Wednesday, May 2, 2007
WHAT'S NEW IN PUBLIC AFFAIRS
Civil lawsuits are increasing in America, right? Wrong. Higher legal fees and alternative dispute resolution methods are encouraging more out-of-court settlements, reports Business Week. Meanwhile, back in D.C., the rising influence of Democrats is showing up in various ways: in corporate PAC contributions, Republican support for Democratic presidential hopefuls, and in lobbyist hiring decisions. Over at the Supreme Court, notes The New York Times, several justices have raised serious doubts about the McCain-Feingold campaign finance law. These stories and more in this edition of the Public Affairs News Monitor.
HEADLINES AT A GLANCE
"The Vanishing Trial"
"Companies Shift More Donations to Democrats"
"Lobbyists Profit From Power Shift in Congress"
"Justices Raise Doubts on Campaign Finance Law"
"Congress Pecks Away at CEO Pay"
"Union Pose Trouble for Democrats on Trade Pacts"
"K Street Outreach Project"
"New Allies on the Amazon"
"N. Dakota to Be 'Shareholder Friendly'"
"A Golden Opportunity"
"Crisis Management for a Vindictive Age"
UPCOMING CONFERENCES
http://www.pac.org/conferences
Political Involvement Legal Overview
May 14, 2007 - Washington, DC
This meeting is essential for anyone involved in your organization's government relations or public affairs programs. The program was designed for professionals at the state and federal levels who are seeking guidance on campaign finance, lobbying laws, gift restrictions and other legal considerations. Our speaker, Ken Gross, the country's leading authority on campaign finance legal issues and Public Affairs Council legal adviser, will answer your political legal inquiries and review hot-button issues and common mistakes made by political programs.
Corporate PAC Roundtable
May 15, 2007 - Washington, DC
Limited space available. Registrations accepted on a first come, first served basis.
This hands-on idea-sharing forum offers you a unique opportunity to exchange successful solicitation strategies with fellow PAC professionals, discuss effective communications, identify potential pitfalls, benchmark your PAC's performance and address strategies for success.
Grassroots Roundtable
May 16, 2007 - Washington, DC
Limited space available. Registrations accepted on a first come, first served basis.
This fast-paced, interactive discussion offers you a unique opportunity to share best practices for keeping your grassroots contacts informed, in focus and active.
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Public Affairs News Monitor may be reproduced in hard copy form or electronically for internal circulation to Public Affairs Council member companies and associations.
"The Vanishing Trial"
Business Week (04/30/07) No. 4032, P. 38; Orey, Michael
Civil lawsuits nationwide are on the decline, a shift that University of Wisconsin law professor Marc Galanter deems the "vanishing trial." Increasing legal fees combined with alternative dispute resolution methods are leading many to reach out-of-court settlements, with civil trials reaching an all-time low of 3,555 cases in 2006. In a further endeavor potentially cutting lawsuits out of the courts, the Securities and Exchange Commission pushed for a proposal to enable federal shareholder lawsuits to be settled via arbitration. Liability laws also have been revised, impeding potential personal injury claims. Damon Silvers of the AFL-CIO criticizes the SEC's actions, saying, "When you've been defrauded, you've got to go to their private forum, not a public forum," which tamper with the ability of plaintiffs to receive justice from corporations. Other developments are also contributing to the trial drought. Changes to liability laws passed in many states have simply closed the door to many types of personal injury claims. Judges themselves have also become much more aggressive about pruning their dockets, resolving cases through summary judgment, or pressuring parties to mediate or settle.(www.businessweek.com)
"Companies Shift More Donations to Democrats"
Wall Street Journal (04/30/07); Mullins, Brody; Treftz, Dean
Campaign contributions made by the political action committees of large corporations are increasingly going to Democrats, a trend that experts say is not surprising because the party in control generally receives a bulk of the money. Of the $6.2 million contributed by corporate PACs in the first quarter, PoliticalMoneyLine reports that 56.6 percent went to Democrats. In contrast, only 34.1 percent of the $140.6 million handed out by corporate PACs during the previous campaign cycle went to Democrats. General Dynamics Corp., Honeywell International Inc., Home Depot Inc., and Aflac Inc. are among the big companies reporting gains in contributions to Democrats. The Federal Election Commission says a combined $2.24 million was given to House Speaker Nancy Pelosi (D-Calif.), Majority Whip Steny Hoyer (D-Md.), and two other top House leaders in the first quarter, up from $697,694 during the corresponding period in 2005. Democratic committee chairmen have also registered increases in contributions, with Ways and Means Committee Chairman Charles Rangel (D-N.Y) reporting a gain from $57,000 to $761,000 over the same time span.(www.wsj.com)
"Lobbyists Profit From Power Shift in Congress"
Washington Post (04/23/07) P. D1; Birnbaum, Jeffrey H.
The Democrats' victory during the midterm elections four months ago sparked a huge increase in the number of lobbyist registrations, which currently stand at 2,232, up from 1,222 during the same period one year earlier. Lobbying law firms both large and small are reporting widespread increases in the amount of business they are doing, with some all-Democratic lobbying shops reporting that their accounts and revenue have doubled. Meanwhile, the Bush administration continues to produce regulations that affect businesses, which has increased demand for GOP lobbyists. Trade associations and corporations are hiring mostly Democrats during their searches for new leaders, but some key association jobs are also going to Republicans. The lobbying activity is being fueled by a desire among companies and interest groups to get closer access to newly elected Democrats and to get a better grasp of their thought processes. There is also a desire to get a better understanding of their influential constituencies, which include environmentalists, labor unions, and trial lawyers.(www.washingtonpost.com)
"Justices Raise Doubts on Campaign Finance Law"
New York Times (04/26/07) P. A1; Greenhouse, Linda
A 2003 ruling by the Supreme Court upheld a provision in the McCain-Feingold campaign finance law that prevents television advertisements sponsored by corporations and labor unions airing 60 days prior to an election or 30 days prior to a primary from naming congressional candidates. The provision does not violate the First Amendment, according to the court, which said it would consider "as applied" challenges on a case-by-case basis. The court recently heard arguments in the case of the Federal Election Commission v. Wisconsin Right to Life Inc. regarding ads from the organization slated to air prior to the state Senate election in 2004. The trio of ads called on voters to contact Democratic Sens. Herb Kohl and Russell Feingold, who was running for re-election, and ask them to vote against the filibuster of President Bush's judicial nominees. Solicitor General Paul Clement is concerned that exempting the ads would open a loophole allowing scores of similar ads to air prior to the 2008 presidential election. Justice Stephen Breyer supports the provision and expressed concern that allowing an exception would make the McCain-Feingold law ineffective, given that corporations and unions can tap their political action committees to cover the costs of such ads. "Forget the rule that corporations can't contribute," said Breyer, asserting that ads are "the single best way to get somebody defeated or elected."(www.nytimes.com)
"Congress Pecks Away at CEO Pay"
Christian Science Monitor (04/30/07); Francis, David
Congressman Barney Frank, the Democratic Chairman of the House Committee on Financial Services, says that a bill passed by the House in late April will slow down the growth rate of CEO pay "substantially." Frank's bill passed by a 269 to 134 majority, with the support of 40 Republicans. It requires shareholders be allowed to vote every year in an advisory capacity on compensation packages. If, in the future, board compensation committees that set CEO pay levels ignore the high executive pay package objections from shareholders too often, "then we will do something more," Frank warns. Frank's "say on pay" bill was quickly introduced in the Senate by Sen. Barack Obama of Illinois, a candidate for the Democratic presidential nomination. The move suggests the high level of income inequality in the United States could be a "major" issue in the 2008 election, says Patrick McGurn, Special Counsel of Institutional Shareholder Services (ISS), a group that monitors corporate governance. Frank says that the pay levels undermine shareholder value and market confidence, so his bill should "further the workings of the capitalist system." The U.S. Securities and Exchange Commission (SEC) made it easier to assess all elements of executive compensation; starting this year, it is requiring fuller disclosure in annual corporate proxies given to shareholders. Charles Peck, a compensation specialist with the Conference Board--a New York business research group--sees this as "a serious and sincere effort to make executive compensation more visible to shareholders and other readers of proxies." He describes the combination of the "say on pay" bill and the SEC disclosure provisions as "progress" in restraining CEO pay growth. Nevertheless, Peck doubts that either will significantly reduce the magnitude of CEO compensation, even though a new study by ISS finds that a "say on pay" law introduced in Britain in 2003 is impacting executive compensation in that nation. (www.csmonitor.com)
"Union Pose Trouble for Democrats on Trade Pacts"
Wall Street Journal (04/30/07) P. A6; Hitt, Greg; King Jr., Neil
Labor unions are skeptical about a proposed compromise between House Democrats and the White House concerning the passage of several free-trade deals through the bolstering of foreign workers' rights. The White House would not like to see too many conditions imposed on the deals with Peru, South Korea, Colombia, and Panama, which could negatively impact corporate sponsorship, while the Democrats are seeking enforceable labor and environmental protections. They want to pattern the protections after workplace rights set down by the International Labor Organization, including a prohibition on forced labor and child labor, a restriction on workplace discrimination, and the right for workers to unionize and negotiate with employers. The deals would represent the first trade legislation presented to a Democratic-controlled House in over a dozen years. The unions, meanwhile, are after strong and enforceable protections for foreign employees out of a desire for worker solidarity as well as the prevention of unfair competition, but they doubt the administration will agree to such measures. "There isn't a lot of trust toward this administration," notes Gary Hubbard with the United Steel Workers.(www.wsj.com)
"K Street Outreach Project"
Roll Call (04/25/07); Newmyer, Tory
Some Democratic congressional leaders are attracting campaign contributions from GOP lobbyists. The presidential campaign of Senate Banking, Housing, and Urban Affairs Chairman Sen. Chris Dodd (D-Conn.) has received checks from U.S. Chamber of Congress President Tom Donohue, Business Roundtable President John Castellani, and former top Senate lobbyist for President Bush Matt Kirk. Other signs noted by several Democratic lobbyists that Republican lobbyists are interested in Democratic lawmakers is their increased presence at Democratic fundraisers since the congressional elections. "It's just clear many Republicans are seeing the need to spend more time with Democrats," said one lobbyist. GOP lobbyist Tim Rupli asserted, "I just think that parties have become far less important than individual Members. And I think there are some great individual Members." (www.rollcall.com)
"New Allies on the Amazon"
Washington Post (04/24/07) P. D1; Kaufman, Marc
An unlikely partnership between fast-food giant McDonald's and the environmental group Greenpeace proved to be a catalyst in convincing Brazilian soy farmers to stop cutting down virgin trees in the heart of the Amazon rainforest. "They brought together a wide range of people and created a sense of urgency," explains a spokeswoman for Cargill, a large multinational firm that provides McDonald's with Brazilian soy that is used for chicken feed. The partnership began after Greenpeace discovered that Brazilian soy farmers were deforesting the rainforest at an alarming rate to plant soy, and it also learned that McDonald's European operation was one of the purchasers of this soy. McDonald's and Greenpeace then teamed up to pressure Cargill to accept a two-year moratorium on purchasing soy from areas that were recently deforested, and Cargill in turn helped convince other Brazilian soy traders to accept the moratorium. The partnership between Greenpeace and McDonald's shows that even the unlikeliest of partners can effect changes that address social and environmental problems in the global economy. From a public relations standpoint, McDonald's is sensitive to any perception that it harms the environment or animals, and in recent years the company has partnered with several environmental and animal welfare groups to address such concerns and become a better corporate citizen.(www.washingtonpost.com)
"N. Dakota to Be 'Shareholder Friendly'"
Christian Science Monitor (04/30/07) P. 16; Beck, Rachel
Shareholder groups are praising lawmakers in North Dakota for passing the first shareholder-friendly law in the country, and they are hoping that lawmakers in business-friendly Delaware--where over 50 percent of firms have incorporated--will also take action. Championed by the North Dakota Corporate Governance Council, the law mandates a majority vote to elect directors, gives shareholders the opportunity to vote on executive compensation, and requires the jobs of chairman and CEO to be split. Additionally, the law enables shareholders with at least a 5 percent stake in the company that they have held for no less than two years to include proposals in the company's proxy statements and obtain reimbursements for the cost of the proxy contest if they win. Only two companies have incorporated in North Dakota, and they are exempt from the law. According to William Clark of the North Dakota Corporate Governance Council, "Delaware will initially scoff at North Dakota, but it will eventually feel the pressure." The law will go into effect in July.(www.csmonitor.com)
"A Golden Opportunity"
U.S. News & World Report (04/29/07); Gilgoff, Dan
A bill signed by California Gov. Arnold Schwarzenegger in March that changes the date of the presidential primary from June to February 5--shortly after those in Iowa and New Hampshire--could have major implications for the 2008 elections. California has long been viewed by presidential candidates as a place to beef up their campaign funds, focusing primarily on affluent donors in Hollywood and Silicon Valley. Candidates typically do not make numerous appearances around the state, mainly because the nominees are basically known well before the June primary. However, candidates are expected to pay more attention to California this time around, considering that the state has 440 convention delegates and an early absentee-ballot date of January 7. According to Democratic Consultant Chris Lehane of San Francisco, "If the picture is muddled or an insurgent candidate injects themselves into the mix after Iowa and New Hampshire, California will play a huge role. The top-tier candidates are recognizing they need a serious California strategy." However, candidates will have to take care in choosing which districts to focus on and how much to invest on publicity, as it costs $3 million per week to air an advertisement statewide. Observers expect Democrats to concentrate on earning endorsements from labor, environmental, and Hispanic groups, as well as state Democratic leaders; Republican candidates, meanwhile, will turn their attention to getting support from Gov. Schwarzenegger, social conservatives in Orange County and San Diego, and entrepreneurs in Silicon Valley.(www.usnews.com)
"Crisis Management for a Vindictive Age"
Financial Times (04/24/07) P. 14; Evans, Richard
PR veterans Eric Dezenhall and John Weber offer a series of rules that business leaders should follow when their company is charged with wrongdoing, noting that the assumption that business leaders can defend themselves through patient explanation to the public and the media is a myth. "In a climate characterized by virulent distrust of business, education doesn't defuse outrage," the authors write in a new book. This distrust has been nurtured by numerous high-profile corruption scandals and the implosion of companies such as WorldCom and Enron, and Dezenhall and Weber say CEOs who fail to recognize this trend do so at their own peril. The authors criticize the belief held by many PR consultants and agencies that engagement, communication, and apology is the best course for minimizing damage and restoring one's reputation; they advocate a more aggressive strategy in which the business leader tries to avoid admitting guilt and responds to each accusation with a counter-accusation. The book's primary argument is that conciliation and repentance is the best course of action when one has done wrong, while mounting a vigorous defense is the proper response when one has been wronged. Business leaders should respond to charges early to prevent public backlash, and they should be familiar with damage control methods in anticipation of an emerging crisis.(www.ft.com)
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