Crain's Cleveland Business

VOL. 39, NO. 27

JULY 2 - 8, 2018

Source Lunch

Akron Former COSE head Steve Millard is ‘all in’ on Rubber City. Page 20

CLEVELAND BUSINESS

Joe Mazur, president & CEO, Cuyahoga Valley Scenic Railroad Page 23

The List Northeast Ohio’s largest law firms Pages 18-19

AT THE TABLE

By JOE CREA clbfreelancer@crain.com

I

ndustrial parkways are filled with surprising enterprises. One in Brecksville is home to one of the region’s most prolific coffee roasters — even under a name that might barely ring a bell for shoppers who pour over a sea of labels while shopping for their next bag of beans.

Brecksville-based Caruso Coffee Co. is steadily growing and has become a stealth powerhouse. The company acquired the Erie Island Coffee brand and its Rocky River and East Fourth Street Cleveland locations, with plans to expand the shops to other parts of Northeast Ohio.

Dominic Caruso, the company’s director of operations, said Caruso A properly Coffee’s current annual production is drawn shot of about 4 1/2 million pounds, with a espresso capacity of 6 million pounds per year. shows a light, He said he sees production ranging foamy layer upward of 10 million pounds “in the over the deep, foreseeable future.” dark body of the coffee.

SEE CARUSO, PAGE 6

SOMETHING BIG IS BREWING Brecksville-based Caruso Coffee Co. is a national roasting powerhouse

With help of millennials, NEO’s coffee culture has perked up

By JOE CREA clbfreelancer@crain.com

Remember when coffee, like so much else in life, was simple?

You plugged in the percolator, scooped some Maxwell House or Chase & Sanborn into the basket and halfdozed in your chair until that unmistakable aroma lifted you from your stupor.

Time was when a few generic blends from a handful of trusted brands dominated the breakfast table. No more. America’s coffee culture has peaked like a July 4 fireworks finale.

First, it’s a matter of sheer numbers. Reuters news service reports that Americans’ coffee consumption in 2018 is the highest it’s been in six years. Sixty-four percent of consumers age 18 and older report they’ve had a cup of coffee the previous day.

Coffee beans are tossed in the cooling chamber of the Lilla roaster, a Brazilian machine that can roast and cool more than 500 pounds of coffee in a batch. See a photo gallery at crainscleveland.com. (Photos

by Peggy Turbett for Crain’s)

SEE COFFEE, PAGE 22

Focus: Legal Affairs In-house attorneys are juggling multiple tasks. Page 11 >> Benesch: Culture is key Page 14

BUSINESS DEVELOPMENT

GCP takes on greater COSE role GCP staff is overseeing the work that had been led by Millard

By JAY MILLER

Entire contents © 2018 by Crain Communications Inc.

jmiller@crain.com @millerjh

It’s unlikely that the Council of Smaller Enterprises (COSE) will have a new, or even an interim, leader any time soon.

No succession or search plan has been undertaken by the small business advocacy organization since the announcement in April that executive director Steve Millard would be leav-

ing the organization he served for 21 years on May 31. He is taking over as president and CEO of the Greater Akron Chamber, following the resignation last year of that organization’s longtime leader, Dan Colantone.

Without Millard, the small business advocacy group will be run without a direct leader, said John Young, the owner of Speed Exterminating Co. and chair of COSE’s board of advisers.

Instead, it will rely on current staff of the Greater Cleveland Partnership,

the regional chamber of commerce that has long nurtured COSE under its umbrella. Since a reorganization in 2016, the two organizations have effectively operated as a single staff.

“It’s a good question, but one we don’t have an answer for yet,” Young said in a recent telephone interview, when asked about a successor to Millard. “Since the realignment with GCP, we made a decision then we could work closely with all the people under one roof.”

SEE COSE, PAGE 21

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CRAIN’S CLEVELAND BUSINESS

Forest City set to sell big, local apartment portfolio

By STAN BULLARD sbullard@crain.com @CrainRltywriter

The Hamptons, a 633-suite complex, is among a portfolio of Northeast Ohio apartments that is being marketed for its owners, a joint venture of Forest City Realty Trust and Millennium Co. of Beachwood. The midrise complex adjoins Beachwood Place. (Contributed photo)

The latest trio of Northeast Ohio properties that Forest City Realty Trust is offering to sell as part of its shift to larger, more profitable markets than its hometown has Michael Barron and colleagues in his Marcus & Millichap sales team also selling Cleveland for a change.

“It’s really nice to get investors into Northeast Ohio who don’t know Cleveland and have not invested here before,” said Barron, a Marcus

& Millichap senior managing director. “We’ve found ourselves describing the region and showing it to people who have never looked at it before.”

That’s because the 1,837 suites are in just three communities and each alone a tasty morsel for a big fish in the multifamily game: Tamarac in Willoughby, Hamptons in Beachwood and Deer Run in Twinsburg. Each is of enough scale, quality or rent range to attract large investment groups that won’t look at small deals in the region or were turned off by the region’s sour economic state. They’re

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also debt-free and high quality, and they’ve never been marketed before.

Technically, the ownership of the offerings is a 50% joint venture between the Key Tower-based realty giant and Beachwood-based Millennium Co., now operated by offspring of real estate developer Norman Milstein.

When Forest City was Northeast Ohio’s largest and most aggressive developer from the 1950s to 1980s on its way to national megaprojects, it frequently formed such partnerships to put up local projects. Millennium even manages the trio of complexes today and, separately, has a massive portfolio of its own.

“This is truly a once-in-a-lifetime opportunity,” Barron said in typical broker-speak.

In itself that is not far from the mark, but such an opportunity could be equaled again. Forest City still will own almost 8,000 suites in the region if these three apartment complexes all trade.

That’s even after it has already sold thousands of suites to joint venture partners since starting its restructuring in 2015. The dispositions under CEO David LaRue also led it to dispose of its downtown office portfolio, which included properties such as the landmark Terminal Tower.

Forest City, in its continuing quest to try to get its stock price to reflect the street value of its $8 billion portfolio, now casts itself as a developer of urban mixed-use properties with apartments and offices in 10 major markets from New York to San Francisco.

Nationally Forest City owns more than 12,000 suites in core markets, with about 3,000 of those held in joint ventures.

Forest City spokesman Jeff Linton wrote in an email that the company considers the Marcus & Millichap offering as “exploring options.”

However, with the apartment market basking in its warmest period in decades and a huge appetite for investment real estate, it’s unlikely that Barron and team members Dan Burkons and Joshua Wintermute won’t find prospects for even this discriminating seller.

Selling even a single property would be a multimillion-dollar realty deal.

Monthly rents in the properties range from $1,225 to $3,380 at the Hamptons, $860 to $995 at Tamarac and $835 to $960 at Deer Run. Vacancy rates range from 3.7% to 5% in the properties, according to online realty data service CoStar.

However, the value of the properties does not mean there is not upside for a new owner. That’s partially due to the age of the buildings, some as recent as the 1990s but a few dating from 1969. That means they may have strong rental locations but lack amenities that bring rent premiums today.

For example, Marcus & Millichap’s offering materials note Deer Run could perhaps garner higher rents by adding a clubhouse, which is typical for newer communities.

Millennium did not return three phone messages and an email from Crain’s Cleveland Business by deadline last Friday morning, June 29.

CRAIN’S CLEVELAND BUSINESS

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Ursuline ‘sharpens’ recruiting message

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

Susan Dileno, Ursuline College’s new vice president for enrollment management, has a big job ahead.

Ursuline’s enrollment has been falling for years. In fall 2008, the women-focused college in Pepper Pike had 1,430 students enrolled. In fall 2013, enrollment had been 1,344.

By fall 2017, enrollment was 1,124.

But college leadership is hopeful.

The declines have been shrinking, and there is a bright spot: Graduate enrollment grew from fall 2016 to fall 2017 despite the overall decline in enrollment.

Ursuline has seen challenges in enrollment in recent years, but it’s not alone, Dileno said. Dileno has worked in enrollment at schools including Baldwin Wallace University and Ohio Wesleyan University for years. As a women-focused college, Ursuline’s target enrollment pool is smaller than most, but many of Ohio’s private institutions have faced similar hurdles: a shrinking pool of possible students and a hesitance of families to choose private liberal arts colleges.

Sister Christine De Vinne, president of the college, pointed to a competitive market of community colleges and for-profit schools in the region.

And a tornado that ripped through campus in July 2013, destroying the athletic center, certainly made the situation tougher as it made it more

signing its website, and it’s working difficult for the college to recruit stuwith an outside group on a market dent-athletes, De Vinne said. The study of the competition in Northeast biggest losses in recent years were in Ohio. The study will help Ursuline fall 2013 and fall 2014, with the de“sharpen” its message, De Vinne cline lessening every year. said, and it will help the college focus Dileno thinks it’s a good time for where and how it recruits future stuher to join Ursuline. dents.

“There’s been a lot of momentum When forming the strategic plan, and a good foundation laid, even beone of the first things the committee fore I arrived, that will leave us head- De Vinne Dileno looked at was what made ing in the right direction Ursuline distinctive, De very quickly,” Dileno said.

Vinne said. For Ursuline, The college recently imoffering a women-focused plemented a new strategic education rose to the top. plan, which covers years Its strong history as a 2017 through 2020. The Catholic women’s college plan has four main prioriwas part of that, De Vinne ties. The first two, as desaid, but Ursuline still scribed on Ursuline’s webthinks there’s value to site, are re-establishing the shaping its education tocollege’s commitment to ward women in modern women-focused education society, even as enrollment and updating its academic has been opened to men. programs with a focus on Lynn Pasquerella, presihealth care. The third is a Ursuline College is looking to grow after enrollment dent of the Association of focus on marketing and re- declines in recent years. (Contributed photos) American Colleges & Unicruiting, including a marketing plan that will highlight both better job of promoting its flagship versities in Washington, D.C., bethe focus on women and on health academic programs, like nursing and lieves women’s schools serve a discare programs. And once students therapy, and its career services pro- tinct role in the higher-education are on campus, the strategic plan in- grams, like its first-year internship landscape. Pasquerella has experience in that space; before joining the cludes a focus on making sure the program.

De Vinne said there’s been a “mis- Association of American Colleges & college retains and graduates them.

Dileno said the plan is aimed at sion tug” in the past, where Ursuline Universities, she served as president growth, but the enrollment expecta- has been reluctant to spend on mea- of Mount Holyoke College, a womtions are realistic. The college isn’t sures like a redesigned website or a en’s college in Massachusetts.

She believes some people would expecting to get back to the levels it new marketing campaign to attract saw 10 or 15 years ago, but it does ex- students. The college tries to keep think the institutions isolated, but she costs low so it can keep tuition low, said women’s colleges give women pect to grow modestly. more leadership opportunities than Dileno said she’s been able to look she said.

But marketing is an area in which they would typically be afforded. at Ursuline with “fresh eyes” and see As part of its strategic plan, Ursome changes that needed to be it’s investing now.

Ursuline is in the process of rede- suline is auditing all of its curricula made. She’d like to see Ursuline do a

and co-curricula offerings, like student organizations, to look for the women-focused and women leadership-focused “threads,” De Vinne said.

“That’s been eye-opening for us for how important it is,” De Vinne said.

For example, the economics curriculum includes a focus on women’s position in society. That may look like a discussion of how being a single mother could impact someone’s economic standing. Or take the college’s legal curriculum. Those classes would discuss how being a woman affects someone’s legal status and conviction rates for men versus women.

And these lessons have value for Ursuline’s male students as well.

“They’re walking into a workplace that is more attuned than ever to the contributions of women and the value of women workers,” De Vinne said.

Aside from a focus on gender, Ursuline is also examining its curriculum to make sure all of the programs it’s offering are large enough to be valuable and trimming those that are too small. De Vinne said the college has already seen faculty leading changes in this area.

For example, Ursuline will be doing away with its initial certification in education for undergraduates and rolling it into its graduate program.

The new program, which will be implemented over the next two years, will be a 4+1 program, De Vinne said.

Instead of education, students will pursue a major that would likely align with the subject area they’d want to teach.

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Happy trails

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The breweries on the Cleveland Brewery Passport are:

With the launch of the Cleveland Brewery Passport program on Monday, July 2, every major Ohio market — and nearly every region in the state — now has some kind of official beer trail promoting these small manufacturers.

It’s the latest evidence of the growth the craft beer sector continues to enjoy, which is creating some challenges for brewers competing in an increasingly crowded market, even though industry observers feel there’s still room to grow.

“We’ve obviously been seeing ones in different areas of Ohio and the country. And we knew, too, that our brewery industry was just booming and has been for the past few years,” said Jennifer Kramer, senior marketing manager for Destination Cleveland, which is organizing the Cleveland Brewery Passport. “We thought it was the perfect time to launch this because the brewers were talking about it, and we have lots of these folks as partners.”

The Cleveland beer trail features 30 breweries. All are within 25 miles of downtown Cleveland. The path is framed by Willoughby Brewing Co. to the east, Avon Brewing Co. to the west and The Brew Kettle in Strongsville to the south.

Like most beer programs, participants get their physical passport, either from Destination Cleveland or at participating breweries, and collect stamps for each establishment they visit. Stamps can be awarded for the Cleveland program for either drinks or food.

Prizes are awarded for different levels of completion. Collecting eight stamps nets a Cleveland script bottle opener, and those with 30 stamps can get a Cleveland script hat. Those who complete the trail in a year also get entered in a drawing to win a grand prize for a Cleveland getaway package. Kramer said that’s expected to include a hotel package, restaurant gift certificate and passes to an attraction (details are still be ironed out). Destination Cleveland’s initial investment in the program is $50,000.

Destination Cleveland, Greater Cleveland’s convention and visitors bureau, has been promoting the region’s beer scene as more brewers pop up. Last fall, the group served as veritable ambassadors of the Cleveland craft beer sector by hosting its own booth at the Great American Beer Festival in Denver, the largest festival of its kind in America.

Sam McNulty, owner of several Ohio City establishments, including Market Garden Brewery and Nano Brew, which are both on the Cleveland program, credited Destination Cleveland with its efforts promoting the beer industry, which he believes is helping draw customers. He said the Cleveland Brewery Passport is another step in that direction.

“This is really exciting. And Destination Cleveland has done a great job of building up tourism in the city,” McNulty said. “Our mantra has always been that we want to make Cleveland in general — and Ohio City in particular — exciting and fun and dynamic for Clevelanders, first and foremost. I believe that once we do that, the tourists will follow.”



Avon Brewing Co.



Bad Tom Smith Brewing



Boss Dog Brewing Co.



The Bottlehouse Brewery



The Brew Kettle



Brim Kitchen + Brewery



Brick and Barrel



Butcher and the Brewer



The Cleveland Brewery



Collision Bend Brewing Co.



Fat Head’s Brewery + Beer Hall



Forest City Brewery



Goldhorn Brewery



Great Lakes Brewing Company



Hansa Brewery and Restaurant



Hofbräuhaus Brewpub



The Jolly Scholar



Market Garden Brewery



Masthead Brewing Co.



Nano Brew



Noble Beast Brewing Co.



Platform Beer Co.



Railroad Brewing Co.



Rocky River Brewing Co.



Saucy Brew Works



Sibling Revelry Brewing



Terrestrial Brewing Co.



Thirsty Dog Brewing Co.



Willoughby Brewing Co.



Working Class Brewery

Toasting to competition There are at least 6,372 breweries in America today, according to the Brewers Association. That number has grown every year since 2005, spiking at exponential rates in recent years to grow more than 340% since then.

The association counts 225 craft and microbreweries in Ohio today.

Destination Cleveland estimates that 22% of those are in Greater Cleveland. There were just 45 across the state in 2011. That’s an increase of 400% since then. Comparatively, total U.S. breweries grew by 211% over that same period. That means craft brewers in Ohio are growing at nearly twice the clip of the national rate.

With the Cleveland program, there are now eight official beer trails in the state, according to the Ohio Craft Brewers Association (OCBA). That doesn’t include wine or mixed beer/ wine/spirits trails, like the Darke County Whiskey, Wine & Ale Trail.

The first was the Columbus Ale Trail in 2015.

The OCBA created its own passport program as well via the Ohio On Tap app, which debuted in May 2017 and earned an Ohio Travel Association RUBY Award for best mobile app of 2017.

That program awards users for collecting stamps through the app at various tiers, starting at 10, then 25, and increasing at increments of 25 from there. The top prizes are awarded to those who collect 150 stamps and those who complete the entire list, which currently includes 180 breweries. Details about that can be found on the app.

“As the number of breweries has

grown across the state, so has the prevalence of beer trails and brewery passports,” said OCBA spokesman Justin Hemminger. “Brewers banding together to get people excited about visiting breweries is a natural offshoot of the highly collaborative and cooperative nature of the craft beer industry.”

In Summit County, the Summit Brew Path, organized by the Akron Summit County Convention and Visitors Bureau, is in its second year and Year 3 is already being planned out because of its inaugural success, said spokesman Jim Mahon.

“What we found almost immediately is there’s this camaraderie and synergy in what you might think of us competing entities,” said Mahon of local brewers banding together.

“They all understood that if the profile of craft beer was raised, everyone was going to do well. That’s exactly what happened.”

That trail includes 18 breweries this year, compared with 14 when it debuted last year.

The budget for that program in 2017 was $15,000, and participating breweries were asked to kick in $500 this year to cover some of the costs.

Last year’s program saw nearly 20,000 passports handed out, with 2,600 people completing the path.

“It certainly benefits us when we talk about Summit County’s assets,” Mahon said. “We heard from many brewery partners they would not be doing as brisk of sales or be able to entertain expansions if not for the Summit Brew Path. And that’s a wonderful thing to hear.”

North Canton’s Royal Docks Brewing Co. — which is preparing to brew its first beer in its new, expanded brewhouse this week — has been included in the Summit program because of their close proximity to the other breweries (and because organizers felt participants aren’t focusing too much on city borders). A couple other Stark County brewers are included in there, too.

Royal Docks founder John Bikis said the program has been clearly additive to their business.

“We are fortunate enough to be included, and I think we are forever thankful for that because it did provide a way to get people into the Canton beer scene,” he said. “We saw so much value in it. We really wanted to see it continue.”

Bikis noted that efforts have been underway to create the Lincoln Highway Ale Trail, a beer trail specifically for Stark County. He’s been one of the organizers of that effort.

Brewers were working with the Stark County Convention & Visitors Bureau on that last year. But when Gervasi Vineyard was included in that, brewers decided they wanted to “go on their own,” Bikis said, simply because brewers have been adamant about having an exclusively beer-focused trail.

“Speaking for us, we have a great relationship with the Gervasi group.

It’s just that this is a brewery tour, a brewery path, and the visitors bureau basically wanted to hijack this and include other businesses,” Bikis said. “So this wasn’t anything against them. This is a brewery path, and that’s how we’re going to continue.”

Bikis said plans are in the works for the Lincoln Highway Ale Trail to launch in 2019.

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CRAIN’S CLEVELAND BUSINESS

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In April, Caruso’s subsidiary, Generations Coffee (a partnership with Coffee Holding Co. in New York City) acquired Wisconsin-based Steep & Brew Coffee. The acquisition of Steep (with revenues of $7 million, according to that company’s most recent fiscal reports) meant an investment of $2.7 million in cash and an additional promissory note, according to Daily Coffee News, an industry trade publication.

That acquisition enables the partnership to expand their roasting capacity in the Upper Midwest. The company will also maintain Steep’s extensive direct-store delivery program, which covers eight states extending as far west as Kansas City, south into the Greater Chicago area and north into Minnesota.

“We’ve quietly grown into Ohio’s largest roaster and one of the bigger players in the Midwest,” co-owner Dominic Caruso said in an email, prior to a visit to the Snowville Road production facilities. “By 2019, we should exceed $30 million in revenue and produce somewhere north of 6.5 million pounds of coffee, not to mention over 15 million K-cups annually.”

Not bad for a family run business that, just a few years back, all but lost its portfolio, if not its shirt.

During the mid-1980s, family matriarch Angela Berardi Caruso started custom roasting a proprietary coffee blend for Akron retailer Russ Vernon and his West Point Market. In short order, the Acme Supermarket chain took interest, and sales of Berardi coffees — named for Angela’s father — took off.

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burg Heights, and her husband Michael Caruso — a biology and chemistry teacher in the Garfield Heights School System — began building the Berardi label into a profitable

local brand, valued at $4 million.

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Painesville’s core to expand via residential neighborhood

By JAY MILLER

440.449.0700 info@landerhaven.com www.landerhaven.com

Press-sealed bags of coffee beans come off a conveyer belt as Mike Caruso, founder of Caruso’s Coffee Co., passes by at the roasting and packaging plant in Brecksville. (Photos by Peggy Turbett for Crain’s)

jmiller@crain.com @millerjh

Painesville hopes it will soon have a solution to fill a 7.5-acre gap left when Lake East Hospital left its longtime downtown location in 2009.

For now, it’s called the High Pointe Center site, and city council is expected to decide by late summer or early fall between two proposals from developers to turn one of the highest points in the city into a new residential neighborhood.

The city government considers this residential redevelopment at the corner of High and Liberty streets as the first step in redeveloping the core of this city, which was founded in 1832. In its favor is that it is one of the few that is growing.

It’s population of 19,813 is up 13.2% from the 2000 population of 17,503.

The Downtown Painesville Organization (DPO), a nonprofit that is working to revitalize the heart of one of the oldest cities in Northeast Ohio through preservation and economic development initiatives, advertises that Painesville is the fastest-growing city between Buffalo and Chicago.

And though it is at the far eastern end of Lake County, its residents have long been commuters to Cleveland. In the early decades of the 20th century, the Cleveland, Painesville and Eastern Railroad ran a 58-mile electric interurban line — an early commuter train — between downtown Cleveland and the Painesville Depot a mile from the hospital site, which allowed residents to live in a

small town but work in a major city.

The city has 11 new housing developments on its fringes, said economic development director Cathy Bieterman, but city leaders believe there is demand for an alternative to suburban-style market-rate housing, which could include for-sale or rental housing.

Bieterman believes Painesville can grow in part because of nearby employers such as Avery Dennison, Lubrizol Corp. and Steris Corp., as well as a relative newcomer, Mar-Bal Inc., which moved into a manufacturing facility in the city from Chagrin Falls in 2016. She noted it’s also only a 30-minute drive to downtown Cleveland, on an accident-free day.

“The interest we’re seeing is that younger generations are looking to get back to the smaller towns and living in the downtowns,” said David Polakowski, DPO’s executive director. “This (redevelopment) will give them an opportunity to live in a community that is growing.”

The city got seven responses to a public request for qualified developers and is working with two of the respondents — Flaherty & Collins Properties and B.R. Knez Construction Inc. Flaherty & Collins is an Indianapolis firm that is working on the $75 million Top of the Hill project in Cleveland Heights. Knez Construction is based in Concord Township in Lake County and has been active in urban residential developments in Cleveland and Akron for several years.

“The Lake East Hospital site presents a wonderful opportunity to (attract) empty nesters and millennials to the downtown,” said Austin Carmony, vice

president of development and a principal for Flaherty & Collins. “It’s not often you come across a piece of property like that nestled into downtown.”

The move of the hospital to TriPoint Medical Center in Concord Township triggered the city’s master planning. It includes plans for civic and retail districts, and for improving the recreational opportunities along the Grand River riverfront, including a fitness walk. But turning the old hospital site into a new neighborhood is the first priority.

“We feel very strongly that the residents and stakeholders who were involved (in the master plan) had the right idea to bring the residential district into downtown,” Bieterman said. “The master plan calls for high density. What that product will end up being, I’m not sure.”

Painesville is also home to the 1,200-student Lake Erie College, which is considering developing dormitories on land between the college and downtown.

“It’s unique to have 8 acres of land in your downtown (to redevelop) and to have an additional 4 acres heading toward the college,” Bieterman said.

“It really gives us a lot of opportunity to (develop) some great synergy to reinforce the urban fabric (and to create) a new residential living district.”

Carmony said the site could end up with about 200 units of housing.

His firm prefers rentals, but he did not rule out townhouses.

“We’re open to all different types of density on that property,” said city manager Monica Irelan. “We’re prepared to do whatever the developer believes will be successful.”

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CRAIN’S CLEVELAND BUSINESS

Vice president Dominic Caruso assesses the aroma of a batch of Columbian Supremo coffee beans.

ugly lawsuit, which Angela Caruso eventually won, the family was bereft.

After the family business collapsed, eldest son Dominic went to work in New York City. There he went to work for the Coffee Holding Co. and developed a relationship with the owners.

Caruso Coffee was born. Launched in 2003, the Caruso brand has been on

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J U LY 2 - 8 , 2 018

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PA G E 7

feet in Madison, Wis. In addition to the Erie Island brand, Caruso blends and roasts coffees for an array of Northeast Ohio restaurateurs and retailers. The company worked with chef Zack Bruell to create a line of coffees custom-blended to match the style of each of his six acclaimed restaurants — brews served at the table and sold in 12-ounce bags at Heinen’s Supermarkets. Caruso also roasts proprietary blends for the Hospitality Restaurants Group (Delmonico’s, Blue Point Grille, The Cabin Club), Aladdin’s Eateries, Flour, Yours Truly and Dante Boccuzzi’s restaurants.

Perhaps their biggest brands are the Cafe Caribe and Cafe Supremo blends. Hugely popular among Latino consumers, the vacuum-packed “bricks” compete with the Bustello brand sold in New York City burroughs as well as local grocers such as Dave’s Markets and Marc’s stores.

The Ingles Supermarkets in the Carolinas and two other Southern states, and the Cash & Carry chain out of Louisiana are also Caruso customers.

The Steep & Brew purchase further expands the company’s reach.

“We’re hyper-focused on having a diversified customer base,” Dominic Caruso said. “Essentially, we carefully refuse to put all our eggs in one basket.

We have a mix of high-volume and lower-margin business, blended with lower-volume and higher-margin businesses. And mixing in home coffee consumers, supermarket shoppers, with out-of-home coffee consumers.

“We’ve always taken a humble and flexible view of our business model,” he added. “We’ve focused on profitable growth and customized solutions to meet the needs of our customers: supermarkets and coffee shops.”

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a steady growth trajectory ever since.

Touring the production facilities and first-stage shipping area is a study in old and new. A collection of vintage roasters and state-of-the-art equipment for blending, packaging and labeling fills the cavernous space. Sacks of beans from coffee estates and ports around the world are stacked among

massive food-grade bins holding blends and varietals. One machine steadily churns out an endless parade of K-cups, used in homes, offices and other businesses to brew single-serve cups using Keurig machines.

“We’re getting there, being able to keep up with the big boys,” Dominic Caruso added, though he has no illusions about toppling other giants. A single Starbucks roastery in western Pennsylvania produces one million pounds of coffee every two weeks.

Today, most of the business is conducted from a 30,000-square-foot office-and-production facility in an industrial parkway on Snowville Road in Brecksville. Growth has demanded the operation expand to a second warehouse nearby, a distribution center with a 40,000-square-foot capacity. The Steep & Brew Coffee purchase adds 15,000 additional square

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PA G E 8

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

It’s time to get to work to fix our economy

By JON PINNEY

Editorial

Heeding the call It really wasn’t all that long ago that The MetroHealth System was slashing hundreds of jobs and struggling to remain in the black. But over the last few years, particularly the last five, the health system has orchestrated a dramatic turnaround — one that ultimately set the stage for a roughly $1 billion physical and operational remake of the health system.

Building a new hospital — one poised to become one of Cleveland’s architectural wonders, according to system officials — isn’t enough for Dr. Akram Boutros, the charismatic physician who stepped in as CEO in 2013 after the doc first pegged for the job reneged on his commitment.

Boutros — simply put — wants to fix Cleveland.

It’s lofty ideal, of course, for a health system already with so much on its plate. Five years in, though, Boutros has done little to shake our confidence. In many ways, Boutros envisions MetroHealth as more than a hospital, but rather an enterprise that cares for the community holistically.

In a meeting with Crain’s reporters and editors last week, Boutros outlined a bevy of initiatives in which MetroHealth hopes to lift Cleveland’s struggling neighborhoods and their residents.

Namely, the system is launching a Community Trauma Institute — an effort that, as Boutros characterized it, would assist neighborhoods with the “trauma of day-to-day life.” That trauma could include violence, community disinvestment, educational roadblocks, lack of internet connectivity and other issues that plague some of Cleveland’s most troubled communities.

As part of that effort, the health system is training a group of pastors — starting in the Lee-Harvard neighborhood — how to deal with community trauma. Then, the health system is volunteering MetroHealth’s vast resources — health care, housing services and job training, for instance — to assist in those community efforts. Likewise, MetroHealth is committing itself to the Open Table initiative — an effort that bands together six-toeight volunteers to focus on helping an individual in need.

MetroHealth also is gaining traction in the war on opioid abuse among its patient population. Over the last 18 months, the health

system said it prescribed 3 million fewer opioid pills than what is typical. Moreover, MetroHealth providers reduced the number of opioid pills prescribed for acute pain by 62%, and 25% for chronic pain.

To facilitate in this effort, the health system opened a Pain & Healing Center to promote alternatives to opioids for pain management.

There’s been a lot of talk lately about Cleveland’s failures —a narrative accented in a recent City Club of Cleveland speech by Jon Pinney, a local attorney who played a key role in the attraction and staging of the 2016 Republican National Convention. In Pinney’s speech, he lamented the sluggishness of Cleveland’s economy — “We’re getting our butts kicked,” he declared — and pushed local civic leaders to “identify the root causes of failure.”

Any respectable effort to resurrect Cleveland’s economy cannot ignore our neighborhoods. Cleveland’s anchor institutions and corporate citizens, in particular, must play a role in this revitalization. The Progressives, Cleveland Clinics, Eatons and KeyBanks of Northeast Ohio should look no further than MetroHealth for inspiration. The global nature of doing business in the 21st century is no excuse for sitting idly by while Cleveland’s neighborhoods continue to crumble. Many of these institutions are working in the community, but are there opportunities to do more? Of course. And in many cases, their voices are more valuable than their checkbooks.

Does MetroHealth have all the answers? No, but so much of the conversation lately has focused on a half-cooked bid to land Amazon’s HQ2 and whether there’s enough support for tech startups that it’s easy to lose sight of the region’s failures on display in our neighborhoods.

In an editorial last week, we highlighted the desperate need for more diverse voices in this important civic discussions. That diversity piece was one of the most glaring holes in Pinney’s remarks and was only touched upon in an ensuing Q&A (and column in this week’s Crain’s).

Boutros — a naturalized citizen from Egypt — is one of those needed voices. After all, it’s easy to highlight failures in our system. It’s not as easy to do something about them.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

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Over the last year, I’ve been highlighting the need for change in Northeast Ohio’s economic development ecosystem. I’ve pored over statistics and talked to countless individuals across all sectors about our region’s lagging economic performance, trying to better understand why we are underperforming and what we should do about it.

On June 8, I took the stage at the City Club of Cleveland to start a conversation about creating real change in our economic development ecosystem. It’s a tough conversation to have, even uncomfortable at times. But for too long, leaders in our region have been unwilling or unable to have it. I called for a conversation. That’s exactly Pinney what I got.

Since my City Club appearance, I’ve received thousands of emails, calls and texts from across the region, and I’m overwhelmed with gratitude over the response. Thank you to everyone for listening, writing and truly caring about our community. There are so many talented people who want to be part of seeing Northeast Ohio thrive, and if my comments have inspired others to join the conversation, then I feel I’ve succeeded. I’m also encouraged that my call to action has been the subject of board meetings, roundtables, editorials and media coverage.

On a personal level, this has been the hardest thing I’ve ever done. I’m not perfect, and my speech was not perfect. I don’t have all the answers. I should have addressed important issues like poverty, education, diversity and equity. Standing on the stage alone, the last thing I wanted to do was alienate anyone.

I’ll stand on the stage with anyone who wants to step forward as a leader, regardless of their race, gender or background. Despite some scrutiny and criticism, I believe I accomplished my goal of starting an important conversation.

Now people want to know what we’re doing next to make progress. I’m hopeful that an alignment process will begin among all of the organizations in our economic development ecosystem. Rebuilding trust and developing a unified vision throughout the ecosystem will be critical to success.

From there, I want to see a regional strategic economic development plan emerge that we can all get behind. I’m encouraged by the fact that board meetings have been called, discussions are ensuing and leaders have stepped forward to help. The conversation should now look toward the future, and I will get behind any well-intentioned process announced.

What’s most encouraging is that new programs and bold projects are already being actively discussed. People are not waiting. They want to get to work.

One example is Project 1969. A group of business and civic leaders, including myself, have formed a planning team to build the nation’s largest and most advanced technology and entrepreneurial ecosystem hub. (You can figure out for yourself why we chose that name). It will be modeled after Chicago’s 1871 (www.1871.com), and will be housed within a newly certified Opportunity Zone, which will provide significant tax benefits to investors. We picked an ideal site, met with the property owner who sees the vision and are working on a model. Anyone who wants to help is welcome to join us. This will require unprecedented collaboration.

SEE PINNEY, PAGE 9

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com.

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CRAIN’S CLEVELAND BUSINESS

INVESTMENT PROPERTY FINANCING

Personal View

Small business voucher program helps accelerate energy innovation

By DAVID M. HART and STEPHEN EZELL

Solar panels are making noteworthy progress in bringing clean energy to Ohio and around the country, but they have a big flaw: They only produce power when the sun shines. Unfortunately, the sun doesn’t shine every day in Cleveland, but Cleveland still needs clean, reliable energy every day — regardless of the weather.

One way to address this problem is through Concentrating Solar Power, or CSP, which converts light into heat and can power turbines around the clock.

But it suffers a different problem: It’s currently a lot more expensive than solar panels.

A small company called Skysun, based in Bay Village, wants to change that. Through an innovative small business voucher pilot program, Skysun received access to the vast expertise and facilities of the Department of Energy’s (DOE) Sandia National Laboratories. Working with Sandia, Skysun has developed technology that may cut the cost of CSP by 13% — a big step forward in making the technology more accessible, even in the middle of the night.

Skysun is just one success story made possible by the innovative small business voucher program, and with sustained support, this success could be replicated across the country. Bipartisan legislation now under consideration in Congress would expand the program and make it permanent. This legislation deserves support.

DOE labs like Sandia have a lot to offer entrepreneurial firms like Skysun. More than 20,000 scientists and engineers work at these labs, joined by thousands more students and visiting scholars. They run the world’s most advanced equipment, like ultra-fast supercomputers and giant 3D printers.

But the labs have a problem, too. They are big and bureaucratic and, often, heavily guarded. Even if an energy expert is available to help an innovator, it’s nearly impossible to identify that person from the outside.

That’s where the small business voucher program comes in. The voucher provides up to a year’s worth of brainpower of a particular expert.

Small business vouchers are already a proven win-

PINNEY

CONTINUED FROM PAGE 8

After my speech, countless people contacted me offering ideas to grow our population, and I’d like to share just a few. One person who reached out suggested tax incentives to attract people to return home — think of it as an “ex-pat tax credit.” Citing data that confirms a high percentage of our top high school graduates leave the state to attend college, another person suggested incentivizing our kids to attend college here instead of leaving the region. People also supported building a comparable program to Campus Philly, a program I referenced during my speech that Philadelphia created to retain students passing through its universities (www.campusphilly.org).

In response to the housing starts data that I presented, one person argued that our suburbs have “zoned out growth” and every municipality should adopt pro-growth zoning standards drafted by a super-regional pro-growth advocacy council (perhaps call it “GrowNEO”). The idea is a good one — as an attorney, I know how hard it is to get projects approved by zoning bodies. Many of our municipalities prohibit developers from building apartments and impose so many restrictions that projects are not economically feasible. Last year, a suburb voted down a $35 million project because the “building was too big.” The national developer left town and vowed to never come back.

Other people urged the region’s powerhouse hos-

ner for both the businesses and the DOE labs. Since 2015, 114 energy technology startups have gained access to more than $22 million of national lab services in three rounds of awards. While that is only about 0.1% of the labs’ budget, the value of the insights gained and relationships built have been worth much more than that.

Similar programs have also proven their worth at the state level in Connecticut and Rhode Island, and in other countries as well. Studies of European programs have demonstrated that they create jobs, help companies grow and foster collaboration among researchers.

The legislation now under consideration in Washington, D.C., would bring the small business voucher program to all 17 of DOE’s national laboratories and cover the full range of energy technologies that they are working on. It would put the creative methods the program has used to cut through red tape on a firmer legal footing. It would give the labs funding to administer the program, so they don’t view it as a tax on their ongoing research efforts.

The legislation would also retain the rigorous competitive process that the program has used to winnow the most promising ideas from the hundreds of applicants who have applied in each round. The winners must also have some skin in the game, in the form of a 20% cost share.

The United States and the world need clean, cheap, secure, reliable energy. Rapid technological progress is essential to meet this need, and entrepreneurial firms like Skysun, which think outside the big business box, can accelerate that progress.

The DOE small business voucher bill would give some of the most promising of these firms a better chance to contribute to clean energy solutions — and solve many of the problems they face along the way.

Hart is a senior fellow at the Information Technology and Innovation Foundation (ITIF) and professor of public policy and director of the Center for Science, Technology, and Innovation Policy at George Mason University’s Schar School of Policy and Government.

Ezell is vice president for global innovation policy at ITIF. pital systems, universities and corporations to collaborate and lead the alignment process. Countless people want to get behind bold projects, like the Cleveland-to-Chicago Hyperloop project being explored by NOACA. Several people shared my view that we need to invest heavily into building an innovation economy, applauded JumpStart and thanked KeyBank for investing $24 million there, while calling for other companies to do the same. Dozens of people called for support of the early stage startups fueled by organizations like FlashStarts and the North Coast Angel Fund.

Everyone agreed that we need to map the ecosystem, gather better data, set metrics and build a regional economic development portal. I am hopeful that the amazing people of the Leadership Cleveland class of 2018 will take on this important project. Stay tuned for more on this and the “Grand Challenge” I referenced in my speech.

I am grateful that so many people attended or watched my speech at the City Club. It shows how many individuals care deeply about this region, regardless of whether they agree with what I said. I also want to thank the nearly 2,000 people who took the time to email me their ideas and thoughts. I promise I will respond to every email — just give me a little more time.

Please help keep the conversation going. Thank you.

Pinney is managing partner of the Kohrman Jackson & Krantz law firm.

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PA G E 9

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PA G E 11

Focus

LEGAL AFFAIRS

In-house lawyers find juggling is the ‘new normal’ Company attorneys’ responsibilities continue to expand since recession

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

When Jeannette Knudsen joined The J.M. Smucker Co. in 2002, she was only the company’s second inhouse lawyer.

Today, Knudsen, who worked her way up to general counsel in 2010, is a senior vice president at Smucker (NYSE: SJM). But she’s much more than the firm’s lead attorney. She’s secretary, chief compliance officer and manager of the enterprise risk and regulatory team. She oversees a department with 15 attorneys, 12 people who focus squarely on pertinent corporate regulations and a legal staff of 37.

Much like the case at Smucker, in-

house legal departments at today’s companies look and act rather different from years past.

They still oversee litigation and general legal matters, of course. But most are serving vastly expanded roles — many with stretched resources — and are increasingly involved in corporate strategizing. Company lawyers are making tight budgets, haggling with outside law firms and participating in board meetings to degrees they simply never did in years past as they wear multiple hats and increasingly take on new responsibilities.

“This is the new normal,” Knudsen said.

There are many factors at play in the evolution of in-house legal departments.

Illustration by MHJ/iStock via Getty Images

SEE IN-HOUSE, PAGE 16

By the numbers These five goals were listed most frequently by legal departments as a high priority: 76%: Controlling outside counsel costs 41%: Using technology to simplify workflow and manual processes 41%: Focusing on internal data security 30%: Focusing on legal operations 29%: Allocating work to law firms that are proactive in showing their value Source: 2018 State of Corporate Law Departments Report from Thomson Reuters and Acritas

PA G E 12

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LEGAL AFFAIRS

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Paul Flannery and Christos Georgalis, former assistant U.S. attorneys in the Northern District of Ohio who have worked on some of the office's largest securities fraud cases ever, recently left the comfort of government jobs in the U.S. Department of Justice to hang their own shingle.

They could’ve easily stayed with the Justice Department, or landed lucrative jobs at any number of large firms as federal prosecutors tend to do. But they had an entrepreneurial itch. They felt they could meet a need in the market for work in complex white-collar criminal defense and corporate investigations. So rather than further their careers in the government sector, they opened Flannery | Georgalis LLC last fall in downtown Cleveland.

A few months shy of their one-year anniversary, Crain’s sat down with Flannery to talk about their experience so far, the challenges they’ve faced in getting a new firm up and running and how having niche expertise has helped them along their path to building a boutique practice. — Jeremy Nobile It’s been about eight months since your office opened. How is it going so far?

Things are great. The primary benefit is we’ve had a lot of fun. There have been a lot of good challenges to have, like how do you manage the workload coming in? How do you make sure you have the sufficient resources when you have a large number of people turning to you for help? But those are good challenges to have.

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

VOL. 39, NO. 21

MAY 21 - 27, 2018

The largest money manager in NortheastFINANCE Ohio, which has been quietly amassing Byrather JEREMY NOBILE size for well over a century, has achieved explosive growth sincejnobile@crain.com a management-led and private equity supported separation from Key@JeremyNobile Corp a few years ago.

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That model, whichsitions truly started to develop atprivate subleases from the company. timing strategy. a few years ago.said, CEO separate from Key,where Victory on an Victory following a management-led buyoutCorp Brown for Victory step out oneventually its Once David to Brown: “We evolved to the point it set justout didn’t make sense for Key “We saw an opportunity in felt theright, market to do following a recent Brooklyn, OhioNow, to be the owners of Victory (Kenstreak Blaze for acquisition toCrain’s) give it more scale. It’s from Key in 2013, is largely what Brown feels po-what own continue theIPO, work it had been doing for Capital.” something different than wasand happening, based long Victory Capital Management’s parent sitions the firm to flourish as its industry bought companies as Key refocused on other which was our evolves. integrated,somulti-boutique There wasstrategies. no animosity there.

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CEO David eventually to the point where it just didn’t make sense for Key fromtothe TheBrown: timing“We simply domevolved to operate how it likes.

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SUCCESS IS IN VICTORY’S SIGHT

that eventually became Victory was more than

just didn’t make sense for Key to be the owners

folios (in 2015), which became known as CEMP;

ed buyout valued at $246 million in 2013. banking services in thosea years following the century old as the company looked to shed of Victory Capital,” Brown said. and RS Investments (in 2016). It also took a milast recession. Key eventually sold theseveral business the division years ago.JJSince that deal, the firm has gone from $18 billion in assets to $60.9 billion, 148 employees to 300, 18 investment strategies to 72 and five franchises to nine, plus a to Victory employees — thereMany werebanking about 148 at conglomerates were making Victory Capital at a glance solutions platform, moves around shedding their VictoryShares. the time — and New Yorksimilar private equity firmthat time, JJ Victory Capitalinspun out ofIPO KeyCorp following a management-led, JThe money managers to cut costs J and focus onraised core about firm $140 million a recent (NASDAQ: VCTR).

That capital willprivate help equity-supportCrestview Partners for $246 million.

Proceeds ed buyout valued at $246 million in 2013. support its eventual separation from Crestview Partners, the New York private equity firm banking in those years following the of Key’s sale were used to buy backservices stock, beneholds a majority stake in the JJ Since that deal,business. the firm has gone from $18 billion in assets to $60.9 billion, 148 last recession. Key eventuallythat sold still the business fiting shareholders.

to Victory employees — there were about 148 at the time — and New York private equity firm Crestview Partners for $246 million. Proceeds of Key’s sale were used to buy back stock, benefiting shareholders.

employees to 300, 18 investment strategies to 72 and five franchises to nine, plus a solutions platform, VictoryShares.

JJ The firm raised about $140 million in a recent IPO (NASDAQ: VCTR). That capital will help support its eventual separation from Crestview Partners, the New York private equity firm that still holds a majority stake in the business.

How anxious were you about starting your own business?

There was a lot of nervousness.

There were a number of days I talked myself out of it, then Chris would talk himself out of it, then we’d both talk ourselves back into it. We give a substantial amount of credit to our spouses for their unwavering support because if either of them

flinched for a second, I don’t think we would’ve done this. There was definitely a lot of risk and fear there.

Did your friends or family or colleagues question the route you were going down in starting your own firm?

They weren’t naysayers, really, they were just asking if this is really what we wanted to do. Do you really want to take the risk? What if it doesn’t work out? Are you sure you thought this through? Chris and I felt strongly our strong relationships we built through our careers would carry us through.

How many people do you have at the firm today?

Two full-time associates, and a third incoming. We have an office manager/paralegal and two full-time law clerks. When Chris and I left the

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LEGAL AFFAIRS

“When you’re a small firm starting out in a small (business) environment where so much of what you do is intertwined, you can’t afford to bat much less than 1,000 on the people you select.”

DOJ, we did think that our biggest challenge would be getting enough of the right staff quickly enough for the types of matters and number of them that we thought we would get.

Why was getting people such a concern?

With all firms, recruiting talent is important. But when you’re a small firm starting out in a small (business) environment where so much of what you do is intertwined, you can’t afford to bat much less than 1,000 on the people you select.

So really the concern is with getting the right people when you’re setting the tone for the work you want to do and are also building from a small platform.

You have to be cautious about when you pull the trigger on bringing someone in and putting an investment in that person. Sometimes you have more ups and downs in your revenue stream. So when you’re bringing someone on, you have to make sure it’s the right fit and at the right time. We think we’ve done a good job with that. Chris and I are super proud of the team we have.

Do you think the route you took, coming from traditional law firms and working through the DOJ, has made your experience a bit smoother in terms of getting a firm off the ground?

I do think much of our success so far is attributable to the background we had. We had significant experience in our own areas, and we’ve blended together in a unique way to have a wide-ranging set of skills to help us come up with wide-ranging solutions for the types of problems we address.

We do tend to work in a specialized area, which has made us a good fit for other firms who might need us.

Sounds like having a strong track record plus a significant network

has been key to doing well as a firm from the get-go, versus someone with less experience attempting to do the same thing.

We get a lot of referrals and most of the time people are coming to us because our reputation has preceded us. We don’t normally have to face folks concerned whether we could handle something or not.

That strong network is probably invaluable when it comes to business development, yeah?

Yes. Through our unique background, we were lucky to have a wide-ranging network of professionals in the business community to market our specialized services.

Beyond that, we still put together very detailed marketing plans, though they still might just be as simple as simple as reaching out to law firms and letting them know what we do. At the end of the day, the best marketing piece is doing good work and having extremely high standards for client service and satisfaction.

Beyond getting a good result in a case, what’s key to keeping people happy when you’re starting your own firm?

A lot of it is just making sure clients are front and center in what you do.

It’s the little things that count, like always returning calls and emails and letters and keeping people always informed with what’s going on. We also try to let people know what they could reasonably expect in a matter, which is usually the most unnerving for clients, particularly those who have never been involved in these matters before.

Anything with your business model that you think has been helpful to the firm?

We have a lot of resources and relationships that are flexible in models the legal market is turning to that we can utilize. We have personal relationships with other lawyers when we need additional staff and relationships with investigators and retired law enforcement officials who we routinely use on matters that can bring value to client matters. We work with folks on a contract basis to add value to certain cases. That way we don’t pass on a lot of overhead.

Not much is usually taught regarding running a business in law school, right? What’s something you wish would’ve been imparted on you in terms of starting your own firm?

They don’t really teach you anything about that in law school, like how to

run a business. At least not when I was in school. I just wish someone would’ve stressed how much building a law practice is a long game. It would have been nice if somebody in law school impressed upon the young students that when you’re going through life and your career, keep in the forefront of your mind that the relationships you make will be important down the road.

Any other practical bits of advice?

To anybody looking to start a firm, I’d say you have to develop a clear business and marketing plan. If you can’t put into writing how you’re going to be successful, then it’s going to be challenging to be successful. If you can put it in writing with actual words and dollar amounts that show how something could work, then you’re on to something.

Any final words of wisdom?

The single greatest roadblock to you doing this will be yourself. If you can overcome the fear and anxiety of potential failure, then you’ve already gotten over the single greatest hurdle. From there, it’s just the nuts and bolts of running any small business yourself. Just have a strategic plan for how you’re going to serve the market.

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Culture fit is key to Benesch’s growth plan

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

Benesch’s rather fast growth in recent years made the Cleveland-based law firm face a seemingly welcomed issue.

New people were coming on board so quickly, concerns mounted over how to integrate everyone in the firm while simultaneously keeping those people happy and putting them on paths to excel.

All strong firms have some kind of integration plan for just those reasons.

But for firms like Benesch — which counts 202 firmwide attorneys as of June, a headcount increase of 41% compared to year-end 2014 — there may be a need to channel those efforts more concertedly to keep those lawyers content, promote firm culture and ultimately retain new attorneys while recruiting others.

So it created a new position — an integration partner — to do just that.

The position was taken up by Benesch veteran Kevin Margolis in 2017.

It used to be that integration was done on an ad hoc basis. People were introduced around the office. They might be paired with a mentor. But there was never someone exclusively in charge of those efforts firmwide. “We’ve had a lot of growth, adding lawyers in a variety of practice areas,�

Benesch managing partner Gregg Eisenberg said. “When you ask someone to come to the firm, you want them to be as successful as possible.

It’s good for the laterals, and it’s good for the firm. So we developed a whole committee with someone in charge of the integration plan.�

For Margolis, who chairs the firm’s

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envi ronmental practice group, the first challenge was in defining what that person actually does and coming up with a plan to measure success.

It was chal- Margolis lenging because those sorts of roles are seemingly uncommon. “If you were looking for descriptions of an HR director, you could probably find that,� Margolis said. “We looked around for models of integration partners and we couldn’t find any.�

What followed was an integration plan created last fall complete with checklists and other tools to be used by practice group leaders who report back to Margolis.

The three goals of the related plans are to engage attorneys, integrate them into the firm cultures and values and re-enforce how those people are assets to the firm.

It’s certainly not rocket science.

And other firms certainly do similar things.

But creating a framework to actually see through integration all the way through is expected to help retain the new talent the firm has been fighting to acquire, Margolis said. “This way integration isn’t an ad hoc process,� he said. “It’s a formal, planned process.�

Integrating someone might mean inviting them to dinner parties, cocktail hours and training sessions. As part of the integration plan, people now track whether new hires actually go to those.

While the bosses may be paying

CHICAGO, IL

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Benesch at a glance Benesch moved up 15 slots in the 2018 Am Law 200 ranking of the nation’s largest law firms to no. 180.

Those overall rankings are based on gross revenue.

Here are a few of the firm’s key metrics, including in parentheses where the firm ranks in those categories among the Am Law 200.

Gross revenue: $118,831,000 Net operating income: $46,257,000 Revenue per lawyer: $602,000 (150) Profits per equity partner: $762,000 (137) Compensation average, all partners: $540,000 (142) Compensation of non-equity partners: $12,106,000 (137) Number of lawyers: 197 Number of equity partners: 61 Number of non-equity partners: 47 Total partners: 108 Profits per lawyer: $234,000 (119)

closer attention, Margolis said it’s not meant to be a contentious thing. As far as the get-togethers though, there may not be any actual ramifications if people don’t attend, but odds are they’ll at least be asked about it.

But that’s just one example. The overall plan is geared toward ensuring lawyers are happy, productive and expanding their practices and skill sets while connecting them with the right people internally to support that.

That, itself, helps foster collabora-

SAN FRANCISCO, CA

tion, which has become increasingly important in legal services. Benesch, Margolis said, has been particularly sensitive to ensuring people aren’t working in silos the past 15 years (which is when the firm established a management structure led through practice groups). “So this is an evolution driven significantly by the fact we’ve had so much growth and so many new people,� he said.

The firm has enjoyed solid organic growth, with one of its fastest-growing offices being its Chicago location that opened in summer 2015.

According to the Am Law 200 rankings, Benesch jumped from No. 195 to No. 180 in 2018, logging gross revenue of $118.8 million last year (profits per equity partner stood at $762,000).

That increase comes despite the demand for legal services industry-wide remaining flat. The first quarter of 2018, in fact, saw the largest decrease in demand (0.5%) since 2013, according to Thomson Reuters as reported

by The American Lawyer (although demand for Am Law 100 firms themselves grew about 0.4%). Revenue increases across the legal sector are being driven mostly by fees, which increased in the first quarter by about 3.3% across all firms, according to Thomson Reuters.

As the firm navigates the competitive legal market, Eisenberg said Benesch aims to recruit top talent laterally to build out niche expertise in areas like intellectual property litigation, health care M&A, private equity and developing practices like 3D printing. “Before the recession, we were told to get as big as we can. But that may not be the best model today,� Eisen-

berg said. “We think it’s about being really good, elite at certain things and doing that for clients. We don’t want offices all over the world. But we do want to bring in the best talent.�

That can be particularly challenging considering lateral hiring has been booming in recent years.

Meanwhile, according to ALM Media, which puts out the Am Law rankings, a 2016 study found that the success rate of those hires is rather poor, with many failing to meet expectations. Specifically, the report mentioned that 47% of lateral hires don’t even stay around for a full five years.

So considering the odds of a lateral hire not just panning out but even staying with a firm for many years are about as good as a coin flip, Eisenberg said it’s all the more important to have a strategy in place to support and retain those people.

Benesch is certainly aware of this.

And like any firm, it knows there’s never going to be 100% retention.

Earlier this year, the firm closed its Indianapolis office as about 14 attorneys there jumped Taft Stettinius & Hollister’s offices in that market. “Lateral recruiting is hard, and there are bad statistics with laterals working out,� he said. “It’s really important if you’re going to invest money and attract people to your organization that they stay and are as successful as they can possibly be.�

In the long run, the hope is a refined approach to integration will become its own recruiting tool and feed the talent pool even further. “If you have a plan for integration and could show that to a potential lateral,� Margolis said, “I think that makes us an even more attractive place to work.�

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LEGAL AFFAIRS

Adviser: Brian J. Lamb

Protect corporate boards from 401(k) claims Plaintiffs lawyers have their sights set on a portion of the more than $5 trillion in assets held in U.S. 401(k) retirement plans.

Litigation against plan fiduciaries — those responsible for investing, managing, administering and protecting 401(k) plan assets — is on the rise. The claims, which primarily arise under the Employee Retirement Income Security Act of 1974, or ERISA, challenge the prudence or diversification of plan investments or the reasonableness of fees paid by plans to third-party service providers, such as record-keepers and investment advisers.

In 2017, ERISA class action settlements, many involving plan fiduciaries, reached almost $1 billion, with individual cases settling in the tens of millions of dollars each. Increasingly, plaintiffs are including boards of directors as defendants, arguing the board members are or ought to be treated as plan fiduciaries under ERISA. For example, the board of RadioShack recently defeated such claims, while the board of BB&T Bank is currently trying to fend them off. Plaintiffs may calculate that suing the board raises the stakes and provides additional leverage for settlement, but there are ways to protect against this.

Lamb is Thompson Hine’s litigation practice group leader and is based in Cleveland.

Best practices concerning the board and ERISA  Most boards should not be involved in the daily management and administration of 401(k) plans. Those functions

are better off in the hands of benefits committees or designated officers.  Ensure that plan documents and/or delegation documents are precise and unambiguous in allocating responsibility for plan administration and the management and investment of plan assets. Ensure that bylaws, charters and other governance documents contain no conflicting provisions.  Recognize that the board and its individual members are always fiduciaries, at least to the limited extent they have the ability to appoint other plan fiduciaries. Thus, the board has a duty to monitor the appointed fiduciaries.

Department of Labor guidance states: “At reasonable intervals the performance of trustees and other fiduciaries should be reviewed by the appointing fiduciary in such manner as may be reasonably expected to ensure that their performance has been in compliance with the terms of the plan and statutory standards, and satisfies the needs of the plan. No single procedure will be appropriate in all cases; the procedure adopted may vary in accordance with the nature of the plan and circumstances relevant to the choice of procedure.”  Educate board members on the dif-

ferences between their state law fiduciary duties — as board members — and, where applicable, their ERISA fiduciary duties (as plan fiduciaries).

ERISA’s standards, to the extent they apply to a director, are considerably less forgiving than the usual formulations of a director’s duties of care and loyalty under state law (e.g., no “business judgment rule” protection).  Determine if proper insurance coverage is in place. Many D&O policies have an exclusion for fiduciary liability under ERISA, so consider the need for fiduciary riders or separate fiduciary policies for ERISA claims.

WE HE LP CROOK E D S TOCK BROK E R S M AKE SOME THING OF THEMSELVES.

When is the board an ERISA fiduciary?

You can ask three questions to determine whether board members are fiduciaries under ERISA. First, do the plan documents or other governance documents expressly name the board — or a committee thereof — as a fiduciary? If so, those board members will be treated as fiduciaries to the extent described therein.

Second, as a functional matter, does the board actually exercise discretionary control or authority over plan management, does it exercise discretionary authority or responsibility for plan administration, or does it provide investment advice? If so, regardless of what the applicable documents say, the board will be treated as a “functional” fiduciary to the extent of such control, authority or advice.

Third, is the board responsible for selecting and retaining plan fiduciaries? If so, it is the position of the U.S. Department of Labor — the relevant regulatory authority over 401(k) plans — and most courts since the Enron case, that this responsibility is a fiduciary power under ERISA. Given that most boards have the ultimate appointment power within a corporation, it is safe to assume that the board will virtually always be treated as an ERISA fiduciary, even if only for the limited purpose of appointing and monitoring other fiduciaries. Some plaintiffs argue that the board should be the guarantor of the full performance of the fiduciaries it appoints, but most courts hold that the duty to monitor an appointed fiduciary’s performance does not create an overarching responsibility for all its decisions; rather, the board faces liability only to the extent it fails to periodically monitor the fiduciary’s performance.

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IN-HOUSE CONTINUED FROM PAGE 11

One is the last recession, which has forever changed the business model for corporate law firms as clients — like major companies — became more price sensitive in the wake of a stalling economy and slimmer legal budgets. That has created a shift in the way legal services are delivered.

There’s also the advent of technology changing the accessibility and delivery of information that ultimately shapes the way legal matters are handled.

And many companies have greatly evolved in recent years, whether or not the economy and technology have been factors (they have been in most cases). They’re bigger, more global and more sensitive to new pressures, like new and complex regulations.

All those factors are at play at Smucker, which was a $650 million company when Knudsen joined the Orrville-based foodstuffs manufacturer from a midsize Akron law firm in 2002.

Today, the company has a market capitalization of nearly $8 billion, practically doubling in size with the acquisition of Ainsworth Pet Nutrition this spring in a deal valued at $1.9 billion that gave it a new line of dog and cat food products.

“Our business has gotten extremely complex,” Knudsen said. “Today, you have to be agile and get up to speed with things quickly, make difficult decisions quickly, and use all that to consider how you change what you do going forward.”

An evolving legal team

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Thomas Peppard Jr. of Tucker Ellis often acts as general counsel for corporate clients who don’t have one, primarily privately or family owned businesses. He’s also the incoming chair for the Cleveland Metropolitan Bar Association’s business, banking and corporate counsel section. He said that in-house and general counsel jobs have always been difficult, but they’ve become increasingly demanding in recent years. He also addressed a myth in the legal world that those positions are cushy, 9-5 jobs compared with jobs in a traditional law firm setting.

“People would think that if you go in-house you do it because it’s easier hours and that you have only one client to know really well,” Peppard said. “Now, I think what we’re seeing is people saying ‘I’m the go-to for all these issues and I’m available 24 hours a day.’ It’s myth that in-house means easier hours.”

The actual workload is much more intensive, as in-house teams are expected to be legal matter generalists, but also specialize in their respective niches. They have to protect against legal issues, which doesn’t just mean knowing about all relevant global laws and regulations — like as it pertains to food and marketing, in Smucker’s case, and how all that relates to GMOs — they also have to know cybersecurity.

Legal teams also are being held more accountable to budgets, while resources in those are shifting around.

The 2018 State of Corporate Law Departments Report from Thomson Reuters and Acritas showed that 76% of in-house legal departments listed controlling outside counsel costs as their lead priority among top goals

Illustration by MHJ/iStock via Getty Images

today. That was followed by using technology to simplify work processes (46%) and focusing on internal data security (41%).

In terms of controlling those Knudsen costs, companies like Smucker rely on firms less often and prefer to handle matters inhouse. It’s simply cheaper.

New regulations in recent years have led to an “explosion” in class-action lawsuits against food companies based on marketing and labeling challenges, Knudsen said. Companies with products labeled “all natural” are targeted regularly.

In something reflecting a shift in corporate strategy, Smucker used to settle many of those kinds of cases privately.

The company has beefed up its legal team, though, and it has been shifting money once used to settle cases to fight them.

Besides being a “principles-based company” motivated to fight meritless cases, Knudsen said, the strategy signals to the rest of the world that the company isn’t going to lie down when taken to court.

“If people think you’re an easy target, you’re going to get inundated with cases,” she said.

When outside firms are considered for cases, the dynamic with them has changed significantly.

It used to that in-house legal teams served as little more than a broker of outside legal services, Peppard said.

But the days of lawyers dropping off bills with little scrutiny are effectively over, at least for the savviest companies. That’s what helped drive the adoption of upfront estimates and alternative fee arrangements over flat fees because, as Knudsen noted, “in-house counsel really does not like the hourly billing rate.”

Smucker has always been lean in its outside legal spend. But over the years, “we’ve gotten much smarter,” she said.

The scales of power are, indeed, tipping toward companies as they drive the price conversation in a competitive market.

When Smucker does an RFP to firms for a legal matter, many typically will respond by asking how much the company wishes to pay.

But Knudsen said she pushes to know costs up front and challenges those firms to give them figures.

Those who don’t play that game may be skipped over (though there may be exceptions in the case of a firm taking on a particular matter they’re uniquely qualified to handle).

“I can’t go to a customer and ask them how much they want to pay for a jar of jelly,” Knudsen said. “I tell them I want to know what our input costs are. I expect that of law firms.

But they don’t like to do that.”

Tech will drive more change Altogether, those changes at inhouse departments comes as those groups are increasingly playing larger roles overall in corporate strategy.

It makes sense, considering every element of a company’s business and how it runs itself touches some kind of legal area.

Nonetheless, the sense is that legal departments were once simply cost centers. Today, they’re increasingly valued in decision making, Peppard said, and have seats in strategies driven out of the C-suite.

The groups are expected to be more proactive and less reactive than ever.

“We really are involved in the beginning now because they see the value we can add with the business because we have the ability to see both the business side and the legal side. And sometimes we have the most vision across the company because of the nature of the work we do,” Knudsen said. “It’s been great to earn that confidence from the business teams where they don’t just view us as lawyers.”

While more is expected of inhouse legal teams today, changing the way that sector operates, the advent of technology can’t be understated.

Cost-conscious legal department are looking for ways to implement tech to create efficiencies and do even better work.

And Knudsen expects that will be the source of the next greatest evolution in legal services for corporate lawyers as much as their law firm counterparts.

“The legal field will dramatically change in the next 10 years through AI,” she said. “This is the way things are now. But the rate of change will increase exponentially.”

responded both years.

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LEGAL AFFAIRS LIST ANALYSIS

List: Local law firms add female partners

By CHUCK SODER

Those gains have largely been driven by firms outside the top 10. The 10 largest firms on the list have 10.6% fewer partners and 12.5% fewer attorneys today than they did in 2008.

They also employ fewer female partners (115 today, down from 122 in 2008) and fewer minority partners (23, down from 31).

It should be noted that several attorneys who spoke to Crain’s for an April 2017 story called “Lawyers rethink the business” said the industry never really recovered from the Great Recession.

Even so, the other 30 firms in our analysis roughly maintained their attorney levels over the past decade.

They also saw their base of female partners jump from 101 in 2008 to 151 today — a 50% increase driven by small gains at most of those firms.

They also have added a handful of minority partners since 2008; their

csoder@crain.com @ChuckSoder

The number of local female partners at larger Northeast Ohio law firms has increased by 19% over the past decade, according to data submitted for our annual Law Firms list.

But the number of local minority partners is about the same today as it was back then, according to data submitted by the 40 largest firms that gave Crain’s partner information in both 2008 and 2018. That group includes all but three of the top 40 firms on this year’s list. (The digital version includes a total of 68 firms.)

Of course, the increase in female partners was from a small base: The 40 firms in our analysis said they employed 266 female partners as of May 15 of this year, up from 223 in 2008.

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Number of local law partners Here’s a 2008 vs. 2018 comparison of the number of local partners at the top 40 firms that responded to the Crain’s survey both years.

2008 1,355 total local partners 223 women (16.46%) 59 minority (4.35%) 2018 1,343 total local partners 266 women (19.81%) 56 minority (4.17%)

overall partner numbers rose by 2%.

Granted, the story changes if you just look at the past four years. The 40 firms in this analysis have added eight minority partners since 2014 — a 16% increase, given that they em-

ploy only 56 minority partners today.

On the other hand, the number of female partners has increased by only one since 2014. Most of the gains on that front came in 2009 and 2010.

One possible explanation: The num-

ber of partners at those firms increased by 2% in the 12 months leading up to our 2009 list, but since then those gains have been lost.

Nonminority men still make up 75% of all partners at the 40 firms in this analysis, but one early indicator suggests that more women could join their ranks in the future: Those 40 firms have been hiring more female attorneys, even as overall attorney numbers remain flat. They employ 704 female attorneys today, up from 678 in 2015, the first year we asked that question. They also employ 141 minority attorneys (we didn’t ask that question in previous years).

But at the moment, if you’re a nonminority male attorney at one of these firms, there’s a 64% chance that you’re a partner. That percentage is just under 40% for female and minority attorneys.

PA G E 18

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CRAIN’S CLEVELAND BUSINESS

THE LIST

Largest Law Firms

Ranked by Number of Local Attorneys

THIS YEAR FIRM (1)

LOCAL PARTNERS LOCAL ATTORNEYS/ FEMALE/ LOCAL WORLDWIDE MINORITY STAFF ATTORNEYS PARTNERS

PRIMARY PRACTICE AREAS

TOP LOCAL EXECUTIVE

1

Jones Day 901 Lakeside Ave., Cleveland (216) 586-3939/www.jonesday.com

194 60

12 1

629

2,500

Full range of litigation and corporate practice areas

Heather Lennox, Cleveland partner-incharge

2

Baker & Hostetler LLP 127 Public Square, Suite 2000, Cleveland (216) 621-0200/www.bakerlaw.com

162 93

21 2

378

951

Corporate, litigation, employment, tax, private equity, health care, class actions

Hewitt Shaw, Cleveland office managing partner R. Steven Kestner, firmwide chairman

3

Benesch 200 Public Square, Suite 2300, Cleveland (216) 363-4500/www.beneschlaw.com

138 82

13 5

259

203

Corporate and securities, litigation, real estate, intellectual property, health care, labor and employment

Gregg Eisenberg, managing partner

4

Tucker Ellis LLP 950 Main Ave., Suite 1100, Cleveland (216) 592-5000/tuckerellis.com

137 59

12 5

276

214

All types of trial, transactional or IP matters

Joe Morford, firm managing partner

5

Thompson Hine LLP 127 Public Square, Suite 3900, Cleveland (216) 566-5500/www.thompsonhine.com

128 67

13 3

313

378

Litigation, corporate, real estate, construction, product liability, finance, environmental, privacy, immigration, bankruptcy/restructuring, benefits, IP

Deborah Read, managing partner Kip Bollin, Cleveland office partner-incharge

6

Calfee, Halter & Griswold LLP 1405 E. 6th St., Cleveland (216) 622-8200/www.calfee.com

121 69

11 2

237

151

Corporate, M&A, securities, litigation, IP, government relations, labor, benefits, commercial, real estate, tax, estate planning

Brent Ballard, managing partner Thomas McKee, chairman

7

Squire Patton Boggs 127 Public Square, Suite 4900, Cleveland (216) 479-8500/www.squirepb.com

104 43

9 2

311

1,600

Full suite of corporate, disputes and public policy services

Frederick Nance, global managing partner; Michele Connell, managing partner, Cleveland

8

Ulmer & Berne LLP 1660 W. 2nd St., Suite 1100, Cleveland (216) 583-7000/www.ulmer.com

81 46

12 1

170

156

Litigation, financial services, business law, real estate, IP, benefits/ERISA, immigration, product liability, employment, cybersecurity

Patricia Shlonsky, partner-in-charge, Cleveland office

9

Roetzel & Andress LPA 1375 E. 9th St., 10th Floor, Cleveland (216) 623-0150/www.ralaw.com

78 48

9 2

171

155

Banking/finance, employment, energy/environmental, estates, health care, transportation, franchise, government, education, real estate, IP

Douglas Spiker, partner-in-charge, Cleveland

McDonald Hopkins LLC

75 42

3 0

155

139

Corporate, litigation, IP, restructuring, estate planning, real estate, M&A, health, banking, benefits

Shawn Riley, president

Superior Ave., E., Suite 2100, Cleveland 10 600 348-5400/www.mcdonaldhopkins.com THE(216) LIST

Largest Law Firms

It takes a team!

Ranked by Number of Local Attorneys mcdonaldhopkins.com

THIS YEAR FIRM (1)

Strengthening youth in Cleveland as a Cleveland Indians Community Partner

LOCAL PARTNERS LOCAL ATTORNEYS/ FEMALE/ LOCAL WORLDWIDE MINORITY STAFF ATTORNEYS PARTNERS

PRIMARY PRACTICE AREAS

TOP LOCAL EXECUTIVE

11

Walter | Haverfield 1301 E. 9th St., Suite 3500, Cleveland (216) 781-1212/www.walterhav.com

74 37

10 0

132

74

Corporate, education, IP, labor and employment, liquor control, litigation, public law, real estate, tax and wealth management

Ralph Cascarilla, managing partner

12

Brouse McDowell LPA 388 S. Main St., Suite 500, Akron (330) 535-5711/www.brouse.com

71 48

15 1

131

71

Corporate, business restructuring, environmental, estate planning, health care, insurance recovery, labor/employment, litigation, real estate, tax

Marc Merklin, managing partner Christopher Carney, partner-in-charge, Cleveland

13

Buckingham, Doolittle & Burroughs LLC 1375 E. 9th St., Suite 1700, Cleveland (216) 621-5300/www.bdblaw.com

67 49

7 2

133

67

Business, litigation, employment and labor, real estate and construction, health and medicine, trusts and estates

John Slagter, managing partner

14

Reminger Co. LPA 101 Prospect Ave. W., Suite 1400, Cleveland (216) 687-1311/www.reminger.com

66 55

10 3

180

140

Medical malpractice, workers compensation, estate planning, D&O and employment practices, professional liability, oil, natural gas and utilities

Stephen Walters, CEO, president

15

Hahn Loeser & Parks LLP 200 Public Square, Suite 2800, Cleveland (216) 621-0150/www.hahnlaw.com

60 40

7 4

135

116

Commercial litigation, business, IP, estate planning, labor and employment, construction, creditors' rights, reorganization and bankruptcy

Stanley Gorom III, partner-in-charge, Cleveland office

16

Taft Stettinius & Hollister LLP 200 Public Square, Suite 3500, Cleveland (216) 241-2838/www.taftlaw.com

58 29

7 3

93

445

Finance, litigation, real estate, tax, intellectual property, labor and employment, domestic relations, municipal, health care

Jill Helfman, Adrian Thompson, copartners-in-charge

17

Krugliak, Wilkins, Griffiths & Dougherty Co. LPA 4775 Munson St. N.W., Canton (330) 497-0700/www.kwgd.com

56 38

6 0

105

56

Corporate, real estate/construction, labor/employment, employee benefits, workers' compensation, tax, health care, environmental, OSHA

John Tucker, managing partner

18

Frantz Ward LLP 200 Public Square, Suite 3000, Cleveland (216) 515-1660/www.frantzward.com

53 33

6 1

87

53

Bankruptcy/creditors' rights, construction, corporate, education, estate planning, health care, insurance, employment, litigation, real estate

Christopher Keim, managing partner; Michael Frantz, Joel Hlavaty, management committee members

19

Vorys, Sater, Seymour and Pease LLP 200 Public Square, Suite 1400, Cleveland (216) 479-6100/www.vorys.com

52 22

2 2

76

350

Corporate, litigation, labor and employment, bankruptcy, health care, real estate, financial institutions

Anthony O'Malley, managing partner, Cleveland

20

Brennan, Manna & Diamond 75 E. Market St., Akron (330) 253-5060/www.bmdllc.com

42 27

6 1

43

67

Health care, litigation, business, labor and employment, real estate, M&A, tax, estate planning

Anthony Manna, chairman Jack Diamond, president

21

Gallagher Sharp LLP 1501 Euclid Ave., 6th floor, Cleveland (216) 241-5310/www.gallaghersharp.com

42 29

7 1

87

53

Litigation, insurance, legal malpractice, professional liability, railroad, trucking, aviation, maritime, product/employer liability, mass/toxic torts

Timothy Brick, managing partner

22

Day Ketterer Ltd. 200 Market Ave. N., Suite 300, Canton (330) 455-0173/www.dayketterer.com

41 25

4 0

61

41

Business, banking, education, litigation, employment, health care, real estate, family, estate planning, workers' compensation, taxation

Robert Roland, managing partner

23

McCarthy, Lebit, Crystal & Liffman Co. LPA 101 W. Prospect Ave., Suite 1800, Cleveland (216) 696-1422/www.mccarthylebit.com

40 25

4 0

69

40

Transactional, estate planning, tax, litigation, domestic relations, banking, property, personal injury, employment law, alternative dispute resolution

Robert Glickman, managing principal

24

Weston Hurd LLP 1301 E. 9th St., Suite 1900, Cleveland (216) 241-6602/www.westonhurd.com

39 30

6 0

66

47

Business advice, litigation, construction, employment, estate/probate, insurance, professional negligence, real estate, banking, white collar

Carolyn Cappel, managing partner

25

Kohrman Jackson & Krantz LLP 1375 E. 9th St., 29th floor, Cleveland (216) 696-8700/www.kjk.com

39 22

5 0

63

43

Corporate, technology/IP, real estate, tax, litigation, estates, employment law, domestic relations education, health care

Jon Pinney, managing partner

THE LIST

Largest Law Firms

CRAIN’S CLEVELAND BUSINESS

Ranked by Number of Local Attorneys

THIS YEAR FIRM (1)

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J U LY 2 - 8 , 2 018

LOCAL PARTNERS LOCAL ATTORNEYS/ FEMALE/ LOCAL WORLDWIDE MINORITY STAFF ATTORNEYS PARTNERS

PRIMARY PRACTICE AREAS

TOP LOCAL EXECUTIVE

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PA G E 19

26

Meyers, Roman, Friedberg and Lewis 28601 Chagrin Blvd., Suite 600, Woodmere (216) 831-0042/www.meyersroman.com

37 21

6 0

58

37

Real estate, tax, finance, labor and employment, construction, civil/ commercial litigation, estate planning and human resources

Seth Briskin, managing partner

27

Fay Sharpe LLP 1228 Euclid Ave., 5th floor, Cleveland (216) 363-9000/www.faysharpe.com

35 21

5 0

75

35

Intellectual property

Douglas Graham, director of administration

28

Wegman, Hessler & Vanderburg 6055 Rockside Woods, Suite 200, Independence (216) 642-3342/www.wegmanlaw.com

34 17

3 0

60

60

Corporate, litigation

Peter Hessler, managing partner

29

Tarolli, Sundheim, Covell & Tummino LLP 1300 E. 9th St., Suite 1700, Cleveland (216) 621-2234/www.tarolli.com

34 15

1 0

70

35

Intellectual property

Management committee

30

Cavitch Familo & Durkin Co. LPA 1300 E. 9th St., 20th floor, Cleveland (216) 621-7860/www.cavitch.com

34 22

2 2

52

34

Business law, capital and finance, estate planning, family law, litigation, real estate

Michael Cohan, president

31

Buckley King LPA 600 Superior Ave. E., Cleveland (216) 363-1400/www.buckleyking.com

32 14

6 1

52

36

Financial/business transactions, real estate, labor/employment, D&O, E&O, governance, tax, creditors' rights, bankruptcy, family, estates

Brent Buckley, managing partner

32

Dworken & Bernstein Co. LPA 60 S. Park Place, Painesville (440) 352-3391/www.dworkenlaw.com

31 15

3 0

65

31

Business, commercial litigation, commercial real estate, estate planning, oil and gas, family, personal injury, workers' compensation

Howard Rabb Erik Walter Richard Selby Jr., managing partners

33

Wickens Herzer Panza 35765 Chester Road, Avon (440) 695-8000/www.wickenslaw.com

30 12

2 0

73

30

Business transactions; litigation; probate, estate, elder law; real estate and construction; M bankruptcy; health care

Matthew Nakon, president, CEO

34

Amin, Turocy & Watson LLP 127 Public Square, 57th floor, Cleveland (216) 696-8730/www.thepatentattorneys.com

29 9

2 6

48

29

Intellectual property

Himanshu Amin, managing partner

35

Pearne & Gordon LLP 1801 E. 9th St., Suite 1200, Cleveland (216) 579-1700/pearne.com

28 15

3 4

55

28

Intellectual property including licensing, litigation and transactional matters

Michael Garvey, partner

36

Zashin & Rich Co. LPA 950 Main Ave., 4th Floor, Cleveland (216) 696-4441/www.zrlaw.com

27 2

0 0

44

31

Labor and employment, family law, international family law, workers' compensation, business law, sports law

Andrew Zashin Stephen Zashin, co-managing partners

37

Littler 1100 Superior Ave., 20th floor, Cleveland (216) 696-7600/www.littler.com

26 15

4 1

44

1,528

Labor and employment

Bonnie Kristan, office managing shareholder

38

Stark & Knoll Co. LPA 3475 Ridgewood Road, Akron (330) 376-3300/www.stark-knoll.com

26 19

1 0

40

40

Business and corporate services, estate planning, special needs planning, probate, business litigation, labor, employment, insurance defense

John Krajewski, managing partner

39

Bonezzi Switzer Polito & Hupp Co. LPA 1300 E. 9th St., Suite 1950, Cleveland (216) 875-2767/www.bsphlaw.com

26 18

3 0

59

28

Medical malpractice defense, nursing home defense, employment law

Jeffrey Van Wagner, managing shareholder

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

Want the full Excel version of this list Ñ and every Crain's list? Become a Data Member: CrainsCleveland.com/data The digital list includes 68 law firms. Information is supplied by the companies. Send questions, corrections and suggestions to Chuck Soder: csoder@crain.com.

(1) Firms with equal numbers of local attorneys are then ranked by worldwide attorneys.

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CRAIN’S CLEVELAND BUSINESS

AKRON

Chamber’s chief aims to foster collaboration

By JUDY STRINGER clbfreelancer@crain.com

Call it a simple question. Or call it a concern.

Since the April announcement that longtime Cleveland-based economic development professional Steve Millard would take over as president and CEO of the Greater Akron Chamber, chairman Marc Merklin has fielded inquires about whether his board’s choice of leadership signals a move toward greater regionalism. The underlying issue — a persistent worry among some — is that the Rubber City’s identity could be at stake.

“If we were hiring someone from Florida or Illinois, no one would ask, ‘Are you are getting closer, or too close, to Florida or Illinois?’ ” Merklin said. “The fact that Steve is from the area does not in any way detract that he is all in. He is not here to represent Cleveland. He is here to represent Akron and the Greater Akron area.

“And the fact that he already knows the region is a plus, not a minus.”

Millard assumed his new role on June 4, capping a yearlong executive pursuit by the Greater Akron Chamber after the unexpected resignation of Dan Colantone, who had led the organization for 17 years. Merklin said that immediately following Colantone’s departure in May 2017, the board retained former Green Mayor Dick Norton as interim president to steer the ship while a committee that Merklin chaired took the time to “conduct a thorough search.”

“We wanted a different kind of leadership, a different approach,” the managing partner at Brouse

significant for another reason. The mayor noted he’s been in office for less than three years, Summit County Executive Ilene Shapiro was elected November 2016, and other key leadership changes — not the least of which is the University of Akron’s search for a permanent new president — are imminent.

It’s an unprecedented opportunity to “push the reset button,” Horrigan said, on “what our pitch is to companies, how we sell the Greater Akron region, how we get people to invest here.”

“I think that ev“There is an amazing amount of erybody knows Akron needs to change happening down here. In do more to grow,” Millard said in an terms of key institutions, interview a week leadership has changed over the after settling into last three years, and there is a lot his new office.

It was the city of new development, innovation and its stakeholders’ commitment and entrepreneurism.” to addressing the challenge that — Steve Millard, president and CEO drew him south. of the Greater Akron Chamber “There is an development forward via more co- amazing amount of change happenhesive connections with the Akron ing down here,” Millard said. “In mayor and Summit County execu- terms of key institutions, leadership has changed over the last three tive offices.

“It’s not enough to just say we years, and there is a lot of new develwant to work on economic develop- opment, innovation and entreprement,” Merklin said. “How do we get neurism.”

Millard began his career in supply things to happen?”

Millard steps in as the study is chain consulting, but in 1997 the coming to a close, Akron Mayor Dan Mantua resident took a job with the Horrigan said, just in time for the Greater Cleveland Growth Associaformer Council of Smaller Enter- tion to escape “the day-to-day travel prises (COSE) and Greater Cleve- of the consulting world.”

“I thought it would be a like a twoland Partnership (GCP) executive to put his imprint on forthcoming rec- year gig,” he said. “I just happened to enjoy the work and things ommendations.

Horrigan said the timing of the changed.” chamber’s leadership transition is SEE MILLARD, PAGE 21 McDowell said.

According to Merklin, even before the leadership shakeup, there was a groundswell of opinion — both internally and externally — that the chamber needed to work more collaboratively with other economic development entities in the area, including colleges, which play a part in workforce development; civic institutions; and regional organizations like Team NEO, Magnet and JobsOhio. By early 2017, the Akron Chamber already had begun to study how it could propel economic

Steve Millard, seen here in Greater Akron Chamber’s downtown offices, stepped in to lead the organization in June. (Shane Wynn for Crain’s)

OuterBox riding high on growing e-commerce wave

By JUDY STRINGER

OuterBox founder Justin Smith, left, and partner Jason Dutt are steering the Akron-based digital marketing firm through tremendous growth.

(Contributed photo)

clbfreelancer@crain.com

When Justin Smith decided to ditch a web design program at the Art Institute of Pittsburgh 14 years ago and, instead, start OuterBox, his Hudson parents — particularly his mother — were, as he put it, “not overly thrilled.”

It was the first year the art college offered website design courses, Smith said, and in the first semester, the 19-year-old and his instructors recognized he knew more than they did.

“It took a few years for the company to gain traction, but when I look back at it now, it was a wonderful decision, because had I waited even four years, the market space would have been more saturated,” the Akron-based CEO said. “We definitely hit at the right time.”

Since its 2004 founding, OuterBox has grown from a one-man website-building operation into a 47-person, full-service digital marketing firm. The South Main Street company has doubled in the past two years, Smith said. Since November alone, 20 new hires have come on board.

Last month, OuterBox said it plans to expand into an additional 2,500 square feet on the second floor of the Kaiser Building, where it currently occupies 6,000 square feet on the third floor.

Demand for even more space,

however, is a question of “when” not “if,” according to Smith.

“We expect to do over $5 million (in revenue) this year, which is up more than 50%, almost 60%, year over year,” he said. “We could be out of space in five months or five days.”

Smith attributes much of his firm’s growth to its extremely high ranking among results when people type words such as “e-commerce marketing,” “search engine optimization,” or, more simply, “SEO,” into search engines. While OuterBox began with basic website design, the company quickly developed an expertise in SEO at a time before the market was full of digital marketing agencies. It was a skill built out of necessity, Smith said.

By playing around with its own site and developing strategies to ensure OuterBox popped up as one of the top

search results for these terms — which were new and, therefore, easier to use as a target in ranking battles — Smith said the company essentially “grew using the same search marketing strategies we now offer as services.”

“Soon more and more companies were calling and asking us to do those types of projects,” he said. “To this day, we don’t do any outbound sales. It’s all people Googling, finding us and calling us.”

Jason Dutt joined Outbox as a partner in 2011 after eight years of mentoring and collaborating with Smith.

“We were both early adopters to the concepts of SEOs and online marketing,” Dutt said.

Dutt’s specialty was SEO work; Smith had a good handle on creating functional e-commerce sites.

“And there were only a handful of

companies doing either one of those things, so when we combined we really became one of the first in the industry when it comes to e-commerce and the marketing of e-commerce sites,” Dutt said.

The other secret to OuterBox’s success is the growth of e-commerce itself. A February report released from the U.S. Commerce Department found that consumers spent $453 billion on the web for retail purchases in 2017, a 16% increase compared with $390 billion in 2016. That accounted for nearly 9% of all sales. Market watcher Forrester forecasts U.S. online retail will top $500 billion by 2020, and digital researcher eMarketer expects global retail e-commerce sales to double from just under $2 trillion in 2016 to over $4 trillion in 2020.

With more consumers than ever buying digitally, OuterBox has emerged as one of the leading companies to help sellers land on that first page of search results without paying exorbitant pay-per-click fees from Google and others. Yet, an increasingly bigger slice of the firm’s sales growth, and the e-commerce industry’s growth as a whole, comes from B2B transactions, according to Smith. Whether it’s a multinational manufacturer that wants to move multimillion-dollar sales online or a regional petroleum provider that wants to schedule and bill fuel deliveries over the web, B2B e-commerce projects are intrinsically more com-

plicated, he said.

There are more touch points between the two parties, such as contract approval, and more variation in terms such as pricing and logistics. In addition, “the e-commerce piece or software often has to be integrated with existing internal systems like an ERP or CRM,” Smith said.

As a result, business customer e-commerce development is more extensive than, say, a building a site to sell T-shirts to teens, and B2B clients book OuterBox members for months, instead of weeks.

“It’s a lot more about functionality than design,” Smith said.

Smith said he wants to keep his growing business in Akron and is working with Kaiser Building owner Tony Troppe to find other downtown properties that can accommodate a larger operation. Another possibility, he said, is leaving the core team in place and opening a satellite office in Columbus or Cleveland, either of which would help with recruiting talent not eager to commute to Akron.

The firm also is faced with the challenge of maintaining a consistent level of service as it becomes a bigger organization, according to Dutt.

“As a smaller company, you have a special skill set or expertise, and as you grow you need to be able to transmute that to a larger team and build a culture around that, so that each client has the same kind of experience with you,” Dutt said.

CRAIN’S CLEVELAND BUSINESS

MILLARD

CONTINUED FROM PAGE 20

In 1998, COSE, the small business division of the Growth Association, tapped Millard to be its executive director. He kept that role in 2004 when the Growth Association and its affiliates merged with Cleveland Tomorrow and the Greater Cleveland Roundtable to form GCP. GCP CEO Joe Roman said Millard has been instrumental in building that organization and has emerged over the past two decades as “probably the most respected small business advocate in the chamber world.”

Horrigan said he thinks small and midsize businesses are the key to fueling growth in Greater Akron. Millard’s small business acumen will be a huge asset to Akron, the mayor added. Like Merklin, Horrigan sees Millard’s regional background as an asset rather than detractor.

Millard knows all of the players in the Northeast Ohio business ecosystem, Horrigan said. He understands the issues and challenges they face.

He’s demonstrated an ability to come up with solutions and programs, not only for small companies like those in COSE, but the larger constituents served by GCP. “I think we need to take advantage of all of the assets in the region and not just act as Cleveland or Akron, but as Northeast Ohio,” Horrig-

an said. “Now, obviously, I will take an Akron-first attitude, because I think we offer some unique things here.”

Millard understands the ambiguity. While he is sensitive to the fact that some might think of it as a tightrope walk to balance the fragile development needs of Akron against the strength that can be derived from broader regional promotion, Millard doesn’t see it that way.

Northeast Ohio drives more than 45% of the state’s economy, he said.

“Yet, each of the individual metro areas — Cleveland, Akron, Youngtown, Canton, Lorain — these are all important areas that have their own sets of relationships and ecosystems, too,” he said. “So I think we have to take the best of both worlds.”

In his role at Akron Chamber, Millard said, “I will unabashedly try to find a way to access and use resources that exist broadly in Northeast Ohio to the benefit of the companies that we work with in Summit, Portage and Medina Counties.”

Such talk is music to at least one Summit County stakeholder.

Sue Lacy, president of ConxusNEO, the county’s workforce development agency, is encouraged that Millard’s collaborative spirit aligns well with the work already underway.

“It’s a new day in Akron,” Lacy said, “one that we can all look forward to.”

COSE

CONTINUED FROM PAGE 1

Joe Roman, CEO of GCP, echoed Young’s assessment, saying the organization will be evaluating staffing needs.

“The best way to make sure that the best decisions, that the right people, are representing COSE for the long term is to go through a shortterm evaluation like we’re doing, ensuring that none of the important COSE offerings are suffering in any way, shape or form,” Roman said.

“We’re able to meet the needs of small business and COSE while we maintain the (COSE) brand as we evaluate over the summertime and early fall what kind of additional talents — people — we might want to bring in to supplement that.”

Roman said that existing GCP staff will carry on the COSE work that Millard led. For example, Roman pointed to the COSE Health and Wellness Trust that was created in 2017 to provide health care benefits for COSE members of fewer than 50 employees.

Millard led the creation of the plan, a Multiple Employer Welfare Arrangement (MEWA), a federally approved plan that takes advantage of an exemption from specific Affordable Care Act-mandated benefits. In January, GCP reported that more than 2,000 employers had enrolled in the plan.

Roman said three other people had been working with Millard on the plan.

ADVERTISING SECTION

“They can step in and manage the MEWA without missing a beat,” he said.

Since the reorganization in 2016, a consolidated staff has managed COSE events and represent both GCP and COSE before the Ohio General Assembly and other government bodies.

“The alignment of several years ago continues to prioritize COSE and

“The best way to make sure that the best decisions, that the right people, are representing COSE for the long term is to go through a short-term evaluation like we’re doing, ensuring that none of the important COSE offerings are suffering in any way, shape or form.”

— Joe Roman, CEO of GCP

the COSE brand and small business, but from a staffing perspective, we created teams that can service the entire organization,” Roman said.

That approach is being taken for other COSE programs, such as discounts on products and services, small business consulting, energy management and its group-rated

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PA G E 21

workers’ compensation plan.

“We’re not rushing to do a search while the (GCP) team can also continue to provide those services,” Roman said. “We’re able to pivot and have other people (who) in the short term, and maybe the long term, we’ll see, but in the short term will manage all the activities.”

Also at that time, the COSE leadership board was changed from a board of directors to a board of advisors with Group Services Inc., a GCP subsidiary taking on fiduciary responsibilities that had rested with the COSE board of directors.

GCP, which can trace its lineage back to 1848 and the Cleveland Board of Trade, now includes five “brands” under its umbrella. In addition to COSE, they are Accelerated Middle Market Progress (AMMP), which represents companies with revenues between $10 million and $1 billion; Cleveland Development Advisors, GCP’s real estate and business development finance affiliate; the Commission of Economic Inclusion, which advocates for minority businesses and for greater minority participation on corporate boards and in senior management; and OHTec, a technology industry advocate whose members are considered a subset of COSE’s membership.

All but AMMP have had leaders who carried titles indicating leadership of their unit. OHTec lost its executive director in March when Dean Brainard resigned. That position remains unfilled.

MBA

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CONSTRUCTION

Craig Bush

Jeff Dentzer

Lead Estimator

Director of Business Development

Shook Construction Co.

Shook Construction Co.

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PA G E 2 2

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CRAIN’S CLEVELAND BUSINESS

COFFEE

CONTINUED FROM PAGE 1

If coffee once seemed common, it has become ubiquitous — especially when you tally places to buy a cup. Coffee shops abound, supplemented by expansive coffee bars in gas stations, rest stops and a growing number of retailers, from Target stores to Nordstrom.  A quick count of Cleveland area Starbucks locations — including kiosks, free-standing stores and stands within other properties — shows roughly 50 shops.  Starting this year, the Tim Hortons coffee-and-donuts chain, a Canadian-based global leader, will start opening a planned 105 shops in the Cleveland, Sandusky, Youngstown and Canton areas.  New Dunkin’ Donuts locations are planned for the Greater Cleveland area in 2018, including an approximately 2,000-square-foot prototype store expected to open this fall at 1990 Moore Road at Colorado Avenue in Avon. Earlier this year, another Dunkin Donuts shop debuted at East Ninth Street and Rockwell Avenue in downtown Cleveland.

Meanwhile, fast food giants are boasting a fresh emphasis on their coffee beverages. McDonald’s continues to aggressively market both hot and iced coffee drinks with specialty twists. Chick-fil-A claims a switch to improved blends of specialty beans for their brews.

However you define it, growing numbers of Americans refuse to settle for “ordinary” coffee. Today, gourmet coffee products account for roughly half of all the nation’s sales, according to the National Coffee Association. Which explains why Cleveland area neighborhoods and suburbs are witnessing a growing number of independently owned coffee shops and cafes.

Over the past few years or so, places such as Pour Coffee near East Fourth Street in downtown Cleveland; Beviamo Cafe in Tremont; Fiona’s Coffee Bar and Bakery in Willoughby; Fluffy Duck Cafe near University Circle; Six Shooter Coffee in Cleveland’s Waterloo and the Tenk West Bank development — just to name a few — have brought their individual takes on Cleveland coffee culture. Over the next week or two, The Metropolitan, at

make it your way: espresso, pourover, French press, cold brew, etc.

Red Cedar Coffee in Berea has a long-standing commitment to coffee education. Their modest retail shop at 711 West Bagley Road holds specialized coffee tastings on the first Saturday of every month.

“The consumer is becoming much better educated, and we try to contribute to that,” said owner Larry Denton, who runs the business with his daughter, Anne Denton.

Although the blends the Dentons produce under their Red Cedar Select, Full Moon and Northern Lights labels (as well as the proprietary blends they produce for private accounts such a Le Bistro du Beaujolais restaurant in Olmsted Falls) continue to dominate sales, that’s changing. Single-origin coffees now account for the roaster’s biggest growth, about 40% of total sales. Organic and “direct trade” beans purchased at a variety of estates also represent a growing market.

Since Red Cedar opened as a wholesaler in 2005 (“no debt, but no customDawn Fox, store manager, preps a latte at the Rising Star Coffee Roasters shop in Cleveland’s Hingetown ers,” Larry Denton said) growth has neighborhood. Check crainscleveland.com for a roundup of our favorite shops. (Photo by Peggy Turbett for Crain’s) been steady. With the exception of 4744 Broadview Road in Cleveland’s pany, because they all carry a certain center of everything we do,” Jenkins 2008 and 2009, when the nation was at South Hills/Old Brooklyn area (al- sort of ambiance. We call it ‘SMH’ — said while relaxing at a table near the the depth of a modern recession, “sales ready in soft opening) will formally something might happen. You might back of his Little Italy store, 2187 have been picking up 12-13% every year since 2010,” he added. run into someone you know, or the Murray Hill Road in Cleveland. lend their voice to the coffee chorus.

“Last year was our best year yet,” “We build open relationships with The Metropolitan is just the latest in workers may be playing a great rea procession of neighborhood spots. cord, or you overhear something our growers as well as our patrons. Just Denton added.

So far the shop has resisted selling Unlike so many other types of eater- about a book you’ve got to read — as we pay a fair price for the coffee we ies, coffee shops tend to become a lo- something that might change your bring in, we need to be able to answer coffee by the cup. The Dentons concal joint rather than a destination cus- life in a cool way. And coffee is the the customer’s questions honestly. centrate on sales of whole beans That’s essential, building the kind of during personal visits to regions such tomers drive miles to visit. (More than vehicle for all that,” he said. as Costa Rica, Ethiopia, Papua New That vibe appeals to a broad range of business we do today,” Jenkins said. a few shop operators said that they Rising Star and others in the new Guinea, Sumatra and Tanzania, as don’t consider a store beyond a mile customers, Feran said, but millennials generation of Northeast Ohio roasters well as equipment for grinding, storare especially attuned to that buzz. of their place to be a competitor.)

“The market that’s growing for spe- work directly with coffee growers ing and brewing the stuff.

So why go to a place where a cup of But that may soon change. specialty coffee will cost upward of cialty coffee consumption happens to around the world. Although almost ev“I don’t want to compete with the $3 — enough to put the customer be the only (social demographic) ery business you visit offers at least one well on their way to a full pound that that’s growing in Cleveland, and that proprietary blend, single-origin vari- people up and down the street,” said happens to be millennials,” Feran etals — beans obtained from an estate Denton, unfurling blueprints for a would yield a dozen or more cups?

Christopher Feran knows the answer. said. “They grew up with technology, located in one of the world’s growing new coffee shop, roastery and distriSince 2010, Feran has been one of and they seek a greater connection to regions — have become the drink of bution center set for a nearby properthe principal operators of the five things. They want to know the origins, choice. That’s made coffee tasting as ty in Berea. “On the other hand, we Phoenix Coffee Co. locations in Cleve- the handling, who’s grown the prod- much a part of the experience as sip- hope to draw in customers who want land and Cleveland Heights, plus the uct and whether they’re treated ethi- ping a whole cup of freshly brewed java. a different coffee experience in the Walk into a growing number of area. We’ve designed the place so viscompany’s roastery and business of- cally. They want to know the story.”

Gary “Kim” Jenkins, founder of shops and you’ll find a buzzy kind of itors can watch beans being roasted, fices downtown. He describes shops Rising Star, is a retired rocket scien- seminar underway. Owners and try a cup of, say pour-over Costa Rica like as his as “a third place.”

“There’s your home, your work- tist (literally) who said that much of baristas post signs and offer personal Finca Dragon, then maybe buy a place, and whatever your ‘third his company’s cultural ethos is built insights into the origins, characteris- pound ground to-order.”

He added, “People are seeking out a place’ is,” the 31-year-old business- around issues that are both personal- tics, overall flavor profile — aroma, ly important and particularly of con- body, taste, acidity and astringency better coffee in Northeast Ohio. To reach man explained.

— of any given beans. In addition to the customer and tell the story, even “The kind of comfort we provide is cern to young consumers. them part of is vital. ” 21 many CLEVELAND will makeBUSINESS “Transparency is absolutely at the ready-to-pour coffee, CRAIN'S so enmeshed in the DNA of our comμ the JULYstory, 2, 2018 μ PAGE

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CRAIN’S CLEVELAND BUSINESS

Source Lunch Joe Mazur

President, CEO, Cuyahoga Valley Scenic Railroad If you ask Joe Mazur about his career, he’ll say he’s following the advice of his dad. “I learned from my father that you should like what you do, and then you’ll never work a day in your life.” Mazur started his career at Thistledown, where his father worked as a trainer; moved to SMG, where he ran Cleveland State University’s Wolstein Center; made a stop at the International Soap Box Derby; and for the past year has been riding the rails of the Cuyahoga Valley Scenic Railroad.

The nonprofit railroad, which is in the middle of a capital campaign and whose existence is made possible by scores of volunteers, is more popular than ever, with annual ridership of more than 200,000. Its scenic rides and special event trips through the Cuyahoga Valley National Park provide an economic boost for the region, drawing riders from across the globe. “In Peninsula depot, they’ve had a world map and people put a pin from where they’re from, and people from all over the world ride the train,” he said. When asked his favorite lunch spot, Mazur said the train, so we caught a ride. — Sue Walton

Five things Bet you didn’t know Rail buffs are called foamers, as in foaming at the mouth when they see a train.

Favorite theme ride?

Mazur’s is the Grape Escape wine-tasting trip, riding in the dome car.

Guilty pleasure?

“I love sweets. I’ve got a pocketful of candy.”

“Crazy Train” or “Midnight Train to Georgia”?

“I’ll go ‘Crazy Train.’ I’m an Ozzy (Osbourne) fan.”

Dream job?

“I think I have it.”

How often do you ride the train?

I’m on it all the time. The volunteers see me. I’m on getting a (hot) dog. I call them breakfast dogs. If it’s before 11 a.m., I get on and get a breakfast dog.

How steep was your learning curve?

I knew nothing of trains when I started. I didn’t pick up a single book.

I like to just get on and learn. Just being a sponge, and just listening to the volunteers, you learn a lot. I just like new challenges. The challenge was, “Let’s learn what this is about.”

How many volunteers versus paid staff work for the railroad?

We only have full-time, paid: 25. And 1,800 volunteers. We had 104,000 hours of volunteer service last year.

Since we’ve been recording the volunteer hours since 1999, we just hit 1 million hours.

What kind of people volunteer?

There could be an airline pilot, there could be a CPA, a lawyer. It’ so cool.

(A retired Ohio state representative was spied volunteering on our ride.)

What are the biggest challenges with so many volunteers?

I don’t find a challenge with volunteers.

What I find a challenge is that these are historic cars. This car is 70 years old.

We have 29 cars that are on average 70 years old. Keeping up with the fleet preservation is the biggest challenge.

Lunch spot Aboard the Cuyahoga Valley Scenic Railroad Stations are in Independence, Peninsula and Akron.

The meal Two hot dogs and two soft drinks.

The vibe Riders can grab casual lunch (hot dogs, wraps) and snacks in the dining car, though the train does run more formal dining trips in the summer.

Guests can enjoy the gorgeous scenery of the park riding in coach cars or upgrade to the first-class car, dome car or the St. Lucie Sound luxury car.

The bill $6 (train tickets extra)

You were at the Soap Box Derby, which was part of the identity of Akron. This is part of the identity of Akron ... (Mazur chimes in) Northeast Ohio. It’s very important for us to emphasize the fact that we’re in Cuyahoga County as much as we’re in Summit County. I think folks sometimes feel that we’re a Summit County organization. We’re not. Our busiest station is Independence.

Explain the connection between the national park and the railroad.

The tracks are owned by the national park. They maintain the tracks. They also own our Fitzwater Train Yard, and they also own the office we have on Stine Road (in Peninsula). A lot of ticket pricing, we get their blessing on. There are folks on board the train specifically to entertain our guests and talk about the park. That’s part of our partnership. The park supports our education programs.

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sider intel

MARKETING, ADVERTISING & EVENTS INSIGHTS.

Today’s Tip: Don’t be afraid to change up your programs.

It’s one of those things where we don’t exist without them.

If federal funding pinches the park, does it pinch you?

A little bit. We’re about a $5.5 million nonprofit organization, and we’re fine.

But we need that endowment to secure us. If the park is shut down, we can’t run. So, if the park shuts down during the middle of Polar Express, we’re refunding a lot of money.

Tell me about the capital campaign. How is it going so far?

Good. We’re over $2 million of a $5 million capital campaign. And the neat thing about our campaign is that we have multiple projects that need to be completed, so as soon as we get the right amount of money to complete that project, we start it. So it’s not like we need to wait until it’s all in. We’ve already spent almost $1.5 million now.

On what?

Over the history of the organization, we’ve slowly increased the cars and capacity. There was a deficiency in power. So the lights and all the power on the train is another car that is right behind the locomotive. It’s our power car. It’s a generator. It’s a big diesel engine that powers the train. So we have two of those now. And that’s what we needed. So both cars are fully powered, and there are backup generators. So, if that goes out, there are additional generators to keep us going. That was about $1.2 million.

What else is on the wish list?

A domed dining car is another thing.

Something called the “edu-trainment car.” It’s a rolling children’s museum.

When kids are on the car, typically they’ll get bored a little bit after seeing enough trees. So, we’re looking for a place for the kids to go and be entertained, like a children’s museum but pull elements of the national park into the car. It’s a quarter of a million for that car and we’re almost there.

But we still need funding for it. Plus, an ADA (American Disabilities Act) dining car. You saw we have an ADA accessible coach car, but we don’t have an ADA accessible dining car.

That’s really big on our list. Plus, there’s $1 million in the campaign for fleet preservation. And the idea is to create an endowment for us. It’s a $5 million capital campaign, but we think we can raise more than that, and that would go into an endowment.

Companies that host multiple events often have repeat attendees. So why not take a fresh approach and try something new? Opt for a more casual format like a fireside chat versus a formal panel session, or what about adding more networking time at lunch and skipping the presentation? A small change can leave a lasting impact by increasing engagement and audience participation. Remember that networking can be just as important to attendees as the content.

Ashley Ramsey

Events Manager Crain’s Cleveland Business aeramsey@crain.com

How Crain’s can work for you: Crain’s Cleveland Business events are widely recognized as a great place to make connections, consume excellent content and honor hard-working NEO professionals. But, we also keep the attendee in mind by changing up the program and including plenty of time for networking.

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