Top law firms used to dealing with antitrust regulators on a lawyer-to-lawyer basis are now advising clients to consider enlisting lobbyists and political fixers to smooth the path toward getting deals approved.
The shift in mindset is reflected in the firing of two senior DOJ officials, Roger Alford and Bill Rinner, who decried the influence of lobbyists in a settlement that allowed the $14 billion merger between
“In the past, the guidance was always ‘don’t touch that tool, it’s nuclear,’” said Thomas A. McGrath, Linklaters’ managing partner of the Americas. “In more instances, clients are asking, and we are open to it, or we are suggesting it depending on the profile of the deal. At least you want to get a take from political operatives about how the administration is going to react to a particular deal.”
Jeffrey S. Oliver, partner with Baker Botts who advises clients on merger reviews, added that the process appears to have drifted away from facts and law toward relationships and connections.
The level of confidence that cultivating a relationship with the White House will pay off in the form of a faster investigation or the avoidance of litigation is “higher than it has ever been,” Oliver said.
“It would be malpractice of me not to tell a client that we do seem to be in an environment where relationships with people at either the Oval Office or the DOJ front office can indeed impact the outcome of a given investigation,” Oliver said. “It’s now on the menu in a way that it never has been.”
Deals in the tech, pharmaceutical, and agricultural industries could benefit from a lobbyist’s help, said Zachary R. Kobrin, partner with Saul Ewing LLP who advises companies on merger reviews. “If you are a Big Tech company, I would absolutely recommend having their lobbyist involved in the process.”
The Trump administration’s standard operating procedure will be to expect lobbyists to “have some involvement, depending on the size of the deal, depending on the market,” Kobrin said. “It’s not a new phenomenon. I just think it’s more magnified right now.”
The shift coincides with a spike in revenue for several lobbying firms with ties to the Trump team. Ballard Partners became the top Washington lobbying firm by the third quarter. BGR Group also posted growth this year, along with Miller Strategies.
Ballard Partners declined to comment. Miller Strategies and BGR didn’t respond to requests for comment. The DOJ also didn’t respond to a request for comment.
‘Less Independent’ DOJ
Lobbying on Capitol Hill in support of a major acquisition is commonplace, and companies doing major deals have always hired lobbyists with connections to the administration, said GOP lobbyist Sam Geduldig, managing partner of the CGCN Group. “That happened in Obama, Bush, certainly Biden.”
What others say is unusual now is “lobbying the executive office of the president to intervene at the Justice Department, either pro or con, on a transaction that either is or hasn’t yet been submitted for review,” or is the subject of an ongoing investigation, said Brett Kappel, a political lawyer with Harmon Curran.
“The White House feels perfectly comfortable intervening in the Justice Department on anything,” Kappel said.
The lobbyists in the HPE case, according to Alford, included William Levi, a partner at Sidley Austin, and Mike Davis, an influential ally of President Donald Trump and founder of the Article III Project, an advocacy group focused on confirming conservatives to judicial roles. Sidley Austin declined to comment. Davis didn’t respond to requests for comment.
Alford, the fired DOJ official, went off in a speech about the influence of lobbyists on the HPE-Juniper deal, saying the “cost to the country of this new pay-to-play approach to antitrust enforcement is enormous.”
“Is this the new normal, with every law firm hiring an influence peddler to dual track and sidestep the litigation and merger review process? That’s what law firms are now considering,’' Alford said at the Tech Policy Institute Aspen Forum on Aug. 18.
This Justice Department is “less independent” than previous DOJs have been, said an executive in the lobbying industry who agreed to speak on the condition of anonymity.
In the past, the executive said, “the tail wags the dog"—meaning lawyers in the DOJ antitrust division drove the decision making on proposed deals. “In the past, the tail probably had more power. And in this administration, the leadership has more power.”
Messaging Tactics
Lobbyists could convey the benefits of a deal that align with the administration’s policy objectives, instead of getting bogged down with the nuances of the Sherman Act, several antitrust lawyers said. That could mean emphasizing how a deal will keep jobs in the US or lower drug prices.
“From my perspective, it would be to better frame and make sure that we are messaging properly to the White House and that we are talking to the right people about the right things that matter,” said Austin Ownbey, partner with Akerman LLP who counsels clients in the pharmaceutical, tech, and manufacturing industries through the merger review process. “I wouldn’t have done that under the Biden administration.”
David Cross, a partner in Goodwin Procter LLP’s antitrust and competition practice, said advising clients to enlist lobbyists can make sense under certain circumstances.
“We know for example that the administration is focused on pricing in certain industries and certain sectors,” Cross said. “It likely would be in the interest of the client if you had a lobbyist who could reach the administration to be able to explain those benefits to the marketplace. It aligns with their policy objectives.”
More clients are proactively asking questions about “‘what would be the strategy’ rather than us suggesting that it needs to be part of the strategy,” said Amanda Wait, who leads the antitrust practice at Michael Best & Friedrich LLP.
“They need to have a comprehensive strategy that considers not just lobbying considerations or external stakeholders, but how are they going to tell this story, and what is the story and do they have the evidence to back it up?” Wait said.
Ches McDowell, managing partner with Checkmate Government Relations, said he expects demand from clients to continue growing. Checkmate’s client list includes Glock Inc.,
“We’ve shown with multiple clients we get things done,” McDowell said. “Apparently that’s a novel thing in Washington.”
McDowell added that the way things were done under the Bush administration “aren’t really relevant anymore.”
“You have to operate with a certain speed and effectiveness that the K Street establishment isn’t used to,” he said.
Risks, Rewards
Of course, timing is delicate when deploying a lobbyist.
“This is a we’re-on-the verge of them filing a complaint, and if we don’t take this step, we’re going to be in court,” Ownbey said. “You know already that staff doesn’t like your deal. If we weren’t for sure getting pushback from staff, I wouldn’t jump to the White House yet.”
Baker Botts’ Oliver noted there’s the risk of offending DOJ antitrust staff, especially for repeat players before the agency, and a cost to the lawyers representing them.
“The confidence that it will lead to a better result has gone up, but the fallout is still there to a large degree,” he said.
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