Law Times - Newsmakers

10 December 2014 wiTh heenan BLaikie LLp said to have had its best year in 2010, it was a shock to many in the legal community when after 40 years the firm that had once been home to Pierre Elliott Trudeau and Jean Chrétien collapsed and announced on Feb. 5 it was winding up operations. The collapse left the legal community reeling, with many lawyers wondering which firm would be next. It also prompted widespread fears about the sustainability of the law firm business model as law- yers questioned whether there's enough demand for their services at the fees they've been charging. The collapse was particularly surprising because Heenan Blaikie had had some "good years" immediately after the 2008-09 down- turn. But it was perhaps those good years that were the "worst thing that could have happened to them," said one source, as they helped to cover up the true impact of the recession since the total value of corporate deals in Canada had fallen significantly. One in-house counsel said the writing had been on the wall for large firms for more than a decade. "Like many firms, they are paying their lawyers too much and when they don't have the work to sustain it, it can all go pretty quickly. This is not a pretty story. Other firms know they aren't immune from it and they need to be very conservative at this point." In addition, others said a perfect storm was happening on many levels at Heenan Blaikie. For example, the firm opened a Paris office just as the European economy was tanking, and there were reports of poor financial controls, succession issues, infighting, and a lack of leadership. Senior partners had been trying to figure out the next moves for the iconic Canadian firm that had large groups of lawyers jumping ship for more than 18 months before the final collapse. The firm of 575 lawyers spread across eight offices had lost at least 40 part- ners from a number of practice areas, including its core labour and employment group. At one point, Ottawa lawyers in that practice area quit. They included co-managing partner Dan Palayew, who left for Borden Ladner Gervais LLP. After the shutdown, a number of partners in Vancouver created spinoff firm Gall Legge Grant & Munroe LLP. Twenty- four more former Heenan Blaikie lawyers from the Toronto and Montreal offices, including Chrétien, went to Dentons Canada LLP. Others landed at other firms across the country or hung out their own shingles. Many were watching the Heenan Blaikie story with dis- belief as what was once considered one of the premium law firms in the country appeared to be falling apart. "I think it's very sad," said Brian Grosman of Levitt & Grosman LLP. Grosman said when he saw last year that the leaders of the labour and employment group — namely Henry Dinsdale and Jeff Goodman — were going to Hicks Morley Hamilton Stew- art Storie LLP, he felt it was "the beginning of the beginning." "When I first heard about that, I thought: 'There's something wrong here.' These people are leaders in their group. Whenever the leaders are leaving, you know the troops are not all that far behind." Eight months later, the collapsed firm was still in the news as a flurry of lawsuits from former Heenan Blaikie employees alleged wrongful dismissal, misrepresentation, and unpaid settlement agreements. None of the allegations have been proven in court. 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 wrongful 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. In another lawsuit, a former patent agent at Heenan Blaikie alleges the firm owes him $800,000 in damages for wrongful dismissal for letting him go without notice. top stories Canada's largest law fi rm failure leaves legal profession reeling Heenan Blaikie collapses after 40 years After months of rumours about troubles at Heenan Blaikie LLP, the fi rm began winding up operations in February. By Jennifer Brown

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