The first planned U.S. overhaul of foreign lobbying disclosure rules in 30 years is rooted in more aggressive Justice Department enforcement that has left a growing number of attorneys practicing in the space uncertain about its reach.
The interest and confusion of practitioners surrounding the Foreign Agent Registration Act comes amid investigations and court cases to enforce lobbying transparency from prominent figures. Cases have involved allies of the previous two presidents, including an investigation into whether Rudy Giuliani acted as an unregistered agent for Ukrainian nationals and an indictment of Obama White House Attorney Greg Craig. Giuliani was not charged and Craig was found not guilty.
“Ultimately, the reason for more attorneys and questions is the DOJ’s ‘significantly improved enforcement attitude,'” said Brandon Van Grack, who was head of the DOJ’s FARA unit until early 2021 and is now co-chair of Morrison Foerster’s national security practice . In drafting an upcoming rule proposal, the department “necessarily understood that some of these issues require clarification.”
With a maximum prison sentence of five years for premeditated offenders, FARA mandates public disclosures when individuals, corporations or non-profit organizations act on behalf of foreign interests. It contains exceptions for lawyers that have proven difficult to interpret for working on the border between legal representation and political advocacy.
These exemptions are now set for regulatory rewrite, impacting attorneys – both those hoping to provide clarity for clients about whether they need to register and others worried about their own need to file. FARA specialists expect the proposal by the end of the year after the DOJ missed its planned September deadline.
Pivot after 2016
FARA was enacted in response to growing concerns about Nazi propaganda and influence in the 1930s. The Justice Department, which is regularly amended by Congress, now wants to bring the law into the 21st century, as are a number of proposed legislative changes floating around on Capitol Hill.
Over the years, the FARA Bar Association has evolved from politically oriented firms to big law office firms, particularly those with a strong international presence. A 2016 DOJ Inspector General’s report pointed to enforcement deficiencies, leading to the department’s newfound emphasis.
Special Counsel Robert Mueller’s indictments of lobbyists Paul Manafort and Rick Gates, stemming from his probe into Russian influence in the 2016 Trump-era election, sparked a surge in investigations and high-profile indictments. Today, the law is a core element of the government’s national security and counterintelligence strategy. Recent cases also included interests linked to China, Pakistan, Iraq and Zimbabwe.
Earlier this month, a judge dismissed the DOJ’s civil suit accusing casino magnate Steve Wynn of failing to register as a foreign agent for lobbying the Trump administration on behalf of China. Federal prosecutors last week finalized their case against Trump’s ally Tom Barrack, who testified at his trial Tuesday on charges of violating a law closely linked to FARA.
The DOJ’s 2019 civil settlement with Skadden to register as an agent for the Ukrainian government and the acquittal of the firm’s former partner, Craig, on FARA charges continue to make law firms look up more than previous years on FARA’s intricacies are set.
A rulemaking advance notice last year, which prompted comments from firms such as Squire Patton Boggs and WilmerHale, revealed the DOJ’s interest in revising certain aspects of the FARA exceptions and other provisions affecting attorneys.
The request for public comment last December signaled the DOJ’s interest in changing the interpretation of an exception to “ordinary legal representation” in a criminal, civil, or administrative proceeding.
Joshua Rosenstein, a senior FARA attorney at Sandler Reiff, said he routinely answers questions from clients practicing at other firms about how this exemption should be interpreted. Although the department recently issued guidance recognizing that the modern legal profession has veered into the public relations realm, the DOJ was still vague and inconsistent about what forms of public relations would disqualify attorneys for an exception, he said.
“We often get questions – how much can you say in the course of that first press release? If they try to tell their story and possibly sway a jury pool, is that too much if their client is a foreign government, for example? said Rosenstein. “Or is that considered safe because it doesn’t cross a line beyond normal legal practice in 2022? I don’t think there is a clear answer to that.”
Another problem is the sheer volume of attorneys who “have this dual role of being both an attorney and a political adviser,” said Kate Belinski, a partner at Ballard Spahr. “They might be doing the same thing for the same client, and part of that is legal work, and part of that is more lobbying and policy advice. As this has become more common, I think this has made things more complicated for attorneys working in these roles.”
By and large, lawyers try to avoid activities that would require disclosure, as concerns about attorney-client privilege or aspirations for political appointments tend to weigh on them, FARA practitioners say.
An update to the legal representation exemption appears likely to expand the circumstances in which attorneys can safely avoid disclosure. But the DOJ indicated in last year’s statement that it is also considering going in the opposite direction in a separate FARA exemption that applies to attorneys.
A trade exemption restriction, as proposed by the Department, may still be helpful to lawyers struggling with the vagueness of old regulatory language.
Currently, this exception precludes FARA registration if the activity is “private and non-political” for a foreign principal and promotes “trade or business” for that principal. However, the exemption does not apply if the activities “directly further” the public or political interests of a foreign government or political party.
“How do you reasonably assess whether the proposed work in the United States would ‘directly advance’ the public or political interest of the Chinese government?” said David Laufman, a partner at Wiggin & Dana who previously oversaw FARA enforcement at the department . “This is disturbing, opaque language laced with tremendous subjectivity.”
If the DOJ limits the availability of this exemption, it would expand the pool of potential attorneys subject to FARA registration. This is a case where clarity-minded attorneys would still be dissatisfied if their legal work now triggers FARA obligations.
Prosecutors would also benefit from this.
“Ultimately, if the behavior has crossed the line, the Justice Department will have a regulatory catch to point out,” Rosenstein said, “when perhaps today it isn’t.”