Days after Tony Podesta shook Washington by stepping down as chairman of his namesake lobbying firm, the Podesta Group is laboring to remake itself as some staffers and clients eye the exits.
Podesta announced his resignation on Monday, hours after an indictment was unsealed charging Paul Manafort and his deputy, Rick Gates, with violating foreign lobbying law. The indictment said Manafort had hired the Podesta Group — identified as “Company B” — to lobby for an ostensibly independent nonprofit that “was under the ultimate direction” of the Ukrainian president, his party and the Ukrainian government.
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Sources familiar with the situation at the Podesta Group said on Monday that the firm would relaunch quickly. Four days after Podesta stepped down from the firm he founded, though, that has not happened.
Eight Podesta Group staffers who spoke on condition of anonymity said the firm is hustling to hang on to as many clients as possible as it struggles to hammer out what it will look like without its founder. Two of the firm’s highest-paying clients, Oracle and Wells Fargo, are leaving, even as others wait to see how things shake out.
“It seems clear that panicky, risk-averse clients will leave,” one Podesta Group staffer said. “Those with stronger stomachs for whom the firm has long delivered will stay. It’s really that simple.”
Representatives of at least five other lobbying firms, meanwhile, acknowledged in interviews that they were reaching out to Podesta Group staff in hopes of poaching top talent.
“Any firm worth their salt is looking over their team to see who might be worth poaching,” one Republican lobbyist at a rival firm wrote in an email, speaking on condition of anonymity.
Paul Brathwaite, a Podesta Group principal whose clients include Airbnb, Samsung and T-Mobile, sent an email to clients on Wednesday saying he was leaving to start his own firm, Federal Street Strategies.
“It has been a long-term goal of mine to try my hand at running a small business, and I am looking forward to the opportunity,” Brathwaite wrote in the email.
Kimberley Fritts, the Podesta Group’s longtime chief executive who is now taking over, declined to comment on Thursday.
Lobbyists who plan to remain at Podesta Group said many staffers there are optimistic about starting fresh and that most of the firm’s clients are sticking with them — or at least waiting to see how the firm revamps. Five clients — including BAE Systems, BP and Lockheed Martin — confirmed to POLITICO that they’re staying with the firm.
“We are aware of the management changes announced this week, and once we better understand the composition and focus of the firm’s reconstituted business, we will be in a better position to assess if they can continue to meet our needs,” Brian Roehrkasse, a BAE Systems spokesman, wrote in an email.
One senior Podesta Group staffer estimated that three to five clients have said they will leave.
“We’ve been gratified by the clients that we’ve talked with that are willing to stay,” another senior member of the firm said.
The Podesta Group and another firm referenced in the indictment, Mercury Public Affairs, retroactively filed paperwork with the Justice Department earlier this year for work they had done for the European Centre for a Modern Ukraine. They were hired by Manafort, Donald Trump’s former campaign chairman, who is under scrutiny by special counsel Robert Mueller.
Firms are rarely prosecuted for violating the Foreign Agents Registration Act, and no charges have been made publicly against Podesta Group, Mercury or any of their employees. But Tony Podesta, a major Democratic fundraiser, and Mercury’s Vin Weber, a Republican, are under scrutiny by Mueller’s grand jury, The Associated Press reported on Thursday evening.
Top staffers had been discussing Podesta, 74, leaving the firm and Fritts taking over for months. But the Podesta Group was unprepared for the speed of its founder’s exit. Two staffers said they hadn’t seen Podesta since Tuesday, the day after he announced he’d step down.
The firm is now struggling to answer the most basic questions, from how to buy out Podesta — who owns the firm in full — to the structure of the new firm. One Podesta Group principal said he didn’t know whether Tony Podesta owned the cell phone he was talking on.
A core group of senior staffers are planning to start a new firm, rather than simply rebranding the current Podesta Group.
But it’s unclear whether all Podesta Group employees will be offered a job at the new firm. “I think that’s hard to know at this point,” said one senior staffer, adding that it depended on how many clients stick with the firm.
That’s left some of the firm’s younger members anxious about losing their jobs.
“A lot of people who have nothing to do with this, nothing to do with Tony’s mistake are worried about losing their jobs,” one staffer said.
Other Podesta Group staffers downplayed the idea that the firm would need to trim its ranks. “I haven’t seen a level of flight of clients that indicates to me there are going to have to be swift, deep cuts,” one staffer said.
The Podesta Group is one of Washington’s most prominent lobbying firms, and for years Podesta’s name has helped bring business in the door. The firm brought in $24 million in 2016, making it the No. 3 firm in town.
Staffers gave Podesta a standing ovation when he announced he’d step down on Monday. But the turmoil unleashed by his resignation has left many staffers eager to move on from the baggage now associated with the Podesta name.
“Everybody, everybody wants there to be separation from the Podesta Group and separation from Tony,” one staffer said.
Podesta launched his firm with his brother, John Podesta, in 1988 as Podesta Associates and built a reputation as one of the top lobbyists in town. He’s been an outsized presence on K Street for decades, known for his flamboyant ties and the sumptuous Democratic fundraisers he threw at his Washington home.
But several Podesta Group staffers said he hadn’t done much lobbying in recent years, focusing instead on business development — a selling point for clients wondering how the business will go on without him.
Top Podesta Group staffers said they hoped to wrap up the business of starting a new firm in the next few days. “We want to do this yesterday so we can stop answering that question,” one senior staffer said.
Perhaps the most closely guarded secret now is what the new firm will be called. One senior staffer cautioned that he didn’t know the name of the firm but said he didn’t think it would include the name of the top staffers.
“I think we’re going to be looking for something a little more eye-catching,” the senior Podesta Group staffer said.
Steven Overly contributed reporting.