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Beset by financial troubles that forced it to downsize its business, Steel Hector & Davis in Florida has become the target of a talent raid that has led to the exodus of many of its most experienced lawyers. As recently as last fall, the venerable Miami-based law firm was promoting a growth strategy designed to develop business as far north as Canada and as far south as Brazil. But now the firm, whose South Florida roots run as deep as such other business institutions as Ryder System, Eastern Airlines, Burdines and Southeast Bank, is looking to become a smaller “boutique” firm, managing partner Alvin Davis, said in an interview Thursday. “We’re not a Greenberg Traurig, we’re not a Holland & Knight,” he said. “We are not going to be all things to all people.” While Davis and his fellow partners work to reshape the business, they have had to deal with public reports about the defections of more than a dozen lawyers since January, the late arrival of paychecks and the shrinkage of the firm’s tax and real estate departments. In the interview, Davis voiced displeasure with the airing of his firm’s troubles in the Miami Herald and other publications. “Sure, we have problems, but having a story in the newspaper about them every half-hour is not helpful,” Davis said. “The fires that are being started are on the outside.” Steel Hector’s rivals have seized the day. Some have dispatched headhunters to cull the firm’s 200-lawyer roster for talent. Many of the attorneys are open to offers. “Almost everyone is looking,” said one partner who did not want to be identified. “Morale is low. These departures say a lot.” According to two firm partners who spoke on the condition of anonymity, Steel Hector’s eight-member board of directors, in an effort to stem the tide of departing lawyers, agreed to take a sizable pay cut. That gesture may not be enough to keep some top partners from leaving, some insiders say. Partners are said to be exchanging rumors of who will leave next. Many check their e-mails for word of colleagues announcing their last day. The rumored departure of one prominent lawyer — Raul Valdes-Fauli — was quickly denied by Valdes-Fauli himself. “I am not leaving Steel Hector,” he said in a telephone interview. “I am here in New York meeting with Steel Hector clients.” There were six defections last week. They included two department heads and Jay Kim, who is president of the Asian Pacific Bar Association. Kim, a top litigator who became a partner in January 2004 and handles Korean and other Asian-based business clients in corporate and litigation matters, announced he will be leaving Steel Hector to start a firm with Gregory Ward, a former Steel associate. Kim said his exit “has nothing whatever to do with why the others are leaving.” “I felt bad about the timing, but this was set awhile ago,” he said. “I want to run my own law firm.” Partner Richard Bernstein, who headed the corporate securities practice department, is joining Greenberg Traurig as a shareholder. Sherwin Simmons, who headed Steel Hector’s tax department, moved to the Miami office of Pennsylvania-based Buchanan Ingersoll, taking two other tax partners with him, Darin I. Zenov and Guillermo Quinones. Roy Barquet, an immigration law partner at Steel Hector, is also moving to Buchanan Ingersoll. Bernstein, general counsel for FTAA Inc., and an outside attorney for the Miami Heat basketball team, is active in the Miami Jewish community and is founder and chairman of the Florida-Israeli Chamber of Commerce. He declined comment. Davis declined to discuss why Bernstein left. Additionally, former Steel Hector partner Diamela del Castillo joined Miami-Dade County as an assistant county attorney focusing on general civil litigation, including federal practice and tort work. Del Castillo, who was named partner in January 2004, declined comment. Some partners left, according to sources, as a reaction to the loss of most of the real estate and tax departments earlier this year. Founded in 1925, the firm grew to prominence under the leadership of former managing partner Joseph P. Klock Jr. and in 2000 was ranked second among South Florida law firms in gross revenues in the Miami Daily Business Review 15 survey. Partners who have left have complained of out-of-control expenses, including large delegations of lawyers at the firm chartering planes for international business scouting trips. Two partners who did not want to be identified said partners would open their checks and find them reduced by up to 25 percent, with no explanation, and then learn that colleagues were having the same experience. When they complained to management, they said they were told, “we have a lot of receivables out there.” Davis called reports that partners did not get their full compensation “an absurd point.” He said that, due to clients not always paying on time, some lawyers “did not get their full draws” on two or three occasions. But, he said, the firm made it up by the end of the year. “Everyone got their pay by the end of the year,” he said. Samuel C. Ullman, who sat on the firm’s board of directors for 18 months before departing the firm, said Thursday that he had concerns about Steel Hector’s ability to control expenses. “The money wasn’t being managed well,” he said. “Expenses were too high.” Ullman said he differed with some of the decisions made by Klock, who ran Steel Hector for 25 years as managing partner before stepping aside in November of last year. “I didn’t agree with some of the decisions Joe made, although he’s a brilliant man.” Ullman, a tax attorney who left Steel Hector with William D. Townsend to join Miami-based Bilzin Sumberg Baena Price & Axelrod, did not elaborate. Klock could not be reached for comment.

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