Addressing A Government Relations Problem: An Expert Perspective

Thursday, February 1, 2007 - 00:00

Editor: What are the typical circumstances under which a company may need to retain outside counsel for help with government affairs?

Harding: Generally, we have seen problems arise in three broad categories: procurement, public policy, and regulatory compliance. In the procurement area, a company may be seeking to conduct business with the government, or need assistance solving problems that have arisen in connection with its existing government business. With respect to policy, there are circumstances under which policy decisions are made without regard to the practical impact on private enterprise, or circumstances where businesses have an opportunity to influence policy that affects them by participating in hearings or similar forums. In the regulatory area, as government regulation has become increasingly pervasive and agencies have become more aggressive, companies are often in a position of facing compliance issues.

Gruskin: Sometimes our clients find dealing with the government is a necessary evil, while other times it is an excellent way of increasing business. The government does not think or act like a co-party in a commercial matter, however, and in any situation where the interests of business and the government collide, outside expertise in the government process may be required to achieve a resolution.

Editor: When those types of issues arise, what can you do to help?

Harding: We provide two fundamental services to our clients. First, by virtue of our knowledge and experience, having worked in government and with government entities, we can identify the right people, at the right levels of government, to address a problem. As we all know, government at all levels is not getting smaller - in fact, over the years governments have grown larger and more complex, and one of the keys to success is being able to cut through the fog of a vast bureaucracy to get to a place where it's possible to achieve the client's goal. The longstanding and credible relationships our attorneys have with government officials and staff provide us with the ability to establish the best approach when determining how to help our clients in this area.

Gruskin: Just as important is our experience creating and implementing substantive strategies for addressing the underlying issues. Sophisticated business owners know that government problems don't get solved because "somebody knows somebody." Rather, government problems get solved because the right substantive, persuasive arguments are effectively made to government officials with the ability to make decisions. In every government matter, we start with the understanding that government decision-making is significantly different from commercial decision-making. Our job is to work with the client to craft a strategy that recognizes those differences, and which is aimed at reconciling the government's public interest with the client's private interests.

Editor: What is the greatest challenge for clients facing government issues?

Gruskin: The most significant challenge is maintaining perspective. Things that make sense in a commercial context don't necessarily make sense in a government context, and that can create an understandably high level of frustration for business leaders who are more accustomed to an arms-length commercial process driven by economic considerations. Government decision-making and transactions can be painfully slow and inconclusive, and the economic aspects of the issues which drive a business deal may not be determinative of the outcome of a government-related matter. When you add an overlay of political considerations, and the potential involvement of community activists, the media, or other interest groups, participating in a government decision-making process can be a daunting challenge for a business.

Harding: One of the ways we deal with this is to keenly focus on the practical aspects of achieving a result. The ability to realistically assess the likely outcome of a government matter - and keeping our clients informed so they can make sound business decisions - is an essential part of the service we provide to our clients in this area.

Editor: There is a brand new administration in New York state government, and a relatively new administration in New Jersey do you see changes in how the government conducts business?

Harding: Absolutely. It's significant that the very first actions of the Spitzer administration in Albany were to issue orders covering ethics in the executive branch of government, and both Governor Spitzer and Governor Corzine emphasized reforming the business of government in their campaigns. When you consider the background and track record of these political leaders, it's clear that they sincerely want to reinvent the way government business is conducted, and we view that as a very positive development for our clients. As the emphasis shifts to substance, notwithstanding excellent contacts, it is more important than ever that businesses be able to address government issues comprehensively on the merits.

Gruskin: In fact, in today's environment, believing that government problems can be solved simply based upon "who you know" is nave and will ultimately lead to failure - the reality is that "what you say" is much more important, and success depends upon the ability to develop a comprehensive strategy to substantively present positions. Our approach to government relations matters contemplates fiercely advocating our clients' positions on a substantive basis consistent with a strategy developed to take into account the various governmental interests.

Editor: Is the firm's government relations practice focused on certain jurisdictions?

Harding: One of the great strengths of our firm is that we have more than 20 offices throughout the United States, and accordingly have a presence in many states. Based upon the nature of the work that we do for our clients, however, we anticipate that the initial focus of our government relations group will be in New York, New Jersey, and Pennsylvania. Our attorneys have also been active in government matters in Delaware, Georgia, Texas, New Mexico, and on the West Coast, and we accordingly expect that we will be handling government relations matters in those jurisdictions as well.

Editor: How do you approach staffing government relations matters?

Gruskin: Our government relations practice is multi-disciplinary - attorneys from various practice groups will be participating in handling government matters. The firm's general practice includes many areas in which attorneys have significant experience working with government agencies on regulatory, finance, corporate, securities, real estate, land use and other types of matters. Those attorneys have developed an expertise in working with government officials, and that experience provides tremendous depth and resources. In addition, by virtue of representing a wide variety of government agencies, or having served in various governmental capacities, many of our attorneys have developed a "hands on" familiarity with the way government works. Depending upon the nature of the assignment, we will assemble teams of specialists to work with our clients and other third-party professionals (such as public relations consultants or legislative lobbyists) to develop the best possible strategy for handling the matter.

Editor: Do you have any advice for corporate counsel confronted with a government problem for the first time?

Harding: A significant mistake a company can make when confronted with a government issue is to respond too quickly, and, in the course of responding, make the problem worse. The full extent of a problem with a government agency is not always apparent in the first instance, and these types of problems are often multi-faceted, involving potential legal liability, the possible loss of other, unrelated government business, and the prospect of adverse publicity. Accordingly, it's critical that clients have a full understanding of all aspects of the problem, and that the initial response be very carefully thought out.

Gruskin: In our experience, the keys to successfully resolving a government relations problem are patience, perseverance and persuasion. From the moment the problem arises, the client has to understand that the government relations problems are significantly different from commercial problems. Probably the single most important item to keep in mind is that in order to effectively resolve a government issue, it is crucial that corporate counsel objectively view the problem from the standpoint of the government to gain a full understanding of the political, legal, and policy considerations which drive the government's actions.

Editor: Finally, is there anything in particular corporate counsel should be aware of to prevent government relations problems from occurring?

Harding: Because government agencies are subject to public scrutiny by interest groups and the media, corporate counsel should assume that the government will be unforgiving with respect to any lapses in meeting contractual or regulatory requirements. In addition, government transactions open the door to scrutiny of the company's business activities by agency staff and government auditors. Accordingly, when companies enter into relationships with government entities, to the extent that corporate counsel can impress upon company executives that strict compliance with contractual and regulatory requirements must be a high priority, future problems may be avoided.

Please email the interviewees at rharding@cozen.com or sgruskin@cozen.com with questions about this interview.