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w w w . C A N A D I A N L a w y e r m a g . c o m J u l y 2 0 1 4 31 agreement that their money would become due upon dissolution. Most of that is owed to the Bank of Montreal for capital loans. Heenan agreed to pay the loans back over 24 months starting in September 2014 and pay any interest. Those cases have been adjourned on consent. A group of 13 ex-partners are in arbitration over their capital payments, trying to get them classified as debt and not equity so they would have higher priority over the firm's assets. Their law- yer, Kent Rosenberg, declined to comment on the arbitration, noting it was confidential. Its key landlords, Oxford Properties Group Inc. in Montreal and Brookfield Office Properties Inc. in Toronto, had yet to file lawsuits, but are owed millions under the leases. It's not clear to what extent partners are personally liable. Some sources implied they weren't, but the Alberta litigation suggests otherwise. In settlement letters to the men, Bonhomme wrote: "The firm con- firms that, in accordance with section 7.5 of the Capitalization Policy, it has procured your release from the guarantees you pro- vided to the Partnership's landlords in Montréal and Toronto." Its two banks, BMO, which managed the capital loan pro- gram, and Royal Bank of Canada, had yet to file suit over their credit lines. One lawyer confirmed Heenan drew down a small amount on its operating line, but expected that would be covered by receivables. It's not clear how much partner capital is it stake, as part- ners contribute based on their income, but it's in the millions. According to the Alberta litigation, the amount posted was 62 per cent of net income. That's at the higher end of the scale for law firms, notes McKenna. Under the partnership agreement, lawyers do not immedi- ately receive their capital when they depart, so most of those who left will be lumped in with the remaining partners, which at the dissolution vote numbered around 170, according to one source. It's not clear how many were equity partners. If money isn't recov- ered to pay the capital loans, then partners are personally liable at a time when they are moving to new firms and would have to take out another capital loan to become an equity partner. There is also the practical reality of dissolution, notes Gary Luftspring, a former partner in Goodman & Carr LLP, which before Heenan was Canada's last big law firm to implode in 2007. The files and records for 40 years of clients have to be dealt with. "What do you do with a 'gabillion' pieces of paper stored at Iron Mountain?" he asks. His partners spent years after the firm closed paying to store documents. Also, accounting and tax records need to be maintained. "There is all this piddly stuff that drives you around the bend." Heenan has nine offices. "That adds huge complexity" to the dissolution, he says, predicting former Heenan lawyers will learn in the process there are "good partners and bad partners." He adds some clients will simply refuse to pay their bills. Meanwhile at the new firm MEP it's business as usual. "We haven't really changed a heck of a lot in terms of the way we prac- tise with each other as a group," says Pawar. "At the end of the day, this is what was best for us and our clients." Starting a business, making a will or buying a house? Declaring bankruptcy, dealing with a personal injury, insurance claim or job loss? If you're in the midst of one of life's big events, help is as close as your smartphone, tablet or computer. Simply go to www.CanadianLawList.com to find the right lawyer for your particular legal need. www.CanadianLawList.com is Canada's most comprehensive online directory of lawyers and law firms. And it's easy to use! You can search by city, legal specialty, or name for listings and contact information. Find the legal expertise you need at www.CanadianLawList.com. g a house? nal injury, help is as Si l legal expertise? Looking for Find exactly what you need at www.CanadianLawList.com and it's available to you 24 hours a day. s available y availabl y CLLwebsite_CL_Jan_14.indd 1 13-12-03 11:07 AM

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