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Jay Alix, founder of the bankruptcy adviser AlixPartners, has ended a $5mn Washington lobbying campaign against McKinsey, bringing down the curtain on one of the consulting industry’s longest running and most expensive feuds.
The businessman spent seven years urging lawmakers to adopt legislation forcing McKinsey to disclose potential conflicts of interest in its government work, a campaign that increased the political heat on the consulting firm.
The lobbying campaign grew out of an even longer legal battle in which Alix accused McKinsey’s rival bankruptcy practice of being a “criminal enterprise” that flouted conflict of interest disclosure rules. Alix’s case was dismissed by a New York judge last year and he decided in August not to appeal.
Congressional disclosures indicate Alix terminated a relationship this month with one of his lobbying firms, Cornerstone Government Affairs, and a similar filing is expected soon from a second firm, Cogent Strategies, said a person familiar with the matter.
“We initially went to Washington because of the bankruptcy issues,” Alix told the Financial Times, adding that it was a “natural extension” to encourage scrutiny of McKinsey’s government contracting.
“We have achieved all of our goals, which were to have McKinsey comply with the law and be held accountable if they are not,” he said.
Alix began his crusade against McKinsey in 2014 after it began acting as an adviser in bankruptcy cases without, he alleged, making the legally required disclosures of clients that could pose a potential conflict of interest.
McKinsey agreed in 2019 to pay $15mn to settle charges from the US justice department that it failed to make complete disclosures in three cases. It has since stopped acting as a bankruptcy adviser.
“Jay Alix — the founder, board member and largest shareholder of AlixPartners — spent eight years waging a campaign in the courts, the press and on Capitol Hill to prevent McKinsey from competing with his firm,” said McKinsey. The company added that it would “continue to engage in good-faith discussions about improving our practices, just as we will always forcefully defend against anti-competitive assaults like this failed campaign”.
Congressional filings show Alix spent a total of $4.88mn lobbying for legislation “protecting the integrity of the bankruptcy system and promoting transparency in government”.
Alix also made close to $1mn in campaign donations to Republicans and Democrats since 2018, according to OpenSecrets.
His lobbyists backed a law to force advisers on the financial restructuring of Puerto Rico to disclose clients that posed a potential conflict, which was passed by both houses of US Congress in 2021 and signed into law by then-president Joe Biden.
More recently they have supported legislation tightening conflict of interest rules on consultants working for the Pentagon, including Republican bills aimed at barring US government contractors from also working for the Chinese state.
McKinsey has found itself in the crosshairs of China hawks including, former senator Marco Rubio, who is now US secretary of state, and other Republicans who have assailed the firm for working in China.
McKinsey launched a lobbying effort of its own to counter what it said was “misinformation”. It has spent $9.7mn since 2018, filings show.
