Will Probe Put Capitol’s Top Lobbyist on the Shelf? : Politics: Many hope it will squelch insurance industry advocate Clay Jackson. Others see him emerging unscathed.

Consumer groups were at war with the insurance industry, and Clay Jackson, the industry’s top advocate in the state Capitol, was on the front lines.

At stake was legislation giving regulators the power to set prices for credit life insurance--which pays off the debts of people who become disabled or die. By one account, the bill would have cost the insurers $20 million a year, maybe more.

Jackson, his 280 pounds spread imposingly over his 6-foot, 6-inch frame, stood in the back of the room, away from the action but conspicuous just the same. Jackson did not testify. But everyone present at the Senate Insurance Committee hearing knew he wanted this bill dead. When the vote came, the bill fell one short.

The measure’s frustrated backers chalked it up as just one more victory for Jackson, the highest paid, and perhaps most influential, lobbyist in the state Capitol. Now, however, it appears that federal agents, aided by a committee chairman turned informant, were monitoring the credit insurance bill and Jackson’s role in its demise.

Jackson’s emergence this month as a target of investigators marks a new direction in the widening five-year federal probe of Sacramento corruption. Until now, the probe has focused essentially on the wrongdoing of elected officials and their aides, with lobbyists portrayed as victims. Three former state senators have been convicted of or have admitted using their offices to extract money from citizens with a stake in legislation.

The most recent senator to fall--Democrat Alan Robbins of Van Nuys--had frequent, close contact with Jackson for nearly a decade as chairman of the Senate Insurance, Claims and Corporations Committee. That contact continued this summer even as Robbins, acting as an informant for the FBI, was secretly recording his private conversations with lobbyists, legislators and others in the Capitol.

Now, with one of the Capitol’s premier lobbyists in their sights, authorities apparently are prepared to examine the crucial role that Sacramento’s hired advocates play as a conduit for money from their private clients to members of the Legislature.

Clayton R. Jackson always plays to win, and his friends predict he will emerge intact from the investigation. But Jackson’s aggressive, competitive nature, and his successes, have left a trail of political enemies and doubters who say it’s about time he got his. A lot of people around the Capitol are hoping Jackson has killed his last bill.

Jackson, a master strategist whose clients have contributed millions to the campaigns of state legislators, is a ubiquitous figure in the Capitol and virtually unknown outside it. Yet his word sways votes and can persuade a governor to sign or veto a bill. As a contract lobbyist, a mercenary for the business world and a few local government agencies, his firm was paid $4.1 million to wield its influence during the 1989-1990 legislative session.

When he enters a room, heads turn and people wonder what he’s up to. Often they don’t find out until it’s too late.

“He has a greater ability than any lobbyist I’ve seen to single-handedly kill legislation that he opposes,” said one lawmaker who has battled Jackson a number of times. “When word is put out that Clay is opposed to something, authors know that their bill is in serious trouble. There are very few lobbyists who have that kind of clout and influence.”

In Capitol circles, Jackson is best known for his work on behalf of the insurance industry, for whom he has worked for nearly two decades. In that role, Jackson in 1987 helped broker a deal that overhauled civil justice rules and limited corporate liability for products known to be dangerous. An accompanying “peace pact” among trial lawyers, doctors, and insurers was recorded in pen on a linen napkin at the end of a private negotiating session in a Chinese restaurant down the street from the Capitol.

Jackson also is credited with persuading insurers to go to the ballot in 1986 with Proposition 51, known as the “deep pockets” initiative, which the voters approved, limiting liability for non-economic damages, including so-called “pain and suffering.”

And it was Jackson, representing workers’ compensation insurance companies, who helped persuade Gov. Pete Wilson to hold up enactment of the state budget for two weeks last summer in an attempt to gain leverage against Democrats for legislation limiting benefits to injured workers.

Beyond the limelight, Jackson has been instrumental in blocking untold numbers of bills aimed at crimping the practices or reducing the profits of the insurance industry.

“Clay Jackson, more than anyone else, has been responsible for the insurance industry’s ability to bat down proposals hostile to its way of doing business,” said state Sen. Patrick Johnston (D-Stockton), who as an assemblyman was chairman of that house’s Insurance Committee.

But Jackson’s list of clients goes far beyond the American Insurance Assn., which paid him $564,000 to lobby the Legislature and the executive branch during 1990.

His current roster of more than 35 clients ranges from Anheuser-Busch to the Turlock Irrigation District, from B.F. Goodrich to the California Mosquito and Vector Control Assn.

“He’s had his finger in everything,” said Will Glennon, legal counsel for the California Trial Lawyers Assn., one of Jackson’s chief adversaries.

So it was that in 1986, when GTECH Corp., which holds multimillion-dollar computer contracts with the state lottery, had an interest in a bill affecting the state numbers game, they called on Jackson to do their bidding. The same year, a coalition of liquor companies and gas station owners retained Jackson to help them end restrictions on the ability of service stations to sell alcohol to motorists.

Now, Robbins has agreed to plead guilty to accepting bribes--in the form of campaign contributions--in exchange for his actions on the two bills lobbied by Jackson, both of which died before they could be enacted. GTECH and the Food and Fuel Retailers for Economic Equity have said that Jackson guided their campaign contribution decisions. Robbins also agreed to plead guilty for his role in a 1985 bill that deregulated credit life insurance, the same issue on which Jackson lobbied against consumer groups earlier this year.

This year’s bill, which would have once again allowed the Insurance Department to regulate credit insurance rates, was being closely watched by federal investigators working with Robbins, who by then had agreed to cooperate with the probe, sources familiar with the investigation have told The Times.

It is not known whether Jackson was implicated in any wrongdoing as he worked successfully with other lobbyists to stop the bill’s progress. But on the same day that the U.S. attorney’s office in Sacramento was announcing Robbins’ plea, federal agents searched Jackson’s offices a few blocks away. They carted off several boxes of documents, including business and campaign contribution records and legislative files.

Jackson has declined requests for interviews since the Robbins disclosure. But his attorney has acknowledged that Jackson is now a target of the federal probe.

Jackson, 48, is a native of Southern California who graduated from USC and went on to Hastings Law School. In 1971, not yet 30 years old, he came to Sacramento as a lobbyist for the firm of the late John P. (Packey) McFarland.

With the Assn. of California Insurance Cos. as his top client, Jackson steadily built his business until the firm ranked among the elite of the Capitol lobbying corps. It helped that most of his clients also were big contributors to the campaigns of legislators and governors.

That money gives Jackson “access,” as it is known here, to the most powerful lawmakers. At the end of one recent session, while the rest of the lobbying corps was packed six-deep at a gate outside Assembly Speaker Willie Brown’s office, Jackson, cigar in mouth, had grandly sprawled himself onto an overstuffed chair in the Speaker’s reception room. It was just the kind of scene that galls his competitors.

But there’s more to Jackson’s influence than the contributions he distributes to lawmakers. Friends and associates say he has combined a keen intellect, political savvy, a professional demeanor and plain hard work to climb his way to the top.

One secret to Jackson’s lobbying, say those who have watched him do it, is his ability to hone in on each legislator’s unique needs, rather than deliver a standard pitch to every lawmaker. In a pinch, for example, he might offer to help a legislator get a key vote for a bill unrelated to the issue he is working.

Unlike many lobbyists, Jackson also knows the details of the bills he is pushing or opposing. He usually speaks without notes and will candidly tell a lawmaker which interests stand to gain and lose if the bill he is lobbying becomes law.

Because of his sheer size, Jackson rarely goes anywhere unnoticed, but few in the Capitol know much about him. He disdains the press, granting only rare interviews, and has little contact with legislative aides, preferring face-to-face meetings with members. Lawmakers report that he is almost always cordial, but in private conversations he has been known to express his contempt for some of them and for the system they control.

Although he works with a single-mindedness that many find distasteful, Jackson is not a prisoner of the Capitol. A resident of Marin County, where he has served on the Marin Symphony’s Board of Directors, he commutes to Sacramento weekly. He maintains a relationship with a San Francisco law firm founded early in the century by the reformist Gov. Hiram Johnson. He travels widely and is fond of competitive sailing, a hobby that allows him to explore the same instinct for strategy that comes in handy at the Capitol.

Glennon, the trial lawyers’ counsel, said he came to appreciate early on how Jackson “knew the rules inside and out and he knew how to work them.

“No decision was made until the last possible moment,” Glennon said. “He played these very elaborate strategies and you couldn’t see the twist until the last moment of the last hearing on the last day.”

One tactic Jackson favors is the use of what critics call the “counterfeit bill”--a competing measure designed to weaken support for the bill he is opposing while falling short of accomplishing the goals of the original legislation.

Gene Erbin, an aide to Democratic Assemblyman Lloyd Connelly of Sacramento, said Jackson used this strategy in 1987 to help defeat a bill that would have implemented limited regulation of automobile insurance premiums, a concept known as “flex-rating.”

“Suddenly, (another) bill becomes a flex-rating bill,” Erbin said. “But it was counterfeit. Bogus. Not useful. Not real. They stole our name but not our substance. It worked brilliantly. It was floated with the intent of directly stripping support from our bill. Each bill fell a vote or two short and it was a perfect day for the insurance industry.”

But Jackson’s prowess inside the Capitol has not always extended to electoral politics. Jackson in 1988 helped raise campaign money for a group of dissident Democrats known as the “Gang of Five” who were trying to oust Assembly Speaker Brown, never a favorite of the insurance industry.

Jackson also urged then-Republican Leader Patrick Nolan of Glendale to field a challenger against one of Brown’s chief lieutenants, Assemblyman Phillip Isenberg of Sacramento, and volunteered to raise money for the effort, according to a Republican staff memorandum obtained by The Times.

But Isenberg remains in office, and Brown fended off the challenge to his leadership. Neither is particularly close to Jackson today.

“I’m certainly not going to forget that, not forgive it,” Brown said in an interview.

The same election season saw voter approval of Proposition 103, which strengthened regulation of the insurance industry, and the defeat of an industry-backed alternative measure. Jackson split with the Assn. of California Insurance Cos. after that debacle, in part because of a dispute over the strategy that led to the defeats.

But these setbacks have failed to slow Jackson, nor have they appeared to reduce the lobbyist’s belief that he is nearly without peer at the top of his profession, say those who deal with him regularly.

“His mode of operation is to come into a discussion with a legislator one-on-one, without other people,” said one legislator. “When he gets in there, just he and you, he says, ‘Now let’s get down to business. The amateurs are out of the room. The troublemakers are no longer around. It’s you and me. Let’s get this thing worked out.’

“It’s almost a role that he plays,” added the legislator. “He is almost a caricature of what people think a lobbyist is supposed to be and say and do.”