March 7-13th, 2003

Q&A: Campaign Finance Lawyers 'Seeing A Lot More Inquiries'

Washington Business Journal
The life of a campaign finance lawyer changed significantly in November when legislation went into effect governing how national political campaigns are funded.

The Bipartisan Campaign Reform Act - popularly known as McCain-Feingold after its Senate sponsors John McCain, R-Ariz., and Russell Feingold, D-Wis. - is the most sweeping campaign finance law in 30 years.

It bans the use of so-called soft money on behalf of federal candidates. "Soft money" refers to unregulated campaign contributions, money that was not subject to federal limits on the amounts that can be given to candidates by individuals directly or through political action committees. The regulated contributions by individuals and PACs are known as "hard money."

Soft money was supposed to go for get-out-the-vote and "party building" efforts. In theory, it could not be used to promote an individual candidate. But in reality the contributions often funded "issue ads" that had the effect of supporting a specific candidate. Much of the soft money came from corporations and unions, which have long been prohibited from directly supporting candidates with contributions from their treasuries.

The Democrats had been raising about half their funds from soft money, and Republicans a little more than a third. Now the six-figure and seven-figure donations to the parties from corporations, unions and wealthy individuals will be gone.

However, the new law does increase the limits on the amount of "hard money" individuals can give to a candidate, although it kept PAC contributions at existing limits.

The law is being challenged in the courts by Sen. Mitch McConnell, R-Ky., and other plaintiffs. Ultimately, the Supreme Court will likely decide its fate. But in the meantime, corporations - which made more than $970 million in political contributions in 2002, according to the Center for Responsive Politics - are scrambling to understand how the law affects them.

That's where Sonia Fois, a partner at Arnold & Porter ( in Washington, comes in. She counsels corporations, trade associations and others on campaign finance laws. Fois talked to contributing writer Tania Anderson about the impact of the new law on businesses.

  • How have campaign finance laws changed since the last presidential election?

     Since the last race, there's been the biggest change in the law in almost three decades. The basic change is that they banned political party soft money. The most constitutionally vulnerable thing is that they have re-defined what is issue-advocacy advertising. This was putting certain types of legislative ads in a district where a race was taking place a few days before the election. Now if you use a candidate's name in the ad, it's considered a political ad and not an issue ad.

  • What have the new laws meant for campaign finance attorneys?
  • We're seeing a lot more inquiries from clients. Any time there's a new law, there's new interpretations. From the intellectual standpoint, it's interesting to learn a new area. The law has been the same pretty much for the last 30 years.

  • What is the biggest challenge for corporations in abiding by campaign finance laws?
  • It's just maintaining a whole compliance system and structure. Our clients want to be compliant. One of the difficulties is keeping track of thousands of employees in a corporation. One person may be doing fund raising on the side and doing it during work time in their office [which may be against a company's policy]. So it's avoiding inadvertent violations.

  • How prominent is campaign finance in the minds of corporate CEOs?
  • Before the new law, it wasn't enough on their minds. It was the kind of thing that was a little much on the back burner. But partially because of the whole Enron, Sarbanes-Oxley bill and corporate governance, CEOs are starting to realize compliance is an important part of doing business. The new law isn't going to affect corporations that much. It affects party committees much more. Because of the absence of soft money, there's going to be more fund raising of hard money. So more corporate executives are going to be hit up for hard money.

  • How will the new laws change the way we view future political campaigns?
  • It depends. The courts have upheld limiting the amount of political contributions you can make, but they have struck down limits on expenditures. There's only so much you can do to curb the amount of influence money has on politics. On the other hand, if the ban on soft money stands, it clearly changes the way money is raised and spent. Candidates are still going to raise tons of money to buy air time. So I don't think Joe Public is going to see much difference.

    Tania Anderson is an Arlington-based freelance writer.

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