Canada

The View From Up North: Biggest Story of 2014

May 2015 bring you all the business wisdom you already think you have.

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Fair to say the biggest Canadian legal market story of 2014 was Heenan Blaikie’s collapse. It was a silent heart attack — nobody on the outside really saw it coming. Heenan just clutched the pearls and crumbled to the Italian marble floor. Inconsolable partners cried all the way to their next law firms.

The most interesting thing that came out of the immediate aftermath was this report by Julius Melnitzer. Melnitzer spoke to an anonymous managing partner who had access to a study conducted by Deloitte Canada (which we will ominously call, the “Study”). The Study evidently concluded another major law firm would shuffle off this mortal coil in 2014. Melnitzer also received unconfirmed reports the Study specifically predicted the victim would be a Toronto-based national firm.

After I read Melnitzer’s story in March, I started digging to figure out who might be the next casualty. I settled on three targets: Gowlings, Borden Ladner, and McMillan for no other reason than they fit the criteria (i.e., Toronto-based and national). I talked to partners at all three firms. No partner I talked to knew about the Study. All of them denied their firms were in trouble.

I talked to partners at other firms. That was a little more gossipy. Everyone I spoke to had his/her theory of who it might be. No one had inside information, however.

After making the rounds, I had no better sense of who might shuffle off next.

Fast forward to the night before Christmas; the year is almost up. All seems calm, all seems bright in the Canadian market. Nobody else cracked during the year. I am still waiting for an anonymous managing partner to leak another Deloitte report that says, “Oooppps, our bad.”

Part of me says, what a shame. Collapses are fun and gossipy. In the spirit of the holidays, another part says it’s good nobody else went under. Heenan’s collapse caused a lot of grief for many people. Nearly a year on and its partners are still sweating. Here’s another story from Melnitzer that explains Heenan may not have taken full advantage of certain liability-reducing tools it would probably recommend to its clients.

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Fasken Martineau, for example, occupies space in the same Bay Adelaide Centre that Heenan occupied pre-collapse. Heenan partners apparently personally guaranteed the firm’s lease payments. Fasken’s partners seemingly told the landlord personal guarantees were a deal breaker and the landlord relented.

As an aside, when I practiced law, I told my clients, “Don’t give personal guarantees! Ever, ever, ever!” I myself would rather take a cold remedy from Dr. Huxtable than sign a personal guarantee. I bet many Heenan partners agree with my position. Yet, personal guarantees they did give. A telling case of, “Lawyer, advise thy self.”

Another example, it is common for law firms to set up a corporation that hires the support staff and “lends” them to the law firm. Thus, liability is trapped at the corporate level, not in the actual law firm, which should in theory protect the partners from wrongful dismissal suits. Fasken does this. Heenan did not. Right now Heenan is being sued by a plethora of ex-employees for wrongful dismissal. Presumably these pesky suits will dog the partners, who just want to enjoy a relaxing holiday season with their year-end transactions, for quite a while.

Two simple pieces of legal advice that might have saved Heenan partners a lot of time, grief, and money.

One thing, however, I’ve noticed about lawyers over the years — they don’t tend to be great at managing their own businesses — but, many think they’re business all-stars.

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Thus, as 2014 closes I have a simple wish for my fellow lawyers — may 2015 bring you all the business wisdom you already think you have.

That’s the View from Up North. Have a great holiday week.

Steve Dykstra is a Canadian-trained lawyer and legal recruiter. He is the President of Keybridge Legal Recruiting, a boutique recruitment firm that places lawyers in law firms and in-house roles throughout North America. You can contact Steve at [email protected]. You can also read his blog at stevendykstra.wordpress.com, follow him on Twitter (@IMRecruitR), or connect on LinkedIn (ca.linkedin.com/in/stevedykstra/).

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