lawyer, the facts and circumstances of a particular case or client issue are different, but the process and the rules remain constant.

Certainly the well-groomed, well-coiffed, well-mannered, and undeniably slick backroom lobbyists are still a hallmark of the cloakrooms and the hallways of most state capitols. However, the vast majority of lobbyists, particularly those who are also lawyers, have substantive expertise in the legislative process and focus on their role as advocates, educators, and political experts. Lobbyists are frequently called upon to explain the impact of a legislative proposal to a business' finances or to draft amendments to legislation to ensure a business is not unfairly impacted. As businesses become more comfortable with the legislative process, lobbyists also can help clients proactively pursue creative legislative solutions to problems.

Many business lawyers read state statutes, regulations, or local ordinances after they become law and question why the law reads a certain way, or why some entities are carved out from a certain regulation or mandate. More often than not, the answer is that a particular business had a lobbyist involved at every step of the process to ensure the business was treated fairly, and sometimes favorably. Experienced business lawyers recognize that a legislative solution to a business problem may be less costly and time-consuming than protracted and expensive litigation. Business lawyers rely on lobbyists to help create sound policy arguments and advocate those positions before elected officials, staff, and regulatory bodies. The role of the lobbyist is to shape those arguments in a political and policy context and to deliver a result for the business client.

Lobbyists also can serve as educators. Most elected officials often have a general pro-business outlook, but they may lack knowledge about a specific industry. Elected officials certainly do not wake up every day and worry about a particular business or its employees, unless it is their own business or a business that is predominant in the official's district, and, therefore, critical to reelection. As a result, it is the job of the lobbyist to be the primary conveyer of this information. Lobbyists answer questions such as how many employees of a business are impacted by a legislative proposal, what the staff costs might be in implementing a new regulation, and whether a new idea by an elected official is already being accomplished by some other means. Elected officials are not intentionally trying to create difficulties for businesses; they simply lack the access to information that would help them understand the consequences to possible legislation.

Another role played by a lawyer who is also a lobbyist may be the most difficult for businesses and business lawyers to comprehend, but can also be the most important. In addition to knowledge of the process, effective lobbyists must master the politics of the moment. Lobbyists know the voting trends in a legislative district, the source of an elected official's political support, which colleagues the elected official is particularly close with, the elected official's business and personal background, and dozens of other political variables. This information allows lobbyists to further assess the best means to impact legislation. For example, a moderate legislator who faces a tough reelection battle in a legislative district that trends more conservative may be more inclined to support small business regulatory relief that benefits employers and employees in the legislative district. This issue may be very positive to conservative, pro-business voters. Lobbyists help identify the best political opportunities to garner votes necessary to accomplish a business' agenda.

Solutions Abound
Business lawyers should not be intimidated by the legislative process and should instead recognize the advantages of engaging in the lobbying process. A business does not need to spend hundreds of thousands of dollars to engage in this endeavor. In advising clients about establishing a governmental affairs process, I describe a series of concentric circles that expand as the clients' activities expand.

The initial circle and the smallest is a completely defensive posture where legislative monitoring is sufficient. For example, a biotechnology medical device company with 400 employees at its headquarters also operates licensed facilities in five other states. The company creates state-of-the-art health-care devices that do not fit easily within more arcane state regulatory schemes. Simply put, the company's cutting-edge technology is developing faster than its government regulation. The company engages a legislative monitoring service to provide year-round, issue-specific reports on any proposed legislative or regulatory changes to its current licensure scheme that occur in the states where it does business. This service allows the company to actively monitor whether its out-of-state licensed facilities will be unfairly treated, or inadvertently excluded by state government proposals. The company can then decide whether to move out of this first concentric circle, from monitoring to a broader engagement that might include influencing the proposals.

The second concentric circle is broader and involves a business proactively engaging the elected officials in its geographic area. The reason that former Speaker of the House Tip O'Neill's quote that "all politics is local" is repeated so often is that it continues to be the primary rule of politics. Business lawyers must recognize the impact that a local business can have on its elected officials. A business has the opportunity to stay in a defensive posture by educating its elected officials about its employee base, the services and products it provides, and its role in the community. Consider the following actual example. A health-care facility client did not have a proactive agenda but was critically impacted by any change to the facility licensure statutes and rules, at both the local and state levels. Three of its local state legislators toured the facility and met the company's leadership team. In addition to a brief description of the client's regulatory status at the state level, the CEO discussed its role as a large employer in the area. In each of the meetings, the legislators asked questions about workers' compensation and health-care costs, as well as workforce development and training. These were issues that were not directly related to the client's licensure issue, but the meeting allowed for each legislator to consider this client as a local resource and an important employer in the community. Because of these relationships fostered at the local level between this company and its local legislators, the potential for the client to be negatively impacted by a change in state licensure is greatly diminished. The total time investment by the company's leadership was about three hours over a one-month period. The legislators now understood the role this company played in their hometown.

The third concentric circle expands beyond a business' geographical boundary and includes proactive outreach to elected officials who serve on oversight committees. For example, a money services/financial business might affirmatively target officials from around the state who sit on a legislative committee overseeing banking and financial services issues. This third element almost always occurs when a business has a proactive legislative agenda, either affirmatively passing legislation designed to protect a particular business model or fighting to keep the status quo (what we sometimes affectionately refer to as a "kill the bill" approach). Much like working within a more localized concentric circle, this third concentric circle involves senior members of the business spending time educating local officials. The role of the lobbyist in this type of effort includes identifying elected officials to target and coordinating meetings, tours, briefings, and the like.

Two key components important to a business as it more actively engages in the political process are ethics and political contributions. Lawyers who have a lobbying practice can play a vital role in advising businesses about state ethics and gift laws. The goodwill that is engendered in a sales setting when a salesperson takes a prospective client to dinner may violate state or federal law when an elected official is involved. In fact, some states, such as Florida, now prohibit businesses from providing anything of value to an elected official. This includes providing a cup of coffee to an elected official when he or she visits the company headquarters, or giving a state official a name tag lanyard or pen with a company logo at a conference or trade association meeting. Political contributions are also highly regulated at all levels of government, both the amount that may be contributed and the entity that may contribute. Business counsel are wise to work with lawyers who regularly practice in the legislative arena and are familiar with the complexities and nuances of both gift law and elections law.

The fourth concentric circle typically involves a business creating an in-house position dedicated to governmental affairs. This governmental affairs professional becomes the face of the company to elected officials, as well as represents the company in various organizations such as a Chamber of Commerce or an industry-specific organization. In addition to the external focus, an in-house governmental affairs professional may work on internal business issues such as creating, soliciting, and maintaining an employee political action committee (PAC) and coordinating voter registration initiatives. Moreover, the governmental affairs professional typically develops contacts in a state and community to assist in business development. In-house governmental affairs representatives often hire outside lobbyists to assist with political and policy issues.

A process that often occurs outside of this concentric circle analogy is when business lawyers hire lobbyists for a discreet issue . . . a one-shot deal. Typically an issue emerges that finds its way onto a general counsel's radar screen and the counsel searches frantically for a lobbyist to fix the problem. Frankly, this type of relationship to governmental affairs serves little long-term benefit and may not achieve a sustained result. While it may seem self-serving for me to suggest that a business needs to develop a long-term relationship with a lawyer with a lobbying practice, a business is not realizing its full potential if it does not have a well-thought-out and long-term political and legislative strategy.

Come On In, the Water Is Fine
Once a business lawyer recognizes the potential impact that government can have on a particular business and assesses the need for lobbying assistance, the hiring decision is critical. Business counsel must recognize that lobbyists are the face of the company to elected officials and regulators. One certainly wants to hire a firm with influence, but also consider the firm's ethics, integrity, and substantive knowledge. A quick check of state news clips mentioning the firm will help, and client lists are usually a public record via lobbyist registration and reporting requirements. Any large corporation understands the importance of branding. Likewise, a business' choice of a lobbyist reflects on that brand. A lobbyist needs to be able to get in the door, but business clients need lobbyists who know what to do or say when they walk through that door. A successful governmental affairs program can be transformative for a business when this strategy is aligned with a company's overall business strategy. The public policies that may be impacted can give companies a leg up on their competitors. Business lawyers should always be looking for ways to give their clients a leg up. In this regard, the legislative arena should not be overlooked. If the competitor of your client is engaged in the legislative process, sitting on the sidelines is not an option. You must be present to win!

Daughton is a shareholder in the firm of Metz, Husband & Daughton in Tallahassee, Florida, having experience in legislative affairs and administrative rule making with an emphasis on financial services, technology, and health care. He may be reached at jim.daughton@metzlaw.com.

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