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Law firm valuations in flux by JULiUs meLniTZer For Law Times A s the profession evolves at an ever more rapid pace, experts are mulling the impact of change on the value of legal practices. "Dental practices have become very valuable commodities because young dentists can't build practices the way previous generations did," says Stephen Cole, senior adviser in the Toronto office of Duff & Phelps Corp., a valuation and corporate finance consultancy. "The same thing is happening at accounting firms, and law firms will follow, largely because there are fewer entrepreneurial opportunities and the ones that are available are valuable." But James Cotterman, a U.S.-based consultant and principal at Altman Weil Inc., sees things dif- ferently. In an article on the valuation of law firms and law practices, he suggests "the valuation land- scape has changed and generally not for the better from a seller's perspective." Cotterman notes the number of sellers, com- prised largely of retiring baby boomers, is growing rapidly; successor purchasers are more aware of the challenges of transferring practices; clients and re- ferral networks have become more unpredictable; clients are more willing to consider alternatives to the "traditional, long-standing relationship with a single trusted adviser;" and technology is changing how the profession works, which affects both the lawyer-client relationship and its value. "Buying professional practices is recognized as a much more difficult activity today than it was a decade ago," wrote Cotterman. "Pricing models, and reasonable hopes and ex- pectations for pricing conversion and future pric- ing increases are vastly different today." ABS DEBATE Ontario lawyers offer their thoughts P3 CRIME OBSESSION Time to address other areas of law P7 FOCUS ON Real Estate Law P9 See Clients, page 5 PM #40762529 $4.00 • Vol. 25, No. 34 October 27, 2014 L aw TIMEs L aw TIMEs Visit carswell.com 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/, CLLdir_LT_Oct6_14.indd 1 2014-09-30 9:25 AM & $#&!&jmmm$cYa[bbWh$Yec ntitled-4 1 12-03-20 10:44 AM e: email@example.com www.docudavit.com Closed File Storage SAVE YOUR FIRM MONEY With Our Secure and Cost Effective, Easy to Access Closed File Scanning & Storage Solutions. Call Us, We Will Help You! ntitled-1 1 2014-10-21 8:13 AM Heenan facing flurry of lawsuits Collapsed law firm sued by former employees, partners by yamri Taddese Law Times A Toronto lawyer representing former legal assis- tants at Heenan Blaikie LLP in their wrongful dismissal claims against the defunct law firm says her clients are struggling to get by after their sudden termination this year. Heenan Blaikie, which began winding up operations last winter, is facing a f lurry of lawsuits from former em- ployees alleging wrongful dismissal, misrepresentation, and unpaid settlement agreements. None of the allegations have been proven in court. "These are legal assistants who were dedicated, loyal em- ployees serving their employer for a lengthy period of time and, through no fault of their own, they were terminated and now haven't received the compensation they were le- gally entitled to," says Christine Westlake, an associate at Koskie Minsky LLP who's representing two former legal assistants at Heenan Blaikie. Westlake says her clients didn't get termination pay, contin- uation of group benefits, and other legal entitlements. "They're not out to get the sun, the moon, and the star," she adds. In one of the lawsuits, a 61-year-old legal assistant alleges the law firm lied to her about its state of affairs just before its collapse. Wendy Rhodes, who's seeking $105,000 for wrong- ful dismissal or breach of contract, says the firm's managing partners misled her into believing her job was secure before sending her a termination letter on Valentine's Day. Former national co-managing partner Norman Bacal "advised Rhodes that Heenan was doing well financially Christine Westlake says her clients didn't get termination pay, continuation of group benefits, and other legal entitlements. Photo: Robin Kuniski See Lawsuit, page 5 Stephen Cole is optimistic about law firms' valua- tion prospects.