If you drive up Massachusetts Avenue toward Vice President Cheney’s house at Observatory Circle, you pass many embassies on your way.

Shortly after the mosque on your right, you come to the British Embassy on your left. Next to it is a grand, red brick building designed by Sir Edwin Lutyens that is  the residence of Her Majesty’s ambassador. And across the road is another impressive building about which hangs an air of desolation.

The architecture, with its blue dome and ornate arches, hints at the reason. This is, or rather was, the Iranian embassy. Washington broke off diplomatic relations with the Islamic republic in 1980 and the building has acquired the forlorn look that you would expect from such long desuetude.

It’s not that no one can think of a good use for such large and imposing premises; it’s just that no one is taking the risk. Potential tenants show up but balk at a catch that K Street lobbyists are now learning about — that victims of terrorism can lay legal claim to terrorists’ assets, and since Iran is a terrorist state, questions naturally arise about its property and income in the United States.

K Street is relevant here because several well-known firms have been told recently that money paid to them by Libya for lobbying in Washington is in the sights of lawyers representing victims of Libyan terrorism.

Thomas Fortune Fay, an attorney representing victims of a 1986 Libyan terrorist outrage in Germany, commented in The Hill Thursday: “If they have to do business with American firms, they are going to have to pay their debts.” Fay is relying on a measure sponsored by Sen. Frank Lautenberg (D-N.J.) that was attached to the defense authorization bill that passed in January. Reaffirming the Foreign Sovereign Immunities Act, it expands the reach of terrorist victims seeking redress or compensation.

The issue of whether a lobbying firm’s fee income from terrorist states is subject to liens under the law has yet to be litigated. So there is, to coin a phrase, “no controlling legal authority” that makes it clear whether K Street does or does not have a serious problem on its hands in reaping the rewards for work it does representing foreign governments, some of which are distinctly unsavory.

Lobbyists argue that they are like lawyers, representing clients to the executive and legislative branches of government just as attorneys represent clients to the judicial branch. K Street is increasingly earning its crust representing foreign governments and other overseas entities. Commercially, it may be riskier work than the street’s denizens realized.