Law Times

February 10, 2014

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Visit or call 1.800.387.5164 for a 30-day no-risk evaluation )BSECPVOEȕ1VCMJTIFE'FCSVBSZFBDIZFBS 0OTVCTDSJQUJPOȕ- 0OFUJNFQVSDIBTFȕ- .VMUJQMFDPQZEJTDPVOUTBWBJMBCMF 1SJDFTTVCKFDUUPDIBOHFXJUIPVUOPUJDF]UPBQQMJDBCMFUBYFTBOETIJQQJOHIBOEMJOH CANADIAN LAW LIST 2014 :063*/45"/5$0//&$5*0/50$"/"%"Ȏ4-&("-/&5803, ȕ BOVQUPEBUFBMQIBCFUJDBMMJTUJOH ȕ DPOUBDUJOGPSNBUJPO ȕ MFHBMBOEHPWFSONFOUDPOUBDUJOGPSNBUJPO .03&5)"/"1)0/�, CLL-Dir_LT_Feb10_14.indd 1 14-01-31 12:11 PM How did Heenan Blaikie fall so quickly? Crisis follows iconic firm's 'good years' after 2008-09 recession ith Heenan Blaikie LLP reportedly having had its best year yet in 2010, how could the fi rm have declined so quickly with its announcement last week that it was wind- ing its operations? While Heenan Blaikie had some "good years" immedi- ately a er the 2008-09 downturn, it's those good years that were perhaps the "worst thing that could have happened to them," according to one source familiar with the situation, as they helped to cover up the impact of the recession. In fact, 2010 was reportedly the fi rm's best year ever with some large one-off transaction fi les that kept lawyers busy. Since then, of course, the total value of corporate deals in Canada has fallen signifi cantly. But even a er a good year, it doesn't take much for things to go south very quickly, says Colin Cameron, founder of Vancouver-based Profi ts for Partners Management Con- sulting Inc. According to Cameron, a 10-per-cent drop in revenue can potentially result in a 25-per-cent loss in profi ts assuming a 40-per-cent net-profi t margin. "To further demonstrate that example, if your revenue is off 20 per cent, your net profi t is cut by 50 per cent," he says. "So it could be as simple as that." At Heenan Blaikie, the Montreal offi ce, like the Toronto one, had recently completed a large fi le of work that was keep- ing cash fl ow coming for an extended period of time. In Mon- treal, a case recently came to an end with a Supreme Court decision issued Jan. 9 involving Pricewaterhouse Coopers/ Coopers Lybrand and Montreal-based Castor Holdings Ltd. About 10 to 15 Heenan Blaikie lawyers were reportedly on the fi le for 15 years. For the Toronto offi ce, a key factor in the fi rm's troubles was a large arbitration fi le that had huge monthly bill- ings and also wound up recently. In addition, others say there was a perfect storm hap- pening on many levels at Heenan Blaikie. For example, the fi rm opened a Paris offi ce just as the European economy was tanking. And when revenues drop, problems can develop quickly given that most fi rms have fi xed costs that go into paying for salaries and operations, according to Cameron. "So when the top line drops, there's not a lot they can do other than fi re people, whether that's staff or associates," he says. "Many fi rms go that way fi rst, but then eventually you got to start letting go of non-equity partners and fi nally you've got to be letting go of equity partners to manage your cash fl ow and expenses." At Heenan Blaikie, meanwhile, senior partners had been trying to fi gure the next moves for the iconic Canadian fi rm that has seen large groups of lawyers jumping ship for the last 18 months. But by Wedesday, it announced an "orderly" wind- up of its operations that would span a few months. It vowed the windup would "make it possible to continue serving the fi rm's clients without interrupting or disrupting service" and POLITICAL DONATIONS Law firms still giving to Ontario parties P3 ELECTION REFORM Stephen gets even with new bill P7 FOCUS ON Family Law/Trusts & Estates P9 See DLA, page 4 With partners leaving, Heenan Blaikie announced it was winding up its operations last week. Photo: Chris Helgren/Reuters PM #40762529 & $#&!& j mmm$cYa[bbWh$Yec ntitled-4 1 12-03-20 10:44 AM L aw TIMEs $4.00 • Vol. 25, No. 6 February 10, 2014 TOOLS CLOUD preview. Child and spousal support calculations anywhere, anytime, on your smartphone, tablet, Mac or PC. To get started, visit: ntitled-3 1 14-01-31 12:21 PM L aw TIMEs L aw TIMEs L aw TIMEs BY JENNIFER BROWN & YAMRI TADDESE Law Times Appeal court clarifies limitation periods he Ontario Court of Ap- peal clarifi ed the issue of limitation periods in two recent rulings aff ecting both class action and family law matters. On Feb. 3, plaintiff -side class ac- tion lawyers breathed a collective sigh of relief a er the court over- turned Sharma v. Timminco Ltd., a 2012 landmark ruling that imposed a three-year deadline for fi ling a class action claim under the Securi- ties Act and successfully obtaining leave to begin a statutory action. e three-year limitation pe- riod was a diffi cult one to meet, according to lawyers who say the Court of Appeal's latest decision on the matter is a huge victory for investors and access to justice in Ontario. In eff ect, the ruling means class action lawyers need only issue a claim within the three-year win- dow and they can toll the limita- tion period while they seek leave to launch a statutory action. e latest ruling in Green v. Ca- nadian Imperial Bank of Commerce considered three separate class pro- ceedings dealing with alleged mis- representations in the secondary market. In all cases, the limitation period ran out before leave to pro- ceed with the action was granted. " is is an overwhelming vic- tory for Ontario's investors," says Daniel Bach, a class actions lawyer at Siskinds LLP. " e Court of Appeal has very clearly said these claims are going to go under the established test and adopted a realistic approach for how the limitation period will work." Just days before its ruling in Green, the court clarifi ed the Limita- tions Act as it applies to constructive trusts in family law cases. In McCon- nell v. Huxtable, the appeal court de- cided to apply the catch-all two-year limitation period to bring construc- tive trust claims against a common law spouse. But if the unjust enrich- ment claim relates to the profi ts of real property, a more lenient 10-year timeline applies. e fi nding overturned part of a lower court ruling that found there was a legislative gap when it came to an applicable statute of limitations for unjust enrichment claims in family law. Lawyers say both rulings will have a signifi cant impact. When the Court of Appeal handed down Timminco in 2012, many lawyers described it as a "thunderbolt" that would render many claims stat ue- barred. According to appeal court Jus- tice Kathryn Feldman, who wrote the decision on the court's behalf, Timminco's deadline is impractical for cases involving complex and time-consuming discovery phases. And once a motion for leave begins, the parties have limited control on the timing of the hearing. "For the above reasons, I would set aside the interpretation given to BY YAMRI TADDESE Law Times W See Decision, page 4 T

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