Richard Rosenbaum took the reins of Greenberg Traurig in 2010 as the first head of the 1,750-lawyer firm based outside Miami.

Rosenbaum, who joined the firm in 1985, practiced in Fort Lauderdale before moving to New York in 1996. He succeeded Cesar Alvarez, who ran Greenberg for 13 years.

In an hourlong interview with the Daily Business Review, Rosenbaum addressed a wide range of issues, from Greenberg’s recent capital call to the firm’s financial health to numerous lawsuits filed against the firm. The interview has been edited for clarity and length.

What prompted the capital call?

In 2012, we will raise $12 million from our shareholders. That is 1 percent of our revenues and 2 percent of all our shareholder compensation. We will do the same thing in 2013. That number is much more significant in a small firm. It’s a very small percentage for a $1 billion-plus law firm.

I don’t think there’s another firm that has had our kind of growth and still had much lower capital than our peers, no debt for most of that time and very minor debt when we have any.

Since Cesar was the CEO and during my entire tenure as CEO, we have had regular shareholder calls and regular leadership calls. I believe on many of these occasions it was mentioned that at the appropriate time we believed the firm should increase its equity cushion. We have said this for years. When we got to this year, I felt that we are in the most uncertain times that the legal industry has seen for as long as I’ve been a lawyer. There’s a lot of change going on, people are paying in different ways in terms of alternative fees, there are so many competitive and pricing pressures and then you got to world economic conditions, which I don’t believe people are very sure of where it’s going. As I finished a solid first half of the year, I decided we should take a mild step. Remember, the average capital that most firms have asked for from partners is 30 to 45 percent.

I’m shocked at how much has been made of this. It’s a small step. Yes, this was the first time the executive committee had approved a capital call for the shareholders in over 10 years. But this was not unplanned or unannounced.

Are any further capital calls planned?

We have no present plans to do it again. We recently renewed substantial lines of credit on a long-term basis which have no borrowing on them. They are fully available so we owe no debt, but we have credit lines if we need them. If this were all about cash, I didn’t have to ask for capital, I could have borrowed it. This is a long-term investment in the firm. It’s for a rainy day or for unexpected circumstances. I don’t believe you should rely on debt. We have almost a Depression-era mentality when it comes to debt.

We also have no unfunded pension obligations. What I have seen in the industry is on average, our peer firms are spending 4 to 5 percent of their overhead on retired or former partners. GT is spending zero.

I am not shy about the fact that we have always looked to control our overhead. We have continued to do that during all the growth that we’ve had.

Many analysts say closed-compensation systems are problematic and transparency is key. Why does Greenberg have a closed-compensation system?

What Dewey & LeBoeuf didn’t have is transparency in how their business is doing. We regularly report in detail on every aspect of our business. I owe that to my shareholders. However, we do not disclose individual shareholder compensation, and that has always been the case at Greenberg.

Why do we have a closed-compensation system? It’s always been closed. This is not something invented for today. We get input from a group of senior shareholders who do reviews of other shareholders and provide us with recommendations. But we do have a system where Cesar and I have the ultimate approval. This allows us to run what is a large business in many disparate locations and practices without politics and without visible competition between our shareholders. This has been a major plus in our culture. It allows us to make decisions that make sense to the market.

All the advantages of being able to use different billing rates in different cities and deliver value to our clients — which is what our platform is all about — could not work if people were not collaborative and were competing with each other.

There’s no question Greenberg’s growth has been remarkable. But some have questioned whether Greenberg has grown too fast and lacks internal controls. What’s your view?

Since we were founded, we have always grown, not only based on the needs of clients and to take advantage of opportunities, but when something was a good fit culturally as well as financially. We did grow very quickly for about 10 years. That was our intensive growth period. We’ve been at the same size for the last five years.

I grew up in this law firm. We weren’t always the biggest. It wasn’t about size. It was about quality, and it was about value. As I considered my job in becoming CEO, my mantra from day one has been about the quality and importance and consistence of quality. When I was co-president in 2007, we began doing some things that were solely intended to ensure our excellence in integrity, quality, service and to have consistency in the firm.

When you have 1,750 lawyers, it’s impossible to be without an occasional incident.

After the Abramoff incident, we made some changes. First of all, we focused much more on the functionality and the integration of our practice groups. Hilarie Bass stepped away from her job as head of litigation to become a global operating shareholder. Her purpose was to focus on all the practice groups, making sure they had training and were integrated. Anyone hired has to meet first with the chair of a different office.

In 2007, we started a commitment-to-excellence program. This is a confidential reporting system where anyone, from the receptionist to a partner, can make a phone call confidentially to report any concerns with quality, ethics or integrity. Within minutes or hours of finding something that concerns us, once we give it a fair review and we know the facts, we act and we report and we do whatever is necessary.

We also developed an audit capability in the firm after Abramoff. We have full-time auditors who go to every office and look at every practice doing random investigations on a regular basis of all kinds of things from billing to accounting to time records. The auditors report to an audit committee that does not include Cesar or I, which means, to be blunt, if we do something wrong, we’re not the ones they report to. On a monthly basis, I have a meeting or a conference call with the auditors as well as the commitment to excellence committee to go over whatever issues there may be.

What do you think about what happened in the Coquina case?

Cesar’s statements in court tell the story. We did not willfully do anything wrong. We felt we did not exhibit a level of quality that we expected to in this case. Make no mistake though, the trial lawyers in Miami are excellent lawyers of the highest quality and of the highest ethics. When you get into the e-discovery area, where you are dealing with tens of thousands of documents, these things can happen.

We took action with the person at our firm we felt was responsible.

Do you feel you will lose other clients due to the Coquina case?


Why have there been so many malpractice cases and scandals involving partners around the country?

I don’t believe that our situation is materially different from other firms. One, we are very large, and we are a big target. Two, we do a lot of work — more than most firms our size — in the real estate industry and with entrepreneurs, and those two areas have been shell-shocked during the financial crisis. When people lose or claim to lose money, they are looking for a deep pocket and they are looking for a firm that has resources and an insurance policy, and many times these suits are brought in an attempt to force a settlement.

There have been cases where our auditors determined we did something wrong and we contacted the clients and returned their money. Or the case with the Chicago lawyer accused of overbilling, we fired him immediately. But when we don’t believe we did something wrong, we may not allow ourselves to be forced into an unwise settlement.

How is your management style different from Cesar Alvarez’s?

Larry Hoffman and Cesar Alvarez have long been my primary mentors and they, Matt Gorson and I have been a team for many years and speak often. We each have our own personal styles, are different people, grew up in different places and have varying amounts of hair. But I learned this business from them, we all share a leadership-through-service mentality, we have a common vision and business instincts, and all of us are dedicated to its lawyers and business staff. So I might send longer emails than Cesar, he may like to talk a little more, but he and I are in this together, and we both greatly appreciate the dedication and contributions of every individual to our long-term success.