Gary Rosen, managing shareholder of Becker & Poliakoff, is withholding up to 20 percent of equity partners’ salaries — a move he acknowledges has not been popular.

“The reaction was not necessarily a standing ovation,” Rosen said.

The holdback was not motivated by financial trouble at the Fort Lauderdale-based firm, merely adopting a common industry practice and to shore up cash reserves, Rosen insisted.

Since taking over as managing shareholder of Becker & Poliakoff 18 months ago, the litigation attorney has put his own imprint on the firm.

Rosen also hired a new chief operating officer, human resources director and information technology director, oversaw three small firm acquisitions and found new headquarters in downtown Fort Lauderdale. In January, the 145-lawyer firm will move into the top three floors of the Wells Fargo Tower, leaving south Broward County after 25 years. Rosen also moved the firm’s Maitland office to a more central location in downtown Orlando.

But one of his biggest and perhaps most controversial moves came in January when he instituted a 20 percent holdback for equity partners.

Rosen says he was motivated to institute the holdbacks after attending managing partner conferences, talking to consultants and discovering it is a common industry practice, he said.

“The standard is partners do not take 100 percent,” he said. “They are owners of the business. It makes sense to have a reserve.”

But others aren’t so sure. Two former partners who did not want to be identified said two paychecks were withheld late last year without notice. And a half dozen lawyers have left in the last year, some say due to financial concerns.

A spokeswoman for Becker & Poliakoff confirmed last year’s withholds and the blanket holdback instituted this year.

“Every law firm experiences ebbs and flows with its cash flow,” spokeswoman Susan Greene said. “This way we can budget ahead.”

This is not the first time Becker & Poliakoff has instituted a salary holdback. In 2008 at the height of the recession, the firm took a 12 percent salary holdback for all attorneys. At least one associate sued the firm to get their money back. The firm said everyone who stayed was fully paid by the end of the year, and it settled the associate’s lawsuit.

Perhaps learning from his predecessor’s experience, Rosen said he preferred to institute holdbacks only for equity partners, who can better afford it rather than associates.

Standard Practice

A former Becker lawyer who asked not to be identified said the way the news was delivered created much of the problem. Instead of discussing it at a partnership meeting, Rosen announced the holdbacks in an email to partners in January, he said.

“We received an email out of the blue, not a phone call, not an equity partnership meeting,” one former lawyer said. “Who does that?”

Rosen denies this, saying a meeting was held about the matter.

Another former Becker & Poliakoff lawyer who did not want to be identified cited another partners’ meeting where one lawyer began yelling and another started crying.

Rosen said he just announced he will roll back the holdbacks from 20 percent to 10 percent starting July 1, and all will be paid in full by the end of the year.

“This has nothing to do with the economic circumstances of our business,” he added. “We’re fully reserved. Ultimately, I think the partners understood … and recognize it’s a smart way to run a business.”

Rosen said Becker & Poliakoff does not use its line of credit to fund operational expenses.

Other legal industry experts say holdbacks for equity partners are standard practice. Some firms have far higher holdbacks, from 30 percent to 40 percent, experts say. Other firms refer to distributions or bonuses rather than holdbacks.

“I think it’s more standard than not,” said Abbe Bunt, a legal recruiter with Bunt Legal Search of Hollywood. “Twenty percent is reasonable. Most big firms do have a holdback of a much higher percentage.”

Noted Ivan Reich, a former Becker partner now at GrayRobinson: “I don’t think it’s an act of desperation. Most firms do some form of that. I don’t think any lawyer likes it, but it’s not an uncommon management practice.”

‘Bold Moves’

Some have been critical of Rosen’s other moves, such as the Fort Lauderdale and Orlando office moves. The firm’s bread and butter has been work for condominium associations, and some question whether those clients — often seniors — will appreciate parking in downtown Fort Lauderdale and navigating a high-rise building.

“I think it’s a bad decision,” said Penny Barnard, a former 30-year litigation secretary who retired in 2011. “The parking situation is bad for customers and employees. It just doesn’t make sense.”

Alan Becker, Rosen’s predecessor as managing partner, defended the moves as part of Rosen’s plan to move the firm’s image away from condo work to be seen more as a corporate law firm.

“They wanted a fresh look,” Becker said. “We’ve always had a good commercial practice, but we’ve not been known for it. He’s trying to position the firm so our reputation catches up to our work.”

Additionally, Rosen said he was able to capitalize on an “unheard of” commercial real estate market and get outstanding leases in both markets. He did not disclose the terms of the deals.

Becker gives good marks to his hand-picked successor’s performance thus far.

“He’s made some bold moves,” Becker said. “I am thrilled with the job Gary is doing. I had planned for him to be my successor in managing the firm, and it’s working out exactly as I hoped. He’s grown beautifully into the job. He’s making very strategic moves.”

Becker noted Rosen voted against his own self-interests with the Fort Lauderdale move since Rosen, Becker, former managing partner Gary Poliakoff and Broward Circuit Judge Jeffrey Streitfeld, among other former and current partners, own the building they are leaving. It’s up for sale for $10 million.

“He’s been trying to put his own imprint on the firm,” Bunt said. “It’s clear that there’s a new person driving the boat. What that means is the firm is changing course slightly, but it’s not charting new waters.”

Several have chosen not to stick around to see where the new helmsman is headed.

Poliakoff’s son, Keith Poliakoff, shook up the Broward legal community last month when he left the firm for Arnstein & Lehr, taking two lawyers with him. Poliakoff was one of a string of government affairs lawyers to leave the firm.

Rosen is the first to acknowledge his leadership may have created some harsh critics.

When asked whether the firm might add his name, he joked, “I have enough of a target on my back as it is.”