Can Seattle firm Preston Gates avoid lobbying-scandal fallout?

WASHINGTON — As the scandal surrounding high-flying lobbyist Jack Abramoff spreads, it's uncertain whether Preston Gates, the Seattle-based law and lobbying firm that employed him in the 1990s, will avoid the fallout.

Most of the attention from Abramoff's guilty pleas this week to charges of fraud and conspiracy to bribe public officials focuses on his clients among Indian tribes and on another former employer in Washington, D.C., the lobbying firm of Greenberg Traurig.

Neither Preston Gates nor anyone currently at the firm has been implicated in any wrongdoing by the government. The firm is saying very little publicly about its former employee.

But with Abramoff's cooperation in an ongoing Justice Department investigation, several issues involving his lobbying at what formally was called Preston Gates Ellis & Rouvelas Meeds could pose a problem for the firm.

Abramoff worked at Preston Gates' Washington office from 1994 to 2000.

Prosecutors say Abramoff's conspiracy to defraud clients and improperly influence public officials began at least as early as 1997 — when he was working at Preston Gates.

And the charging documents also say Abramoff's efforts to bribe a congressman began in 1999.

Questions about Abramoff's work while at Preston Gates don't end there.

A House committee asked the Justice Department last year to review Abramoff's representation of the Commonwealth of the Northern Mariana Islands while working at the firm.

The U.S. Pacific territory, located halfway between Hawaii and the Philippines, paid Preston Gates about $6.7 million from 1994 to 2000 for work largely focused on efforts to defeat a minimum-wage proposal that would have affected its textile industry.

In October 1997 alone, the firm charged 991 hours to the Marianas, according to its 2001 audit. That's about six lobbyists working 40 hours a week for a month. The late Rep. Lloyd Meeds, a Democrat from Everett, was part of the Preston Gates team, as were several other senior lobbyists.

Marianas leaders ended their contract with Preston Gates in 1999 but reinstated it some months later, after a visit from key House staffers who were contacts of Abramoff.

The outgoing governor of the Northern Marianas said this week that he believes the Justice Department probe is extending to Abramoff's work on behalf of the islands, according to a Saipan newspaper.

Also this week, a Texas prosecutor subpoenaed records from Preston Gates related to contributions the firm, its employees or its political committee made to former House Majority Leader Tom DeLay, R-Texas. DeLay faces trial in that state on money-laundering charges involving one of his political action committees.

"The firm considers the contribution to have been a lawful and proper contribution," Preston Gates senior partner Michael O'Neil said Friday. "There's no connection with Jack Abramoff, who had left the firm two years previously."

Finally, one of Abramoff's former clients, the Mississippi band of Choctaw Indians, has asked Preston Gates to review some of the fees the tribe paid the firm several years ago. Tribal leaders last year said they were pleased with Preston Gates' lobbying because it helped their casino revenues and saved millions in taxes. But now they are discussing their payments in light of Abramoff's misconduct at Greenberg Traurig.

Preston Gates traces its Seattle roots back to 1883. Its clients include powerful corporations such as Microsoft and Dell Computer as well as the Seattle Art Museum and Sound Transit.

The firm hired Abramoff after Republicans took control of the House and Senate in 1994. A former head of the College Republicans and friend of DeLay and then-House Speaker Newt Gingrich, Abramoff boasted deep connections in the new conservative majority.

Lobbying firms, which work to influence policy and legislation on behalf of their clients, rely on those kinds of connections to prosper. And that's what Preston Gates did.

In 2000, Preston Gates was the sixth-largest lobbying firm in Washington with $10.5 million in fees.

"There is this enormous pressure to have your firm listed in top-20-grossing firms" in D.C. political magazines, said Mark Corallo, a D.C. public-relations consultant who specializes in crisis management.

"It's prestige, it's what you show to clients and how you gain access on Capitol Hill," he added. "So when a guy like Jack comes along, a firm might say, 'It's clients we didn't use to have,' but it bumps up your bottom line."

Preston Gates lobbying revenues fell by half once Abramoff left for Greenberg Traurig at the end of 2000, according to Roll Call newspaper. Last year, the firm reported $7.7 million in lobbying fees.

So how can a firm like Preston Gates avoid losing clients and credibility when a former employee is headline news around the globe?

First, "Cooperate fully with any government investigation, and tell the public and Congress that you are doing so," said Stan Brand, a corporate attorney in D.C. and a former Watergate investigator. Preston Gates says it is indeed cooperating.

Next, Preston Gates should follow a standard D.C. formula among companies that find themselves on the spot, and hire an outside law firm to do an internal investigation, said Corallo.

"They need to vet every e-mail, memo, letter, document involving Abramoff or clients he brought into the firm, and then interview every employee about any issue directly or tangentially related to this," said Corallo, who also was Attorney General John Ashcroft's spokesman.

The firm has hired outside attorneys, though senior partner O'Neil declined to name them.

Corallo also said Preston Gates should portray itself as another victim of Abramoff's schemes. "You want to claim victim status, and I think they are [victims] to some extent," he said.

Despite the potential black eye, Victoria Toensing, a former Justice Department official and now a corporate defense lawyer, doubts the firm will face criminal liability for Abramoff's dealings. "The company is not going to be indicted," she said. "The firm did what they were supposed to do — represent its clients."

Seattle Times researcher Gene Balk contributed to this report.

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com