Winning Independently: The Legal Side Of Independent Expenditures (Video)

Independent expenditures play an increasingly influential role in federal, state and local elections, making it essential for political organizations, nonprofits, corporations and campaign professionals to understand the complex legal and compliance requirements that govern them. Whether you're funding, managing or advising political advocacy efforts, staying current on the rules can help you avoid costly mistakes while maximizing effectiveness.

In this on-demand webinar, Nossaman host Amber Maltbie and guest speaker Jacob Regladao from Street Level Strategy examined the significance and legal nuances of independent expenditures in today's political campaigns. They discussed the impact of the Citizens United decision, the foundational requirement that independent expenditure efforts remain separate from candidate campaigns and the wide range of communications strategies used in these campaigns, including direct mail, digital advertising, robocalls and grassroots canvassing.

Amber and Jacob also provided practical guidance on funding and compliance considerations, establishing effective firewalls, developing internal compliance protocols and meeting detailed reporting obligations. In addition, they explored advertising disclaimer requirements designed to promote transparency and compliance, as well as emerging issues shaping the future of political advocacy, including the growing influence of artificial intelligence and social media influencers.

This webinar is a valuable resource for California political action committees, nonprofit organizations, corporations, consultants and individuals involved in political campaigning. Watch now to gain actionable insights, better understand evolving legal requirements and stay ahead of current trends and best practices related to independent expenditures.

Transcript:

0:00:08.0 Amber Maltbie: Welcome to the inaugural webinar in Nossaman's Election Law Hot Topic series. Thank you for taking the time to join us. Our goal with this series is simple: to help the people who actually do the work of influencing elections understand the legal rules that shape what they can and can't do. Election law moves quickly, the rules are often counterintuitive, and compliance can have significant consequences. Through this series, our goal is to provide practical, timely guidance that helps you navigate those rules with confidence. Each webinar in the series will follow the same format. We'll break down a timely election law issue into plain English: what the law says, why it matters, and the practical compliance issues that you should be thinking about. And we'll be joined by a client or industry leader who works with these issues every day to share practical insights and best practices directly from the front lines.

0:01:16.7 AM: Today our topic is independent expenditures, one of the most important and misunderstood tools in modern campaigns. Although independent expenditures have long existed in the American political landscape, they took on a dramatically more important role after the 2010 United Citizens decision. Since then, independent expenditures have become a central feature of federal, state, and local elections. Today we'll discuss what makes the communication legally independent, why that distinction matters, and how independent expenditure campaigns allow individuals and organizations to engage in political advocacy outside of traditional contribution limits so long as they remain truly independent.

0:02:08.3 AM: Before we get into it, I'm Amber Maltbie, a partner at Nossaman with the Government Relations and Regulation Group. Our team advises clients across all 50 states on campaign finance, government ethics, lobbying compliance, and nonprofit advocacy. Every day we help clients accomplish their electoral goals while navigating an increasingly complex landscape. My co-host today, we're delighted to be joined by, is Jacob Regladao, vice president at one of California's premier political consulting firms and Nossaman client, Street Level Strategy. Jacob will share his perspective from the campaign side. Jacob, would you mind taking a moment to introduce yourself?

0:02:53.8 Jacob Regladao: Hi Amber. Thank you so much for having me. Jacob Regladao with Street Level Strategy. We are a public affairs and political consulting firm in California. I personally have been working in the PAC and independent expenditure space since 2008.

0:03:08.0 AM: Great. Well, we are delighted to have you.

0:03:10.3 JR: Thank you.

0:03:12.7 AM: So today we are going to cover three core topics. We are going to look at what an independent expenditure is under the law and why that distinction matters. We'll look at who can pay for independent expenditures and we'll address a few of the key compliance rules and hot topics that are still going on in the current election cycle and that we think will be issues in future election cycles. We'll also be getting insights from the front lines from my co-host, Jacob. Two housekeeping matters for today's webinar is: today's webinar is focused exclusively on California campaign finance law, and one issue that we are not addressing in today's webinar is the reporting side. We'll be addressing only the legal side of independent expenditures.

0:04:02.5 AM: So what exactly is an independent expenditure? So you may be familiar that an independent expenditure is a political advertisement, but when does it become an independent expenditure? You're looking at any payment that is made in connection with a communication, and that communication has to contain a particular message. And the message expressly advocates for the election or defeat of a clearly defined candidate or for the qualification, passage, or defeat of a ballot measure. But importantly, and this is a key here, that paid communication that expressly advocates is not made in coordination or at the behest of the candidate or other or ballot measure committee that is going to benefit from that payment. One other thing to note about today's webinar is we are going to be focusing on candidate independent expenditures, not so much on ballot measure independent expenditures. Now that we have the legal definition on the board, Jacob, I would love to get your perspective as a consultant. So from your perspective, what role do independent expenditures play in today's campaigns and have they changed the way that campaigns are run?

0:05:25.6 JR: Thank you, Amber. So in this day and age, when run in a disciplined manner, independent expenditures have become one of the most powerful tools the campaign world has to offer. And they often shape the landscape of a race. The way they've changed the landscape is in today's era, in competitive races, IE spending oftentimes rivals or exceeds the candidate's campaign. Most of the time it overshadows the candidate's campaign and it's often driving the message for the voters. Much of the messaging the voters hear now these days is paid for by independent expenditures. And that is something that's relatively new in the landscape over the past 20 years or so, as you noted. And campaigns themselves, candidates now plan around what independent expenditures are going to do. They try to send signals in a compliant and public fashion to make sure that PACs know what it is that candidates are looking to get out to the voters themselves. And so there is a real upside for organizations who want to run IEs as long as they're doing it in a structured and disciplined manner. They have the ability to really impact the landscape on behalf of the candidate.

0:06:39.1 AM: And when you are talking about candidates, do independent expenditure campaigns only impact state-level races or are we talking about local candidates as well?

0:06:49.8 JR: They can impact any race where there is a contribution limit and an independent expenditure is needed to run an effort where you want to spend more than that contribution limit in the space. So it can be run at the city council level or legislative race, anywhere where that occurs.

0:07:09.2 AM: Okay, great. Thank you for that perspective. So when we're talking about an independent expenditure, we're talking about paid political advertisements. And these can come in the form of direct mail, so the mail that you get right before the election. But it can also be digital advertisements. It can be ads that show up on your digital version of the newspaper that you read, paid social media posts, sometimes in the form of robocalls. Even when campaign workers come and knock on your door and encourage you to vote for a candidate, that can be paid for by an independent expenditure too. So we're talking about the full spectrum of ways that campaigns are trying to communicate and reach to voters.

0:07:57.9 AM: And again, the way that you know that it is a political advertisement is it has messaging telling you to vote for or against a particular candidate. So now that everybody has an idea of what an independent expenditure ad is, and most people who are watching this will have received one or work in the field and are sending these communications out, Jacob, from an organization's perspective who has never sponsored an independent expenditure before, what usually surprises them most about the process?

0:08:38.1 JR: Yeah. I think in California, organizations are often surprised by the cost to run effective campaigns, and that's largely driven by the sheer number of voters in California and the media markets that we exist in. But they're also really surprised by the logistics of compliance and how you have to navigate those rules and make sure you comply. The idea that there's a firm no-coordination wall and that you genuinely can't coordinate with a candidate or talk strategy with a wink and a nod or anything like that, the overall compliance load and understanding disclaimers for different kinds of mediums and being prepared to make sure that you are complying with each different kind of communication. I think that a lot of times folks are surprised by the level of detail that's necessary to work within the space, even though they may see that as a voter on television, it's just something that they're not accustomed to when it comes to actually working through it for each communication.

0:09:43.7 AM: So there's a disconnect between what you actually see as the receiver of a political ad, but then everything on the legal side that goes into getting that ad to the voter.

0:09:56.8 JR: Yeah. Especially in a world where we hear a lot about dark money, but the whole purpose of this activity is to make it transparent and show where things are coming from. And so we oftentimes, I think, are surprised by that.

0:10:10.3 AM: Well, a lot of people engage in independent expenditures. One of the compelling characteristics of an independent expenditure is that almost anybody can pay for an independent advertisement to influence an election. It can be an individual using their own funds doing something, for example, like putting an advertisement in the local newspaper, paying for a Facebook ad. Corporations, political action committees, or PACs as they're frequently called, are oftentimes funders of independent advertisements. But really, it doesn't matter what your business entity form is. If you're a union, an LLC, then you can be in this space and you can influence the political process with independent ads. My one caveat here is that although nonprofits... SOme nonprofits can engage in candidate work, 501(c)(3)s, because of federal tax law that we are not addressing in this webinar, are prohibited from engaging in any candidate elections.

0:11:19.6 AM: So why is it so important that these paid political advertisements are independent? We talked a lot about what exactly an independent expenditure is, and as Jacob mentioned, there's a huge oftentimes expense in running a successful campaign. Well, why independence matters ties those two ideas together. So in California, as in many states, there are contribution limits that candidates must abide by, meaning you can give them some money towards a political contribution, but there's a cap on that. And oftentimes that contribution limit can be quite low. But if you're spending independently, then there is no limit on the amount of money that you can spend to influence that election. Again, so long as you're not doing it in coordination with the candidate.

0:12:19.8 AM: Another important factor is that in some local jurisdictions in California, donors are completely prohibited from making contributions depending on what type of entity they are. There are some local jurisdictions in California that have an outright ban on corporations making direct contributions to candidates. And so independent spending is a way for these entities to have their voice heard in the political process without violating the law. Oftentimes, political action committees will form to influence elections. And if you're a PAC that is formed just to pay for independent expenditures, then you also are not subject to any contribution limit. So you can accept contributions from donors in any amount, which allows you to amass the funds necessary to communicate with voters at scale. This can be really important in media markets like Los Angeles, or even in smaller races where a tiny margin can make a big difference.

0:13:24.0 AM: But I want to turn to you, Jacob, and get your perspective as the person who's in the field doing this, because this idea, independence versus making contributions directly to candidates, this is the fork in the road that you are helping clients navigate. So when you have a client who wants to influence an election, how do you decide whether making direct contributions to a candidate versus paying for a full-blown independent expenditure campaign is the right decision for them?

0:13:59.1 JR: This has so much to do with an organization's objectives and what they're trying to accomplish with their overall political portfolio. Ideally, every operation has both the ability to contribute directly first and also run an independent expenditure. It's important to be able to have both those tools in your toolbox in a political operation. But when it comes to running an IE and the kind of IE you want to run, the size, the scale, it has a lot to do with what you're trying to accomplish. Are you trying to beat an incumbent that's opposed you and your organization over a period of time? Are you trying to get someone from your industry elected into an open seat? Are you simply trying to send a message to a group of legislators who've opposed your issue? It has a lot to do with how you handle an independent expenditure and how you approach something and whether or not actually getting somebody elected versus sending a message is your chief objective. And oftentimes, you can have a portfolio where multiple objectives are there at once. And so a lot depends on the environment, the timing, and the organization's capacity. Also where they're at in their overall timeline of having a political operation. A lot of times folks start off and ramp up, begin to understand the landscape, develop their system, and then build into something that's more robust.

0:15:23.8 AM: Okay. Well, timing is actually something I'd love to talk a little bit more about. Are these campaigns, are they usually developed months in advance, a year in advance? How far out from an election are you telling your clients to start thinking about the election?

0:15:40.8 JR: The most effective political operations that are working in the independent expenditure space are starting months and months in advance of the actual election window. In reality, the clock starts ticking when candidates start declaring their candidacy. And that oftentimes happens immediately after the election preceding an election. So in 2024, people started saying they were going to run for 2026, and that's kind of when the clock starts ticking. So oftentimes you have to begin research on candidates then and start working through the process of understanding how voters performed in comparable elections. All that work takes months at a time.

0:16:23.5 JR: However, it's not impossible by a long shot to jump in later, and experienced and sophisticated operators understand how to get into a campaign on a short window of time. There is an approach to that. You can be effective, but the ideal situation is always to start early.

0:16:43.6 AM: Do you find that as a campaign moves forward, so say you're working with a client who the day after the election cycle closes, they're looking two years ahead, do they ever find themselves in a situation where you're telling your clients, "Actually, the political winds have changed, we think you should change course"? Does that ever happen?

0:17:07.9 JR: I think you're always considering what the sentiment of voters are and where it's going in the direction, what direction it's heading in. I don't know that you change course in that period of time, but you certainly make adjustments. I think we've even seen that between 2024 and 2026, just in the sort of sentiment we saw here in California and how that's changed in just a year and a half, and you saw that in this recent primary. So you always make adjustments, and the way that you're able to do that is by having the appropriate and a robust research apparatus that allows you to do so.

0:17:44.6 AM: So it sounds like these independent expenditure campaigns are incredibly powerful tools. So it becomes really important to understand what makes a political advertisement independent so that you could access that as part of your electoral toolkit. A political advertisement will be deemed not independent, meaning it is subject to the contribution limit of the candidate you are trying to benefit. So essentially your hands are tied. Based on a number of scenarios. And all of these scenarios are set out in campaign finance laws and regulations. So a simple scenario in which a political advertisement will be determined not independent, meaning you can't spend as much as you want on it, would be if it's actually made in coordination with the candidate. So the candidate is actually making a request of your organization or your PAC to pay for an advertisement, a canvas, a phone bank to benefit their candidacy. If that happens, if it's that direct, then those funds that you're spending would be in-kind contributions and they would be subject to the candidate's limit. So you always have to avoid that scenario.

0:19:05.8 AM: There are other scenarios that create presumptions of coordination. For example, if a candidate doesn't ask you to pay for a particular political advertisement, but they give you polling to help inform your campaign, well, that would be coordination as well. If you develop your communication and you run it by the candidate to make sure that they're okay with it, that would also create coordination. And again, if the candidate has their own research materials that they have developed, they've paid for, if they're handing it off to a corporation, a PAC, doesn't really matter who, because they have directly provided it, that creates coordination, and whoever has received it doesn't have that benefit of being able to spend unlimited funds communicating to influence the electorate based on that information.

0:20:11.5 AM: So there are other scenarios where a political advertisement will be deemed not independent. Again, there are some presumptions that are built into the law, and so these are some bright lines that make it easy for the regulated community to know what the law allows and what the law requires. So one thing that a spender cannot do is take an advertisement that has been wholly produced by a candidate and just pay to republish it. So if you were, for example, to get your hands on the digital file of a piece of print mail, you couldn't just pay to reproduce it in its entirety. Or if you got the full ad off of YouTube, you couldn't pay to just reproduce it. Additionally, there are important rules around agents of a candidate campaign and certain individuals close to the candidate from switching sides. So if you have a staffer who leaves your campaign, they can't go and work on an independent expenditure during that same election cycle without creating a presumption of coordination. And similarly, there are rules against a campaign strategist or a fundraiser working at the same time in the same election cycle for both a candidate and somebody who's spending on an independent expenditure campaign, whether it's a PAC or a corporation. So the idea of a common consultant creates a presumption of coordination.

0:21:50.8 AM: There's also, if a political action committee is primarily formed to support a candidate, it can't invite that candidate to come and do a fundraiser for their PAC. That would be presumed coordination too, because of course the candidate who would benefit from it would be interacting directly with that PAC that's already primarily formed to support them. So, Jacob, I want to turn to you for a couple questions about this. We're talking about these lines that no one can cross. So this is where the law meets the day-to-day of where you're at. So are there compliance practices that you think every organization should adopt before they even launch their independent expenditure campaign?

0:22:46.8 JR: Yes. So first, everybody needs to have clear legal guidance for something of this nature. This is not something that can be done by amateurs, and so that needs to be set in place. But organizations can also employ firewalls, like red team, blue team firewalls that are put in writing, that are not just symbolic but clearly operational. Beyond that, making sure that there are clear guidelines about no coordination within an organization, whether that's internal or outside of an organization, that that is not something that will be tolerated at any level. Making it clear that only publicly available information can be relied upon and having that as operational guideline throughout the course of the campaign. Making sure that staff is trained on these sort of things heading into any kind of engagement, and also communicating it with clients. Like when you work with candidates directly, making sure they know that they can't talk to any kind of PAC. And also if you're ever interviewing somebody that you want to potentially endorse, making sure that they know that they can't communicate with you in the future if you are going to be doing any kind of independent expenditure.

0:24:05.0 AM: Absolutely. Those are really great tips from the front lines. And I think especially for organizations that want to have the full menu of political options available to them, there are systems that can be built internally to allow, for example, making contributions, doing independent expenditures, but still observing the law. And part of that is making sure that you have clear communications with what the boundaries are so that they're respected. There's a little bit of self-policing in the day-to-day activities, what I'm hearing from you.

0:24:46.0 JR: Absolutely.

0:24:49.1 AM: So there are some instances where a paid political advertisement will be independent even if there is what appears to be crossover between the candidate campaign and the spender of the IE. So, Jacob, you already mentioned this, but the spender can do two things at once. It can make a political contribution to the candidate subject to that candidate's contribution limit, but it can also do its independent spending supporting that candidate or opposing that candidate's opponent. Again, so long as those communications aren't coordinated as we just defined on the last two slides. Oftentimes a spender has to know information about the candidates in a particular race before they even decide, "Are we going to endorse? Are we going to spend money in this race?" And so there's an allowance in the law for a candidate to come before an organization and tell them about themselves, their candidacy, why they think that they would be the best candidate. All of that's fine. That would not prohibit the organization who wants to spend from doing independent expenditures in support of the candidate who they decide to endorse.

0:26:13.4 AM: There's a fine line that has to be drawn. Jacob, I think you mentioned this a moment ago in your comments, which is if a candidate comes before your organization to tell you about their campaign, organizations that plan to do independent spending should set guardrails at the beginning of those conversations and say, "We can't gain any information from you that is internal to your campaign plans, your campaign needs, your particular voters that need to be targeted, otherwise we will not be able to do independent campaigns on your behalf." So there does have to be some... Or it's a best practice to lay out those guardrails. And, Jacob, it sounds like you all are doing that in practice. And, I mean, I'm just curious, from your perspective, do you find that when you're laying out those boundaries to the candidates that they are generally respecting the boundaries that you set out for them?

0:27:17.4 JR: Yes. Generally that's the case. There have been a few instances, but they're rare. I think a lot of it has to do with a candidate's exposure overall, what level of office they're running for, if it's their first time, or if it's something like they're running for a legislative office after having run for a city council or something like that. Most candidates at this point understand the importance of this level of compliance and why we have these rules.

0:27:47.4 AM: One thing that you mentioned earlier was admonishing staff to look to publicly available information to use when you're developing your independent expenditure advertisements. One thing that might be a surprise to people is that you are allowed as an independent spender to pull publicly available information directly off the candidate's website. And frequently, candidates will put up great photos of themselves, maybe some B-roll footage, meaning just regular footage that hasn't been produced into an advertisement... It's a candidate walking down the street.

0:28:33.4 AM: If you, as an independent spender, pull that information off the internet, you can use that in your advertisements that you develop, and that will not create a presumption of coordination. So I know that these are some helpful pieces of information for organizations and PACs that want to get more information about the candidates, maybe directly from the candidates, without preventing themselves from being able to spend independently. But that also raises the flip side of that, Jacob, which is what are some issues that you find your clients are worrying about that are getting into the independent expenditure space that maybe they don't need to worry about, some misperceptions about compliance that don't really exist or aren't really problems?

0:29:34.7 JR: Yeah, I think it's a range of things. I think tactically, a lot of times organizations believe that their IE messaging has to be or coincide with their organizational messaging or their organizational area of focus, and that's not the case. You should definitely let research drive what you're saying and how you're saying it, not who's saying it. But beyond that, as you've mentioned, when it comes to utilizing a candidate's B-roll or their photos, there's oftentimes concern around that, or if they're in a public space and you're able to capture photos or anything of that nature, using those sort of materials, oftentimes clients are not clear that you can actually do that sort of thing. On the flip side, they don't always understand the importance of the disclaimer and what it means in different mediums and getting that right, or what happens when a funder gives more money and the top three changes and you have to make that sort of adjustment. That's urgent, it's an important part of the compliance world, but it's not something that folks necessarily understand why if someone goes from two to one, why they have to get there and they have to get there in a certain period of time. And so there's certain areas of sort of natural urgency that don't necessarily need to be there, and then sometimes there needs to be a little more urgency around some of these other areas.

0:31:03.8 AM: Well, that is actually a perfect segue to our next slide, please, because we're gonna shift gears a little bit and talk about that issue of disclaimers, which is a huge part of the compliance piece of doing independent expenditure ads. And I agree with you, I find clients are often surprised by how rigorous and how varied the disclaimer rules are, particularly how they can change over the course of a campaign. So let's talk about the disclaimer requirement. So anytime an organization pays for an advertisement to influence the election, that communication has to include language that says who paid for that advertisement. So it seems fairly simple in concept, but let's break it down a little bit and how that impacts the organizations and the types of clients, Jacob, that you're working with.

0:32:09.0 AM: So if you're a political action committee and you're paying for an advertisement, you are required to include, first, a statement that says that the ad was paid for by, and then you include the name of the committee, the PAC that is paying for it. That seems simple enough, except that under California law, the name of a PAC can change multiple times over the course of a campaign. Because the name of the committee has to reflect sponsors of the committee. And that can be an organization who's the majority... More than majority funder of the committee. It can be organizations that are making decisions and setting policy for the PAC. So the name of the committee can change throughout the course of a campaign based on those pieces of information.

0:33:00.8 AM: Second, you have to include the top three funders of $50,000 or more to the committee. So again, this is something that can change over the course of a campaign multiple times. So maybe on March 1st, you have two donors who are over $50,000. When you send out your ad, you have to include the names of those two donors on your political advertisement. A month later, you've got completely different donors who fall within the top three, and so now your disclaimer is a little bit different. So you're not just saying "paid for by" and the name of the committee, you're letting voters know who the top donors to your PAC are.

0:33:46.0 AM: And then finally, the third element is you have to include a statement that lets the public know the communication was not authorized by a committee. This is an important piece of information for the public so that when they're receiving the political advertisement, they understand it's not coming from the campaign, the candidate themselves; it's coming from whoever the sender of that political communication is.

0:34:14.0 AM: So again, the disclaimer has to include the statement "ad paid for by" followed by the name of the PAC, include the top three funders of $50,000 or more to that PAC, and then a statement that it wasn't authorized by a candidate or a committee.

0:34:32.3 AM: Now, what does that disclaimer actually look like? It depends on the form of communication that you're sending out. So if it is a television broadcast versus if it's a small digital ad, the rules will be different in terms of font size, order, even in California, the font color of disclaimers is regulated. So there's a lot of detailed regulation that goes into these disclaimers, which are intended to inform the public of who's paying for the advertisement intended to influence the election.

0:35:08.2 AM: And a small trap for the unwary, I think this is something that may be a surprise to folks who are on the newer side of engaging in independent expenditures, is that the $50,000 threshold for top funders can be lower. Local jurisdictions like San Francisco, Los Angeles, other places will require that the top donors of much lower thresholds, maybe like LA, $1,000, have to include on the advertisement. So these are not static requirements. They are constantly evolving over the course of a campaign, and they require a lot of vigilance.

0:35:56.9 AM: So what I just described applied to political action committees that are paying for independent expenditures. If you're a corporation or one of the nonprofit types that can engage in candidate independent expenditures, then your disclaimer requirement is going to be a little bit different. If you're a corporation or a business entity, then all you have to include is "ad paid for by" and then the name of your entity, and you don't have to include top donors because you're using your general treasury funds, you don't have donors, you're not raising money for that purpose. You do still need to include the language that the advertisement was not authorized by a candidate or a candidate's committee.

0:36:46.3 AM: If you are a corporation or other type of business entity that is giving money to a political action committee. So earlier on we talked about how a political action committee is not subject to any type of limit on the amount that it can receive or the source of donor. So if you're a corporation, you make a large contribution to a PAC because you believe in the mission, what they're working on, well, it very well could be that you are going to be one of those top three donors that shows up in the disclaimer. So I just wanted to make that distinction. Depending on what type of entity you are engaging in the political process, your compliance concerns may be a little bit different. If you're the PAC, you want to make sure that you're getting your top three funders correct. If you're the donor, then you may be more concerned about the optics and how you are appearing on a political advertisement. One important point on that is that the top three funders has a 12-month look-back. So what that means is that when a PAC pays for a political advertisement, they only have to look back 12 months to identify their top three funders of $50,000 or more. So even if you are a large donor to a PAC, you may not end up on a political advertisement disclaimer depending on how far removed your contribution is from when the political advertisement actually happens.

0:38:21.4 AM: One really important point for nonprofits that are engaging in independent expenditures... And we're not covering this in this webinar, it'll be a topic for a future webinar. Is that nonprofits are subject to a whole separate regulatory regime in terms of registration and reporting and potential donor disclosure. So if you're a nonprofit and you're watching this, please check back for a future webinar on that topic in particular.

0:38:52.7 AM: Okay, so we wanted to put on the screen a real-life example of a political advertisement that uses a compliant disclaimer. And this particular advertisement was not paid for by a client of our law firm, but you will see it has all of the key components that were just talked about. It includes at the top the statement that the ad was not authorized by a candidate or a committee controlled by a candidate. Beneath that, it shows who the advertisement was paid for. And you'll see that it says "ad paid for by" and then it names the committee, but then it goes on to say "sponsored by labor and community health organizations." So that is one of the characteristics that might change over the course of a campaign if the organizations or donors to the committee change in a significant enough way. And then beneath that, you'll see what it looks like when you show who the top funders to the organization are.

0:39:56.8 AM: So I mentioned that the disclaimer formatting requirements change depending on what medium you are using. Each of the components of this disclaimer are required by law. So, for example, the text that is in white, that is because the law requires it. The text that is in yellow, that is because the law requires it. These are very granular requirements, which I think is one of the things that can certainly be a surprise to the regulated community when they're jumping into these types of campaigns.

0:40:36.1 AM: But Jacob, now... SO now we're looking at an advertisement, we've gone through what the disclaimer rules are. Can you tell our audience what distinguishes an effective independent expenditure campaign versus somebody who's just spending a lot of money?

0:40:58.0 JR: Yeah, it's a good question. It starts with, I believe, intentional and robust research apparatus that drives your strategy and dictates your medium selection and your messaging, as opposed to something that's put together quickly without that sort of input. It's really important when it comes to being an effective independent expenditure that you understand the audience that's critical to go get and make sure that you persuade. And you only do that by having the appropriate research that illuminates that pathway for you. The other thing that stands out is coordinating well with other PACs and working to achieve common goals. Oftentimes you're in a race where a lot of money is being spent by different entities, and oftentimes it's being spent on the same medium and sometimes at the same time. That's not always effective. You want to do your best to synthesize those activities and coordinate where it's compliant, and it's almost always compliant with PACs. I think that also leads into adapting to the landscape of the campaign as you are communicating and working through it, recognizing what is happening and using your ongoing research to adjust your tactics when you see the need to do so. Those are the things that tend to make independent expenditures effective, and that beyond just excellent creative and good production and smart strategy.

0:42:30.5 AM: Well, that actually raises another question. How much testing goes into messaging before these political ads even make it to the air?

0:42:41.4 JR: If you're doing it right, a lot should go into it [0:42:44.6] ____.

0:42:44.9 AM: And I'm not asking you to reveal trade secrets or anything.

0:42:47.8 JR: That's okay. This is the good stuff. So, definitely polling helps with that. And sometimes it takes multiple revisions of polling to get that right. Focus groups can be helpful. Doing A/B testing of digital ads to inform you whether or not your ads are actually getting through to the right folks. All of these things can and should be deployed when you're making a major investment in an independent expenditure. If you're not doing those things, then you are sort of giving up on some tools that you have to make decisions. You don't always have to have these things to be effective, but they are the way that you can maximize your position in this space.

0:43:32.4 AM: One thing that I have seen, because we're talking about bigger campaigns, bigger impact, a lot of resources. Some of the other clients that we work with are actually on the smaller side. They have smaller budgets, but they're very... They're maybe nonprofits, very entrenched in their communities, and they've been entrenched in these communities for decades in some cases. And so they don't have huge budgets, but they have local knowledge. Would you say that they should feel as empowered to engage in elections and utilize independent expenditures as a tool?

0:44:18.5 JR: Absolutely. They have something that can be very valuable in this space in understanding how voters behave at the ground level. And you can use past voter data to help show you the pathway to success or certainly give you clear signals on how you might be able to be successful in an independent expenditure environment. That data is largely available and relatively accessible for organizations with smaller budgets. And that can be very helpful when you don't have the ability to go out and do polling or focus groups or things of that nature. And there's ways to utilize that and leverage it towards success.

0:44:59.6 AM: Great. That's really helpful. We're looking forward, kind of looking back and looking forward around two hot topics that came up this year around disclaimers in particular. And we're spending a bit of time on disclaimers just because they are so highly regulated. I think it does surprise people, and the rules around them are changing really all the time. And we're kind of in the middle of some changes to disclaimer rules right now.

0:45:37.3 AM: So one of the big topics that came up in the California statewide primary, so this last election cycle was the issue of payments being made to paid social media influencers. So TikTok influencers, whatnot, who are going onto their forums and telling their followers that they support candidate A, candidate B. Well, under California law, under current law, if a campaign is paying a paid social media influencer to do that, they're required to inform the social media influencer that they have to put "paid for by" content. Not as complex as what we just went over, but nonetheless a statement letting their audience know that they are being paid to make that post about the candidate that they're supporting or opposing.

0:46:39.7 AM: This was really an issue in the gubernatorial race where different candidates for governor were making payments to social media influencers and those social media influencers weren't actually complying with this requirement, raising lots of questions, but also more importantly, complaints that were filed with the state body that regulates campaign finance in California, which is the Fair Political Practices Commission. One real-life example of this, complaints were filed against Tom Steyer's campaign for governor. It became a big, I imagine, headache for him and his campaign team during the election because there was a lot of press around this issue, and there are proposed amendments to the current law to clarify and kind of firm up what these requirements are. But it's just something to look out for if your effort is going to look to social media influencers to pay them to influence elections. There are disclaimer requirements that attach to that.

0:47:52.5 AM: And another issue, and this is a big issue, is how AI is being used in political advertisements and what types of disclaimers are required and even can be required with constitutional constraints and freedom of speech issues. So under the current law, advertisements that are either completely made using AI or that materially alter existing material are required to incorporate specific disclaimer requirements. And this would be in addition to all of the disclaimer language that you saw in the earlier slides. The types of ads that are targeted by these AI disclaimer requirements are those that are meant to trick the receiving person into essentially believing something is real that isn't real. So that a candidate said something that they really didn't say, but the receiver of the advertisement wouldn't understand that it's not real.

0:49:03.6 AM: So essentially deepfakes, deceptive advertisements. However, this is brand new legislation and there was a lot of confusion around when the AI disclaimer... What type of ad it was actually required on. There were some political committees that if AI was used at all to create an ad, they put the AI disclaimer on. Others that would not use the disclaimer on the belief that it's parody, it clearly wouldn't trick anybody into thinking that this event really happened. And so a lot of complaints were filed coming out of the primary election cycle with the Fair Political Practices Commission, which caused the FPPC to initiate the start of a new regulation clarifying when this disclaimer actually applies. And so that is something to watch out for. This is a textbook case of where the rules around disclaimers are ever-evolving and they're evolving during an actual election cycle. So that is something to be mindful of. If you're using AI, make sure that you're consulting with your counsel to make sure that you are including a proper disclaimer if it is in fact required.

0:50:32.9 AM: And with that, Jacob, so looking ahead to the rest of the 2026 election cycle, we've got a whole general election ahead of us. What are some of the trends that you're watching or that you think your clients are watching? And are you seeing changes to the way advertising is conducted, especially by independent expenditure spenders?

0:51:03.7 JR: Yeah. I think one of the hottest trends that you already talked about is the influencer piece and how that plays out. But I don't see that being paid for by independent expenditures on a regular basis given just how IEs operate and the voice that they operate from. I think the trend that I will be interested in seeing is how audiences continue to respond to AI-generated content. And beyond just the deepfakes that you mentioned, but the parody-type content like we saw in the mayoral race in LA this year, that's intended to be entertaining, not intended to deceive in the sense of saying that somebody said something, but to imply that maybe their policies or their behavior have yielded something within a particular community. And really that gets down to whether or not the audience is moved by it. And so what I'll be watching is whether or not audiences continue to willingly accept that as part of the overall political dialogue in the state, or if they reject it outright. I think it's gonna not just get played out in this election cycle. We'll see that carry on for a while. But that's gonna be true for both negative and positive communications. As long as there is the ability to produce that kind of content at a relatively low cost, I think we'll see it in the space for a while and how people respond to it will be interesting.

0:52:23.1 AM: Jacob, I'm curious, do you think that there's a reason why independent expenditure campaigns might be less inclined to pay social media influencers than a candidate campaign might be? Because I don't think we saw any complaints that I'm aware of filed against independent campaigns using social media influencers.

0:52:44.4 JR: Yeah. I think a lot of it has to do with the influencer themselves and what they're actually selling, which is their own personal brand. They naturally, when they're reviewing products, tend to disclose, "Nike sent me these shoes," or something along those lines. And I think if they're forced to disclose in the future that someone's paid them, it's gonna be harder when they say a certain corporation or a PAC has paid them for that advertisement. Maybe a nonprofit's a little bit different for them, but they're literally gonna have to say that they are saying what they're saying because they were paid to do so. Then they're connecting their brand back to that entity. And I think that for individual influencers, that's gonna be a harder sell versus a candidate that they can meet, talk to, and discuss issues with.

0:53:33.5 AM: Yeah. That's really fascinating. I'd love to ask you one more question. We're at the end of our webinar now, but as we're closing out, I'd love to ask you just one more question. Is there a strategy... And again, I'm not asking you to reveal trade secrets here. But between advising a client to go positive for the candidate that they support versus going negative against the candidate that your client is supporting, going negative against their opponent? And I ask this question because one of the things that I hear frequently is that with independent expenditures, you want to do good, not harm, and sometimes negative campaigns can backfire. So I'm just curious how you balance that when you're making your plan.

0:54:27.0 JR: Yeah. This goes back to really assessing the space that you're in. And it starts with the candidate that you want to get elected, what their capacity is to execute on certain things. Sometimes after you assess the landscape, you determine that the candidate that you want to actually get elected is going to not have enough resources to get their own message out, and they're not gonna have enough resources to get the message out about the other side. So you might have to do both. In an environment where there's multiple PACs and one PAC is more constrained than the other, one PAC may say they can only do the positive communications versus the negative communications. Typically, both things need to be done. And you're absolutely right. We are here when we conduct IEs to do no harm. Don't do something that can't be undone. If you break it, you buy it, so to speak. So you have to make sure that you're always doing something that's productive. But negative communications is something that voters respond to. So not all negative communications will break a campaign environment. And that goes back to your research and understanding the audience that you're trying to communicate to and what they will palate and what they will move on. So whether it's the candidate landscape and what the campaigns themselves actually have the capacity to do or the audience and what they will respond to, those are the things that feed into that decision, and that's what you have to weigh.

0:55:57.8 AM: Well, thank you, Jacob. And I just want to thank you again so much for joining us today. Just a quick recap on what we learned today. On the legal side is independent expenditures are... They're highly regulated, but they offer a lot of opportunity to communicate with voters whether you have a large budget or a small budget. But the key legal things that you want to keep in mind is make sure that you are independent from the candidate that you want to support. And you can ensure that independence by setting up internal firewalls, setting up guardrails for your external communications. And once you have your systems in place to make sure that you're independent, then make sure that you're following your disclaimer rules. Which is an easy way to get tripped up throughout the course of the campaign, and make sure that you're watching for changes in the law and that you're talking with your counsel, because as we saw through the course of this webinar, there are some live issues right now in the California 2026 general election cycle. Jacob, any final words for our audience?

0:57:18.1 JR: No. Just really appreciate the opportunity. Thank you for having me, Amber.

0:57:23.0 AM: Absolutely. Thank you.