Hotshot Fundraiser, Colby Underwood, Goes After Former Staffer
Colby Underwood, a 6-foot-11, 30-year-old wunderkind who's raised hundreds of thousands of dollars for a stable of local, state, and national candidates, spent 2007 as the reigning champion of Seattle's fundraising world and the darling of the local media. Fawning stories from Crosscut to Seattle Weekly declared Underwood "the single most important man in Seattle politics" and "Seattle's best money man." The basis for those somewhat histrionic statements: a knack for raising funds that has helped propel dozens of candidates, including city council challenger Tim Burgess ($327,557), council incumbent Jean Godden ($227,458) and Seattle mayor Greg Nickels ($537,179) into office.
But events in mid- to late 2007 took some of the shine off Underwood's burnished image. Congressional candidate Darcy Burner, running a competitive race against Republican representative Dave Reichert, dropped Underwood, citing the need to hire an in-house fundraiser who could dedicate the long hours the position required. In December, Underwood lost several employees, including one, McKenna Hartman, who gave her notice and was subsequently fired.
Things really went haywire earlier this month, when Underwood sued Hartman, alleging that she violated an agreement not to compete with Underwood by attempting to set up her own fundraising shop with the help of veteran political consultant Cathy Allen. In his motion, Underwood claims Hartman engaged in an "unabashed plot ... to steal the business of her former employer," and accuses her of "poaching [his] clientele and stealing [his firm's] trade secrets." The suit, which is virtually unprecedented in Seattle's small fundraising world, seeks $1 million in damages from the 27-year-old Hartman, whose own foray into fundraising has been cut short by her former boss's lawsuit.
Neither Underwood nor Hartman would comment directly for this story, but their lawyers were happy to discuss the case. Janyce Fink, Underwood's attorney, says Underwood merely wants to prevent Hartman from using confidential information obtained in her capacity as Underwood's employee—namely, lists of Underwood's clients and potential donors. "[The potential injunction] ... does not put [Hartman] out of business; it simply restricts her ability to use any of the information that she was privy to as a condition of her former employment."
Hartman's lawyer, Gregory Karp, says Underwood's claims are ridiculous. First, he says, Hartman only signed a confidentiality agreement—not a noncompete agreement, which would be unusual in the fundraising world. Indeed, the agreement states only that Hartman will not "disclose" confidential information or use it to her "own ends and gain."
Whether Underwood's lists themselves are "confidential" is itself an open question; anyone, after all, can go into the database of the state Public Disclosure Commission and find out which candidates hired Underwood and who gave them money—a pretty close approximation of his list.
"We will concede that [Hartman] has a confidentiality agreement, but that doesn't address competition at all," Karp says. "She's not going to violate the terms of that agreement. On the other hand, her agreement doesn't say, 'I won't compete with Colby.' Her former employer has no right to regulate her business activities going forward."
Ironically, Underwood got his start in the political fundraising business by doing essentially what Hartman is attempting: branching out from an established firm—in his case, the firm run by Gary Locke fundraiser Tracy Newman. (Newman was out of the country and unavailable for comment.) Underwood served as deputy finance director on Locke's 2000 campaign, helping raise more than $3.5 million; in 2002, he struck out on his own, forming Colby Underwood Consulting with a client list that included Mayor Nickels and quickly grew into the largest fundraising consulting firm in Seattle.
Even as Underwood took on more clients, his prices went up, to the point that candidates in relatively minor local races—Seattle City Council, for example—were shelling out tens of thousands of dollars for his services. Tom Rasmussen, who ran unopposed for reelection, paid Underwood $35,000 in 2007. Godden, opposed by underfunded Green Party schoolteacher Joe Szwaja, spent $42,000. A single month's services could cost a candidate thousands of dollars—Burgess, for example, routinely paid Underwood more than $5,000 a month, and unsuccessful candidate Venus Velázquez shelled out $3,000 for six months in a row. Whether those prices are "exorbitant," "obscene," or merely "middling," as various former clients described them, depends on who you talk to, but the fact remains that Underwood was both commanding high prices and in demand.
Reportedly stretched thin by so much business, Underwood increasingly farmed out the work of dealing with clients to his small staff, causing some clients to complain that they were paying thousands of dollars a month to deal with underlings. (Others, however, described this as par for the course, and developed close relationships with Underwood's staff, including Hartman.) Although Underwood's staff delivered for his clients, some expressed surprise that Underwood wasn't around more often. His staffers, meanwhile, were working harder than ever. Karp says there were "a lot of unhappy people" at Underwood's firm—"how unhappy, I don't know."
It's hard to predict whether Underwood's legal strategy against Hartman will be successful. Earlier this week—after a preliminary hearing for which Fink showed up more than an hour late—Karp rejected a settlement offer that he said "had no basis in the law." On January 22, the lawyers for both sides were supposed to appear in court for a hearing on Fink's preliminary injunction motion, which would prevent Hartman from competing with Underwood. At press time, an hour and a half after the two sides had appeared in court, Fink still had not appeared.
Currently, apart from a few small-time players, Underwood is the only fundraising game in town. If Underwood wins his injunction, it will stay that way. "It will be the death penalty for [Hartman's] personal ambitions," Karp says.