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Business Observer Friday, Feb. 13, 2009 9 years ago

Below the radar

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Despite enormous economic growth and a population topping one million people, established Southwest Florida law firms such as Henderson Franklin have successfully kept the big law firms at bay by focusing on their own market.
by: Jean Gruss Contributing Writer

Where are the big boys?

Most of the biggest law firms are missing from Southwest Florida, a curious thing considering the area's growth in recent years.

Combined, the population of Collier, Lee and Charlotte counties equals that of Hillsborough or Orange counties, but only one of the top five law firms identified by Florida Trend magazine last year has a presence in Southwest Florida: Tampa-based Fowler White Boggs Banker.

Absentees include Akerman Senterfitt, Greenberg Traurig, Holland & Knight and Carlton Fields.

That's just fine by Denis Noah, managing partner of Henderson Franklin Starnes & Holt. The Fort Myers-based firm is so well entrenched that it would be difficult for any firm to gain market share here without acquiring them.

At least one firm, Holland & Knight, routinely refers clients to Henderson Franklin when it has corporate or estate-planning work in Southwest Florida. In return, Henderson Franklin refers more specialized cases to Holland & Knight's Tampa office, such as the recent deal to take Fort Myers-based Radiation Therapy Services private.

Henderson Franklin's strength illustrates how a relatively small firm has managed to stave off competition by remaining focused on customers in Southwest Florida and tamping down expansionist plans even as the economy and population exploded in recent years. What's their secret? “I don't know that there are real secrets,” Noah laughs. “We return phone calls,” he offers.

Other forces have kept large corporate-law firms away, including an economy that's not well diversified beyond real estate, agriculture and tourism. Lawyers also acknowledge that large firms can't command the same big fees in Fort Myers that they can charge in Orlando or Tampa.

It's not that they haven't tried. Tampa-based Annis Mitchell opened an office in Fort Myers until the firm dissolved in 2001. It's taken Fowler White 27 years to build the 18-attorney Fort Myers practice and it recently closed its Naples and Bonita Springs offices after trying to break into tax and estate work down there.

Local real estate attorney and Fort Myers Mayor Jim Humphrey joined Fowler White in 2001. “Southwest Florida has not been terribly receptive to firms outside of the area,” concedes Joseph Coleman, a shareholder and director at Fowler White in Fort Myers. “It's hard to come in and take business from existing firms,” he says.

Henderson Franklin is not alone. Fort Myers-based Pavese Law Firm and Akron, Ohio-based Roetzel & Andress are other firms that have strong reputations in Southwest Florida corporate work. They've been able to attract good lawyers because they offer job stability and the Southwest Florida lifestyle, says Peter Gravina, a partner at Pavese.

Defending the home turf
Certainly, longevity is Henderson Franklin's hallmark. It was founded in 1924 at a time when Thomas Edison was tinkering with his inventions at his winter home along the Caloosahatchee River. It also never had big expansion plans, preferring to stick to Fort Myers, Bonita Springs and Sanibel.

Even during the recent boom, it didn't stretch its 57 lawyers much beyond Southwest Florida's borders. It stayed out of Naples because most of the legal work there is related to tax and estate planning, something handled by the Naples affiliates of northern firms that follow their clients there in winter.

“This is a conservative area,” Noah says. That means local businesses are less likely to trust outsiders with legal work and they're not likely to pay attorneys fees as high as those charged in other Florida cities. “My biggest challenge is to keep clients happy and hire people who want to keep clients happy,” Noah says.

Henderson Franklin touts its stability when it recruits. One attorney, Ernest Hatch Jr., has been with Henderson Franklin for 41 years. Noah himself is a 28-year veteran. “Most of the attorneys who come here stay here,” Noah says.

Noah says Henderson Franklin has rejected offers from outside firms that wanted to enter the Southwest Florida market. “We have a very collegial firm culture,” Noah says. “We don't want to lose that.”
It's not that Henderson Franklin doesn't lose attorneys from time to time. Lt. Gov. Jeffery Kottkamp left Henderson Franklin to join personal-injury firm Morgan & Morgan before he became Gov. Charlie Crist's running mate. He resigned from Morgan & Morgan after he was elected.

Large firms that haven't broken into the Fort Myers area will refer work to Henderson Franklin and hope they return the favor. “They send work to me and I send work to them,” says Richard Hadlow, a partner with Holland & Knight in Tampa.

Holland & Knight is part of the Florida Law Network, a group of smaller firms that work with Holland & Knight and each other to refer business. “They send us as much work as we send them,” Hadlow says. “It's been a very successful affiliation.” It also saves Holland & Knight from peppering the state with offices and overhead.

There is general agreement that attorney fees in Fort Myers aren't as high as elsewhere, though attorneys are reluctant to cite exact figures. That makes it difficult for larger firms to open offices in places such as Fort Myers. “It is somewhat difficult for lawyers to succeed in a large firm if they're billing less than their counterparts [in other cities],” says Coleman of Fowler White. Part of the challenge for any firm trying to make inroads in Southwest Florida is to grapple with the lack of economic diversification. “We're primarily a local economy with a lot of retirees,” says Pavese's Gravina.

Legal work for the real estate and agriculture industries is primarily derived from close relationships with landowners and that always gives the advantage to the local law firms. That's one of the reasons Fowler White got real estate attorney and Fort Myers Mayor Jim Humphrey to join the firm in 2001. “Those are relationship-type practices,” Coleman says.

However, Coleman says the economy has broadened in the last few years and Fowler White plans to have 25 attorneys in Fort Myers within a few years. “We just don't have big industry, but I'll tell you that's changing,” Coleman says.

What the future holds
Henderson Franklin's Noah won't say the firm will never be sold, but for now it's not in the cards. For one thing, the housing-led economic downturn doesn't make a deal very appealing now.
Although some real estate attorneys are working for developers who believe a recovery is on the long-term horizon, Noah says some of its real estate attorneys are now providing support to the firm's litigators who are busy because of the economic downturn.

“Litigation is the biggest part of our business,” Noah says. “If law firms are well balanced, they can weather the upturns and downturns.”

That's exactly what Henderson Franklin is planning. “I wouldn't say we're wildly expansionist,” Noah says. It offers other legal services besides corporate litigation, including family law, tax law, estate planning and insurance defense.

Noah says the firm will grow in line with the area's population, which could one day be substantial if the forecasts are right. “We haven't started seeing the meat of the baby boomer generation yet,” he says.
Noah doesn't believe taxes and insurance rates will hamper growth. Neither are the rising burdens of regulations on developers, which have turned zoning into a quasi-judicial process. “It's almost equivalent to a trial,” he notes.

Economic diversification should be a priority for Southwest Florida, however. “The challenge is getting light, clean industry,” Noah says.
Meanwhile, the worst of the real estate downturn may be behind us, Noah speculates. “It generally gets worked out in the long run,” he says. “We'll start climbing out of it this year.”

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