Risk Taker

Risk Taker

An established Orlando attorney uproots a successful law practice

to start over in St. Petersburg.

By David R. Corder

Associate Editor

Over the past 21 years Larry Heinkel built a lucrative Orlando law practice. He became a go-to lawyer for physicians, lawyers and subcontractors with tax problems. As a Winter Park resident, he frequently volunteered for public service while also raising a family. But earlier this year, at age 46, he did what many well-established lawyers might consider unthinkable.

In March, Heinkel leased office space about 100 miles away in the Northern Trust Bank Building in downtown St. Petersburg. A month later he and Liz, his wife of 11 years, bought a condominium just blocks away. The couple, she is the law firm's administrator, designated the waterfront city as the new headquarters for R. Lawrence Heinkel LLC.

The allure of sand and the Gulf, coupled with all the economic necessities that the Tampa Bay area's urban density has to offer practicing attorneys, enticed the couple. Years of frustration with Orlando's increasing traffic woes quickened their decision to relocate. St. Petersburg seemed the perfect solution.

"There's more to life than just making money, and I don't think it will impact me negatively," he says. "I don't want to bash Orlando. Our friends kid me about moving to the land of the blue hairs. They have no idea how young and vibrant downtown is."

Routine task

Despite the apparent risks, Heinkel doesn't worry too much about the impact of the relocation on the client list he has worked so hard to compile since leaving the University of Florida Levin College of Law. That's where he earned undergraduate and law degrees, as well as a master of laws degree in tax law.

Early on Heinkel worked at Orlando's Akerman Senterfitt & Eidson PA. Three years of work there then earned him a job at Dean Mead Egerton Bloodworth Capouano & Bozarth PA, which staffs one of Orlando's most prominent tax departments. But three years later reality had set in, and Heinkel decided to go solo.

"I've always been a good business generator," he says. "But at Dean Mead it was hard to make your mark because the entire tax department has LLMs."

Around the time he ventured on his own Heinkel accepted what at first seemed to be a routine engagement. The Florida Bar wanted him to speak at a seminar about what happens to taxes during bankruptcy. Then he realized the magnitude of the request. "The tax code is 6 inches thick, and the (volume of) bankruptcy laws are 6 inches thick," he says.

Now about 14 years later, Heinkel attributes his research for that speech as possibly the single most important turning point in his legal career.

"I'm one of the few attorneys around who have learned how (bankruptcy and tax law) interrelates," he says. "So half my business is now bankrupting tax debts. It's been very lucrative. I'm glad the bar asked me to give that speech."

It also spawned a passion about this portion of his law practice.

"Now, I consider it to be outright malpractice to not understand how bankruptcy can be used to resolve tax debts," Heinkel says. "It can be a complete discharge."

That's no hyperbole, says St. Petersburg attorney G. Ray Gibbs, past chairman of the bankruptcy committee of the Florida Bar's tax section. He, too, says few attorneys in the state understand the interrelationship of tax and bankruptcy laws.

"I would say there are not a lot (of attorneys) who have done that," acknowledges Gibbs, who also shares office space with Heinkel in the Northern Trust Bank Building. "Certainly, more and more of them are starting to move up that learning curve."

There is a simple reason why so few attorneys understand the interrelationship, Gibbs adds. "Partially because it's so complicated," he says. "A lot of the bankruptcy lawyers don't want to get involved in tax issues and refer those issues to their accountants or tax experts. But the number of people who are learning the rules (governing the discharge) of taxes in bankruptcy is a growing number."

Game plan

Just as any good entrepreneur, Heinkel capitalized on the research he uncovered. He came up with a plan.

Instead of offering an initial free consultation, Heinkel charges his clients a $300 fee for what he calls the game-plan meeting.

"I'm going to ask a lot of questions, get facts," he says. "I offer pros and cons. I tell them what the IRS can and can't do. About 70% of the time that's all they need from me. They can do (the rest) on their own."

If the tax battle is complicated, however, Heinkel then creates a plan to negotiate a solution with IRS personnel. He relies on two key subcontractors to do this: Shirley Johnson, a former IRS employee, who works with clients on IRS audit and tax collection matters; and Kathy Roberts, a paralegal, who handles the bankruptcy proceedings. After the initial consultation, Heinkel monitors the process to ensure each client's legal needs are met.

"I've got two great people to do the bulk of the work to keep the fees down," Heinkel says.

This team relies heavily on technology to process the majority of the work. Heinkel says it was natural for him years ago to integrate the fax machine and cell phone into his practice when those products became practical tools. As the Internet became more business-friendly, he quickly adopted e-mail protocols and contracted with salesforce.com, a provider of secure database services, to improve his team's operating efficiency.

"I'll be the first with video conferencing when it is high quality, low cost and acceptable by the public," he adds.

Then there is the federal courts adoption of the electronic case filing/case management (ECF/CM) system, which allows Heinkel or his subcontractors to file petitions across the Internet anytime from anywhere.

Such tools bolstered Heinkel's decision to relocate to St. Petersburg. Once or twice a week he still meets with clients in person in the Orlando area. The rest of the time he spends in St. Petersburg.

"After my first meeting, I rarely see my clients again," he says. "Everything is done through e-mail, the phone, the fax and, soon, video conferencing."

The efficiency of such a law practice is not lost on clients such as Orlando area resident Scott Lee, who relied on Heinkel to solve long-standing IRS problems. Several independent sources referred Lee to Heinkel after Lee found little satisfaction from legal advice he obtained elsewhere.

"It was so frustrating because every attorney I talked to gave me a different answer," recalls Lee, who has long since solved his IRS problems with Heinkel's advice. "What I was looking for was a road map to get out of the tax trouble I was in. Every attorney had a radically different version of what that would involve.

"What (Heinkel) told me happened exactly as he told me it would," Lee adds. "And all along the way he alerted me to the potential areas where his predictions might not be true. He was talking with me very honestly."

Competitive obstacles

One of the biggest obstacles Heinkel encounters on the job are the unrealistic expectations competitors push through unregulated advertising on prospective clients. He says these competitors are typically neither attorney nor certified public accountants. They are enrolled agents, who earn IRS credentials by passing a test.

"The toughest part of my business of practicing law is that my competition is not subject to the same advertising restrictions that I am as a member of the Florida Bar," he says. "That's impacted two ways. No. 1, some competitors advertise pennies on the dollar settlement, which is a rare occurrence.

"It creates unrealistic expectations for prospective clients who expect the IRS to roll over and accept a settlement of pennies on the dollars," he adds. "The truth is the settlement is based entirely on the taxpayer's ability to pay not on the percentage of what's owed."

Such IRS requirements have spawned a cottage industry catering to beleaguered and uneducated taxpayers. In Charleston, S.C., for instance, J.K Harris & Co. has evolved into what many consider to be the nation's largest tax representation and negotiation firm.

But Internet forums, such as ConsumerAffairs.com and Baddealings.com, contain purported complaints that assail the South Carolina company for its alleged non-responsiveness to customers. Those complaints claim the company offers free consultations on tax delinquency problems but then bill clients thousands of dollars.

"The second thing about my competitors is they can advertise improperly," Heinkel says. "There also is not necessarily any minimum education or experience required (for employees who act as an enrolled agent). I think people should go to a tax lawyer because inherently these are legal problems. Because the competitors are not lawyers, they can't offer solutions that only lawyers can do such as bankruptcy."