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Seven Shareholders Depart Akerman Amid Reports of Growing Pains
President of 420-lawyer firm says the departures are 'normal course of business when you get to the size that we are'
Daily Business Review
January 11, 2008
Seven Miami shareholders are leaving Akerman Senterfitt, and current and former lawyers with the firm worry more departures are on the way due to economic reasons and growing pains.
Litigators Larry Silverman, James Sammataro and Scott Cosgrove plan to start their own boutique firm; labor and employment shareholders James Crosland, David Miller and Denise Heekin bolted for Bryant Miller & Olive in Miami; and litigator Sean Santini is joining Boyd Mustelier Smith & Parker in Miami. The departures "are completely unrelated. It's a normal course of business when you get to the size that we are," Robert Zinn, president of the 420-attorney national firm, told the Daily Business Review.
He dismissed the speculation about more defections as sensationalism. One source said the firm has missed its budget projections two years running and trimmed pay for partners at the end of last year.
A source familiar with the firm's finances said Akerman missed its budget projection by 12 percent last year and partners were forced to absorb holdbacks tied to insufficient revenue. A shareholder said the budget shortfall was in the 2 percent to 3 percent range.
One source said some associates were taking home more than some partners on a weekly basis due to holdbacks and capital contributions.
Zinn denied the budget shortfall claim. "That's completely untrue. In fact, this year, on average, the shareholders in the firm all in the aggregate made 6 percent more than the previous year," he said.
He speculated the 12 percent figure came from three years ago -- but the firm made 12 percent more than its projected budget that year.
Many shareholders are upset over Akerman's compensation structure and a recent flat-percentage capital contribution system tied to the firm's annual budget projections. Sources said Akerman's compensations structure, which places a premium on originating business, has caused a cannibalistic environment that keeps attorneys from working together. A department head who brings in new clients would not get extra money if the work went to others in the firm, a source said.
Not every lawyer contacted by the Review painted a gloomy picture of Akerman. In fact, the departing Silverman was bullish about the firm. Contacted Thursday at his Akerman office, Silverman said he decided to form the boutique because Akerman had gotten so big it was conflicting out of cases he wanted to handle. "Obviously, the fact that they are very healthy is not something they can or should apologize for," he said.
Other attorneys indicated the firm expanded faster in some markets than it should have, citing haphazard growth to gain a bigger geographic footprint.
The latest defections come just after two other high-profile shareholders left Akerman's Miami office. Brian Garcia, former head of the immigration practice, joined Holland & Knight's Miami office last month as a partner. And labor and employment shareholder Marlene Quintana, also president of the Cuban American Bar Association, left Akerman late last year to join Gray Robinson.
Garcia left Akerman after more than nine years to join Holland's international and cross borders transactions group, where he hopes to build an immigration group. Garcia told the Review earlier this week that he didn't have an opportunity to build a practice at Akerman, and that he felt he did at Holland & Knight -- a notion that Zinn rejected.
Last year, Akerman suffered several other key defections, including the former chair of its corporate securities practice, Kara L. MacCullough. She left last January for Holland & Knight along with corporate shareholders Laurie Green and Esther L. Moreno.
The firm has also suffered departures in its new out-of-state offices.
Three Washington, D.C., heavyweights walked away from Akerman last May to join Fulbright & Jaworski, leaving Akerman without a white-collar practice in the nation's capital. Duane Morris announced Tuesday that three former Akerman lawyers -- Marvin Pickholz, Jason Pickholz and Jane Wexton -- joined their New York office. Marvin Pickholz was the head of litigation for Akerman's New York office and the national co-head of its white-collar group.
Zinn noted that Akerman recently added 21 attorneys to its New York office through various acquisitions. Turnover was described as a two-way street. One shareholder said departures are never a good thing, but they are standard in the business, the firm's business is strong, and he is busier than ever. In contrast, another source said Akerman résumés were flying around Miami. Founded in Orlando in 1920, the firm opened in Miami in 1982 and spread across Florida in the 1990s. Akerman opened in an office in Washington in 2004 and in New York in 2005. The firm's largest office is in Miami.
But sources say the firm has failed to cross-sell its services to clients -- a key to success for large firms -- and blamed that primarily on Akerman's compensation structure. One source said that compensation structure is not likely to change because it favors the core of top partners who control the firm. Shareholder morale has suffered as paychecks have shrunk under pressure from sizable mandatory 401(k) contributions, holdbacks due to the budget shortfalls and increases in capital contributions, according to a source.
Some shareholders were particularly upset with the firm's top leads after they gave themselves large bonuses when the firm missed budget for the second year and while other shareholders were making less money, one source said. The firm's expansion was also blamed by several sources for the firm's budget shortfall and diminishing shareholder compensation.
The growth has also caused Akerman to lose sizable referral business from out-of-state firms that don't have a presence in Florida. After Akerman gave up its Florida-only strategy some firms stopped sending it business because they viewed it as a competitor, said a source, who added the referrals accounted for a lot of work.
Zinn conceded that Akerman is feeling growing pains.
"We tried to expand into Washington and New York, and frankly we may have gotten a little ahead of ourselves on that," Zinn said. "What we found is that we're able to do significantly more corporate, real estate and general commercial than the high-profile, white-collar cases." Zinn attributed whatever turbulence exists at the firm to growing pains as Akerman reached more aggressively into markets outside Florida. With 200 equity partners and about 420 total attorneys, the firm was ranked 108 on American Lawyer magazine's list of the nation's largest law firms, taking in $225 million in revenue and earned $89.6 million in net income in 2006.
Zinn explained the latest departures: He said Silverman, Sammataro and Cosgrove left to realize an entrepreneurial dream. Silverman was Akerman's head of litigation in Miami for two years until last March when he was replaced by Mark S. Shapiro.
Crosland, Miller and Heekin left because the firm required them to add more private-sector clients to their public agency base, according to Zinn. "It's very hard to make that transition. Ultimately they decided it was easier to transition the platform than transition the client base," he said. Miller disputed Zinn's assertion that the three were pushed out of the firm, and said that the three moved to Bryant Miller because they felt it was a more natural fit.
Santini "got an opportunity to work with a guy that he always wanted to work with," Zinn said.
