From technology to healthcare and infrastructure projects, South Florida offers a wide array of growth opportunities in the coming months for the region’s businesses, as well as law and accounting firms.
“We see real opportunities for growth in IT and the life sciences,” said Barry Gould, CPA, partner-in-charge of South Florida, EisnerAmper in Miami. “New products and applications are being developed with the financial support of wealthy individuals, private equity and venture capital sources.”
On the federal level, tax reform and some deregulation of the nation’s financial sector could act as a stimulus to business growth. “However, a loosening of credit or a decrease in financial regulations can lead to volatility in real estate, which generates litigation work for South Florida firms,” said John Genovese, partner, Genovese Joblove & Battista in Miami.
Healthcare is another sector that could be changed by the U.S. Congress and the Trump administration, which is wrestling with potential new regulations to “repeal and replace” the Affordable Care Act. “In South Florida, healthcare is a major element of our economy,” said Mark Raymond, Miami managing partner, Broad and Cassel. “Physicians, hospitals and other providers have an ongoing need for transactional, regulatory, compliance, investigative and litigation services.”
But regardless of what happens in Washington in the coming months, the region’s economy is expected to stay on its upward path, according to managing partners at law and accounting firms interviewed by South Florida Legal Guide. In turn, those firms are growing to serve their clients, including advising on mergers and acquisitions, financing, taxes and litigation matters.
“With 300,000 people a year moving to Florida, there are plenty of legal opportunities in tax and estate planning, to take just one example,” said Raymond. “Knowing the nuances of Florida’s laws and regulations is particularly important in these fields.”
New roadways, utility facilities and transit-oriented developments (TODs) will generate new jobs for the region, says Al Dotson, partner, Bilzin Sumberg Baena Price & Axelrod LLP.
“These projects generate a significant amount of construction activity, as well as new employment opportunities after completion,” said Dotson, whose practice includes land development, government relations and public-private partnerships (P3s) involving the design, building, operations, maintenance and financing of new developments.
“P3 projects shift risk from the public to the private sector, and each has a unique structure,” said Dotson, whose firm is advising on Genting’s Resorts World development, involving a hotel, retail and other uses above and around the Omni Metromover site just north of downtown Miami. Other P3 developments involving Bilzin Sumberg include the Virginia Key Marina, the Brightline/All Aboard Florida multimodal terminal with TriRail and Metrorail.
Along with increasing staffing to handle P3 transactions, Bilzin Sumberg has added attorneys in international tax, inbound investment and antitrust litigation in the past year. “If federal infrastructure funding comes through at the federal level, we expect that will lead to increased land use, zoning and other corporate work,” Dotson said.
Alexander I. Tachmes, chairman of government relations, zoning and land use at Shutts & Bowen LLP in Miami, also expects continued growth in P3 projects. “Governments are using this approach to attract developers and generate tax revenue for their residents,” he said. For example, Shutts & Bowen represented ESJ Capital Partners, an Aventura-based asset management firm that purchased Jungle Island from the City of Miami through a long-term ground lease. “A developer can allocate more funds to improve a property through a ground lease, because it eliminates the upfront cost of buying the land,” Tachmes added.
In the hospitality sector, Tachmes says the renovation of the Miami Beach Convention Center, now underway, will help attract more business-related travel to the region. Now under construction, the center will reopen briefly for Art Basel Miami Beach in December, and then close until the project is completed in late 2018.
“South Florida’s hotel sector has grown substantially in the past decade, and there are more rooms competing for tourist dollars,” he said. “Therefore, investors need to take a tactical approach and carefully identify potential opportunities.”
Tachmes also advises caution in the high-rise residential construction sector. “While there are still many towers under construction, there aren’t many developers walking into a zoning lawyer’s office and wanting to start a new project, especially in the Brickell and downtown markets,” he said.
The flow of money into South Florida’s real estate market is likely to lead to financial distress and litigation in the future, says Genovese. “Our firm is handling two Federal Trade Commission (FTC) receiverships, which suggests there is economic pressure in the marketplace,” he said..
In addition to litigation and bankruptcy, Genovese Joblove & Battista is expanding its fiduciary and franchising practices, said partner Michael Joblove. “Litigation is on the uptick now,” he said. “Our firm is handling more cases on Florida’s Gulf Coast, and we continue to expand our services across the state.”
While real estate, healthcare and hospitality will continue to be mainstays of South Florida’s economy, the marijuana business may take off in the next year, says Michael Ehrenstein, partner, Ehrenstein Charbonneau Calderin in Miami who concentrates his practice on litigation.
“The state Legislature hammered out a deal to add 10 new licenses to the previous seven,” he said. “Each licensee will be able to build a vertically integrated operation from seed to sale with up to 25 dispensaries,’ Ehrenstein said. “That will increase demand for real estate for growing, distribution and retail facilities, and result in more legal work, from arranging financing to transactions and litigation.”
Immigration will be another active sector for the region’s law firms due to the Trump administration’s changes in policy, political turmoil in Central and South America, and other factors, adds Ehrenstein.
“Legal immigrants play a vital role in our economy,” he said. “They add to highly diverse professional workforce and they establish businesses and create new jobs. “In turn, they need advice in negotiating a lease, buying a home and complying with our tax code.”
Looking at the long term, Ehrenstein says global trade will propel the economic vitality of South Florida. “Our transportation, logistics and import-export businesses will be powerful drivers of growth for the region,” he said.
South Florida’s technology sector continues to gain traction, as indicated by the success of the recent eMerge conference, which showcased the region’s capabilities. That growth offers opportunities for law and accounting firms to address issues like licensing, financing and strategic partnerships.
Shutts & Bowen has hired more than 20 new lawyers in the past year, including several in the intellectual property (IP) and cyber security sectors, said Tachmes. “Businesses have many questions about their liabilities in the event of a cyber attack,” he said. “We have also seen law firms hit with hacking attempts as criminals attempt to gain information on clients and pending deals. Our firm hired a cyber security professional and we expect other law firms to do so as well.”
However, advances in technology, such as artificial intelligence (AI) and predictive analytics will also be changing the legal and accounting sectors. “AI will also have a huge impact on law firms, said Raymond.
For example, an AI application could draw on a database of court decisions throughout Florida and the U.S. and predict the outcome of a new cases, such as a personal liability lawsuit filed by an elderly Floridian who slips and falls at a store. “A general counsel for the defendant could look at the findings from an AI system and decide to settle 85 cases of 100 cases,” Raymond said. “It might fight 10 of those cases where the facts are in its favor and decide individually on five cases considered toss-ups. But the law firm may only be handling 15 of those 100 cases, while the rest would be sent to an adjuster to settle.”
Gould says artificial intelligence will also be disrupting the traditional accounting field, handle some aspects of tax compliance and audit work. “Our firm is investing in AI, because that is the future,” he said, adding that AI’s decision-making support will free up accountants to focus on value-added services, such as consulting and business planning.
“When our clients are buying, selling or investing they want to talk with our people before making a decision,” Gould said. “That’s something AI can’t do.”
In South Florida, EisnerAmper has added expertise in areas like real estate, healthcare and financial services, including hedge funds and private equity firms, as well as trusts and estates.
Knowing the Numbers
Getting an accurate financial picture is crucial when buying or selling a business, developing an estate plan, mediating a divorce or representing a client in court, says Sheri Fiske Schultz, CPA, managing director and director of litigation support & valuation services at Fiske & Company.
“We are seeing a great deal of merger activity, as smaller companies are being acquired or merging with others in order to compete with larger competitors,” Schultz said. “That’s a huge part of our practice, and we see no signs of a drop in M&A activity, especially in the service industries.”
On the litigation side Schultz says 99 percent of the cases are settled rather than going to trial. That means discussing “the numbers” during mediation, including using forensic experts to analyze the finances, she said.
South Florida business owners also need to pay close attention to developments in Washington relating to taxes, Schultz said. For instance, the Internal Revenue Service has proposed eliminating discounts when interests in closely held businesses or family-controlled entities are gifted to family members.
“These discounts enable the individual making the gift, usually the parent, to reduce the value of the gift by discounts for lack of marketability and lack of control,” Schultz said. “Because valuation professionals have previously been able to support such discounts of up to half of the value of the original interest, this is significant. Individuals should take full advantage of the existing discounts while the proposed regulations are in a state of flux.”