The Persuaders How does corporate America get its way in Washington? An enlightening visit with the hottest lobbying firm on Capitol Hill.
(FORTUNE Magazine) – When chief executives of American corporations come to Washington, they discover that, to get what they want, they are forced to act in unnatural ways. For instance, nobody at insurance giant American International Group tells CEO Hank Greenberg what to do. He wants to reopen for business in China? Go into the auto insurance game? His people make it so. But when the 78-year-old command-and-control chief comes to Washington, he takes orders from a 36-year-old punk consultant named Mark Isakowitz.
If that seems upside down and twisted, it's because the power structure in Washington is incomprehensibly alien to the businessperson. Power belongs not to the guy at the top but to the person who knows where to apply pressure--the acupuncturist, if you will. The body politic has numerous pressure points (100 Senators, 435 members of the House, thousands of procedural rules), and the skilled practitioner who can identify them and push where appropriate gets results. That's why Greenberg, who desperately wants Congress to pass a bill limiting insurance companies' liability in asbestos lawsuits, will submit to Isakowitz's script when he visits Capitol Hill. Isakowitz, you see, and his more seasoned partner, Don Fierce, are among the most skilled practitioners of persuasion in Washington: Their business is knowing exactly where the crucial pressure points are, how to massage them, and, when necessary, where to stick the needles.
Getting the Fierce & Isakowitz touch costs: The monthly retainer for new clients is $20,000. Yet business interests--all but one of the 32 clients on its roster are corporations or industry associations--recognize that it's money well spent. You don't have to like the positions F&I takes to appreciate its track record. When hospitals wanted to preserve their Medicare payments, F&I stepped in. When HMOs wanted to kill the Patients' Bill of Rights, F&I was the executioner. When generic-drug makers wanted to limit drug patent extensions, F&I maneuvered it into legislation.
With Republicans in control of the White House and both chambers of Congress--something that has happened only briefly in the past 50 years--Fierce & Isakowitz represents a new model for how to wield power in Washington. Traditional lobbying firms maintain a balance between Republicans and Democrats so that they can get things done and prosper no matter who's in charge. F&I, however, is 100% GOP. (Even the secretaries are card-carrying Republicans.) Its eight full-time lobbyists are devoted not just to clients' interests but also to the Republican cause. The firm raises money for GOP candidates, and every election year F&I employees volunteer in pivotal races, manning phones and hammering yard signs. In Washington they lead coalitions of lobbyists to support the pet proposals of senior Republican lawmakers.
In fact, F&I's roots date to the so-called Republican revolution of the 1990s. As chief strategist of the Republican National Committee in 1994, Fierce, 56, a blunt, old-style politico, helped engineer the GOP's historic takeover of the House. He remains a trusted advisor of D.C.'s power players, including Karl Rove, the President's political guru. Fierce meets once or twice a month to hash out Republican strategies with a small group that includes Rove. He also eats breakfast every two weeks or so with the spokesman for House Speaker Dennis Hastert to refine the party's message. In other words, the firm is more confederate than hired hand.
Being a member of the club has its privileges, which is one reason business groups trust the firm to get their messages across. When hospital stocks started tumbling last year on word that Congress was about to slash Medicare payments, the Federation of American Hospitals called Isakowitz. A soft-spoken Cleveland boy, the son of Slovakian immigrants, Isakowitz has been angling around Washington, working for a Republican member of the House and the National Federation of Independent Business, a well-known Republican farm team, since he graduated from Ohio State University in 1988. He knows a lot of people and has a knack for tactical planning. The hospital association, furious over the Medicare bill, figured Isakowitz could do something about it.
The legislation was supported by Congressman Bill Thomas of California, the Republican chairman of the House Ways and Means Committee, so Isakowitz knew that he would have to persuade Republicans of a higher order--the party's leadership--to prevent its passage. On a sweltering day in June, Isakowitz staked out his usual post at the busy crossroads on the second floor of the Capitol between the Rotunda and the door to the House. Standing there, he was guaranteed to spot Majority Leader Tom DeLay (R-Texas) and whip Roy Blunt (R-Missouri). He found them both, and to each separately gave this friendly warning: His client wasn't going to take the cutback lying down. In fact, he told them, the industry had produced TV ads that would label any lawmaker supporting the bill an enemy of health care. The group was willing to spend $4 million to air the commercials around the country.
Isakowitz was carrying a videotape of the ad and offered to give it to the lawmakers. They declined. They took his word as a loyal Republican that the ads were, indeed, harsh. Even as he threatened them, they accepted his political judgment: The last thing their party needed in an election year was a well-financed attack by an industry that was usually an ally. Rather than getting angry with Isakowitz, the Congressmen said they were grateful for the heads-up. "Thanks for letting me know," DeLay said. Blunt assured Isakowitz that the leadership would talk about it. Within weeks, the Ways and Means Committee killed the Medicare decrease under pressure from the leaders. Hospital stocks stabilized. The commercials never aired.
Fierce & Isakowitz also joined with Senate Republicans to preside over the defeat of the Patients' Bill of Rights. The bill would have made it easier to sue HMOs over their health-coverage decisions. It was popular among voters and considered a sure bet for passage as the 2000 election approached. That prospect did not please F&I's client, an association of HMOs. Many Republican Senators told the lobbyists that they wanted to stick with the HMOs, but several of them faced uphill elections and feared their constituents would think they didn't care about consumers. At a small fundraising breakfast for then-Senator Spencer Abraham, the Michigan Republican spoke of getting clobbered by the anti-HMO forces. Isakowitz, who attended the breakfast, got the message and endeavored to make Abraham (and other Republicans up for reelection) feel "comfortable" back home. At Isakowitz's behest, the U.S. Chamber of Commerce and his old friends, the small-business lobby, planted local HMO advocates in the audiences at key Senators' town hall meetings to create the appearance of spontaneous and broad-based support for HMOs. He also directed a $1 million ad campaign to praise the Senators who continued to take the HMOs' side. As a result, the Senate stood firm, and no bill emerged that year, or ever.
Corporate interests don't always require megavictories to be happy, so F&I delivers small favors too. To Miller Brewing, F&I lobbyist Kirk Blalock supplied the names of the New York hotels where delegates to the Republican National Convention will be staying next summer; Miller products will be stocked there. To keep Southern California Edison informed about the doings of the Senate Finance Committee as it drafted the energy bill this year, F&I lobbyist Kate Hull persuaded staffer friends to sneak her past a long line of other lobbyists into the crowded hearing room. From there she e-mailed key decisions to her anxious client in the hall.
The rap on lobbyists (one of the many) is that they're lazy. They take corporations' money and do the minimum amount of work. But no one says that of F&I, least of all John McKechnie, a senior vice president of the Credit Union National Association. Last November, McKechnie watched helplessly as the House refused to take up a bill that would have made it harder for people to declare bankruptcy--a change that would have saved his industry billions. McKechnie left the Capitol to drown his sorrows with some congressional aides and then went home to bed in Bethesda, Md.
But F&I's Samantha Poole remained on the job. Near midnight she got a call at home from Congressman Blunt's chief of staff, who told her that the bill had been altered slightly and would soon come up for a vote. She phoned McKechnie as he was getting into bed, and they both hurried back to Capitol Hill. McKechnie and Poole contacted as many of the fence sitters as they could and, near 2 A.M., witnessed the bill pass. It was the last vote of the 107th Congress. "That's the essence of lobbying," McKechnie says. "When the key decisions are made, you're there in the room."
And that's where Fierce & Isakowitz lobbyists can usually be found, acupuncture needles at the ready.