NEW YORK
TEMPORARY STATE COMMISSION
ON REGULATION OF LOBBYING

OPINION NO. 12 (78-12)

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FACTS

A law firm requests our Commission to respond to a number of questions concerning the reporting requirements arising out of its lobbying agreements with clients of the firm. The agreements provide for a specified fee to be paid to the firm, plus disbursements for personal sustenance. The fee includes related expenses and overhead of the firm such as salaries for associates, secretaries, and paralegals ("office salaries"), as well as rent, electricity, telephone, postage, office supplies, etc., ("overhead").

The questions propounded to us by the law firm, as they relate to the Lobbying Act of 1977 (the Act) and our answers follow:

OPINION

Question #1: Since the law firm must report to our Commission the total "income" received from a client for lobbying services, does the Act require it to also separately report as expenses a reasonable estimate of the firm's "office salaries" and "overhead" in connection with lobbying activities on behalf of a client?

Answer: In its Periodic Report, the firm should state, as a separate figure (Form 102, Item 5), the total "income" applicable to its lobbying activities for the client during the reporting quarter. That figure should be appropriately labeled "income". In addition, Item 5 should separately set forth a reasonable estimate of "staff salaries" and a reasonable estimate of "overhead" relative to its lobbying activities for the client. The net effect of separately stating "income", "staff salaries", and "overhead" would be compliance in part with Section 8(b)(5) of the Act. We deem it unnecessary at this time to discuss other "reportable expenditures" because they are not pertinent.

New reporting forms are in preparation and will provide specifically for separate reporting of "income" and various expenses, thus avoiding double reporting.

The law firm is registered as a lobbyist. The amount which it receives as fees of "income" has been fully disclosed to the public. Under these circumstances, no further reporting is required by the partners individually or by other members of a professional corporation concerning lobbying "income".

Question #2: Assuming that "staff salaries" must be reported, estimated, and apportioned as lobbying services for the client, how shall they be reported?

Answer: Section 8(b)(iv) of the Act states that "expenses paid or incurred for salaries other than that of the lobbyist shall be listed in the aggregate." Accordingly, the law firm should on Form 102, Item 5, report in the "aggregate", a reasonable estimate of apportioned office salaries relative to lobbying. Section IV, paragraph 2, of our Guidelines requires that such salaries be reported in three separate classes: staff, clerical, and consultants, as follows:

(1) Staff (Examples: office managers, paralegals, law clerks, etc.)
(2) Clerical (Examples: secretaries, typists, bookkeepers, reproductionists, etc.)
(3) Consultants (Examples: individuals employed to assist in technical aspects of lobbying activities of the client)

The names of staff, such as clerks, consultants, stenographers, etc. need not be listed. The aggregate figures referred to should be separately labeled, totaled, and reported as "aggregate salary expenses".

Question #3: Assuming that "overhead" in connection with lobbying must be estimated, apportioned, and reported as an expense, how should "overhead" be set forth in the report?

Answer: If "overhead expenses" are $50 or less, they should be labeled and reported in the aggregate at Item 5 of Form 102. If they exceed $50, they should be separately itemized.

Question #4: In which quarter should a lobbying fee be reported as "income":

(1) If the law firm is retained at the beginning of the year to lobby for a client at an annually agreed fee;
(2) If such lobbying services are rendered and completed in the month of June;
(3) If the client is billed in July; and
(4) If the client pays the fee in October for services previously rendered?

Answer: The answer to these questions may be found in Section IV, paragraph 1, of the Commission's Guidelines, which provides that "Reportable Expenditures" shall include all compensation which is received or incurred as well as expenses paid, incurred, or reimbursed for lobbying purposes.

Lobbying income is required to be reported in the quarter for which it is received or incurred. Whether the lobbyist is on a "cash" or "accrual" accounting basis, lobbying income should be reported during the calendar year for which the lobbying services are performed. The lobbyist may exercise an option and consequently may report lobbying income on a "cash" basis or "accrual" basis.

If the "cash" basis is selected, the fee shall be reported as "income" for the quarter in which the fee is received. If the "accrual" basis is selected, it shall be reported as "income" for the quarter for which the fee is incurred. No matter which alternative the lobbyist selects, the fee for lobbying activity during a calendar year shall be reported as "income" no later than the last quarter of that calendar year. Fees for lobbying activities to be performed in 1979, but which are billed or received in 1978, shall be reported in the first quarter periodic report of 1979.

Accordingly, the answer to question #4 is that a lobbyist who has selected the "cash" reporting basis is required to report the fee as "income" in the fourth calendar quarter of that year. The lobbyist who has selected the "accrual" reporting basis shall report the fee as lobbying "income" in the third calendar quarter.

Question #5: If the law firm receives a specific fee for supporting pending legislation, is the entire fee reportable as "income" for lobbying activities if services by the firm include a substantial amount of time for meetings with the client and preparation of position papers on the pending legislation?

Answer: Section 12(a)(1) of the Act provides that persons engaged in advising clients and rendering opinions on "proposed legislation" are exempt from the provisions of the Act, if such services are not otherwise connected with legislative action. On the facts before us, the entire fee is reportable as "income" because the meeting, advising, and preparation are all related to specific pending legislation and is part and parcel of the lobbying activities. Therefore, it does not fall within the exemption.

Question #6: Form 103 is required to be signed by the lobbyist member of the law firm, or the "chief administrative officer" of the firm. If the firm is a partnership and does not have a "chief administrative officer" but has partners, associates, and an office manager, who should be required to sign the report?

Answer: Under the Act, the firm may designate a person to make and file the report as "designee". Such action would be in compliance with Section 13(a) of the Act which provides that the chief administrative officer shall make and file the report "...unless some other person prior to the due date thereof has been duly designated to make and file such statement or report".


APPROVED BY COMMISSION: October 6, 1978

CONCURRING: CHAIRMAN S. STANLEY KREUTZER, VICE CHAIRMAN OWEN McGIVERN, MARGARET C. ANDRONACO, D. CLINTON DOMINICK, DANIEL GUTMAN, and DAVID C. TAIT.

/S/
________________________________________

S. STANLEY KREUTZER
Chairman


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