Canadian Lawyer

26 J u l y 2 0 1 4 w w w . C A N A D I A N L a w y e r m a g . c o m A sk Marshall Pawar what brought down Heenan Blaikie LLP and the corporate lawyer slyly dodges the question, telling a reporter he prefers to focus on his new venture, MEP Business Counsel. But his answers still speak volumes about the future of national law firms. Pawar, a senior associate, and his Vancouver corporate colleagues were left scrambling to find a new home when the partners of Heenan Blaikie voted to dis- solve the firm on Feb. 5. "Every individual got phone calls from a headhunter and had opportunities," says Pawar, including joining a national firm. "We had a really cohesive group, a really good team." Everyone wanted to continue practising together, so they formed MEP, comprising partners Arthur Evrensel, an entertain- ment lawyer who practised at Heenan, Ryan Patryluk, Pawar, and six associates. "The real strength of our team is that they work with a sense of big, international firm mentality and urgency and yet we can do it on the cost efficiencies of a smaller firm," says Pawar. The new firm took cheaper space and lowered rates. Today, he says, international deals are done via e-mails, videoconfer- encing, and conference calls. "Clients want to get the deal done." They don't need law firms with big overhead. "Quite frankly, I think that's the way a lot of corporate firms are heading." If that's the case, Heenan's failure should send shivers down the spines of the 10,000 lawyers who practise at Canada's biggest 30 law firms. That's because it's clear based on discussions with Heenan lawyers and insiders, most who declined to be quoted, no single event brought down the firm. Rather, it was a conflu- ence of nine factors playing out over time which dissolved the glue that bound the lawyers and led to the dissolution vote. They include: • unbridled growth; • poor financial controls; • compensation jealousies; • succession issues; • firm infighting and rivalries; • weak partnership governance structure; • lack of leadership and oversight; • opportunistic competitors; and • a lousy economy. Heenan likely could have survived one or two, because each one alone wouldn't be sufficient to bring an end to a firm. Rather, like separate weather fronts, they collided forming a frankenstorm that engulfed the law firm. What should concern lawyers at national law firms is many of those storm fronts play out daily in legal practices across the country. Vancouver lawyer Peter Gall, now of Gall Legge Grant & Munroe, says, "We didn't have the leadership or the leadership structure or the management structure to hold it together." Montreal labour lawyer Guy Tremblay, a former co-managing partner now at BCF, adds Heenan's collapse can be attributed to a "loss of trust" among partners and a "lack of courage" to go for- ward together. "If you don't have the nails or grout or whatever it takes to make them stick together, you have nothing. That had disappeared over time." Firm grew quickly T o understand Heenan's demise, you have to understand how the firm grew and was managed. Founded in Montreal in 1973 by lawyers Roy Heenan, Peter Blaikie, Guy Dufour, and Don Johnston, it focused on labour, litigation, tax, and entertainment law. "I think we were one of the more friendly firms to work in because people weren't always down your back," says Roy Heenan, the defunct firm's longtime chair- man. "We had a reputation which was exceptional. I think, to see it go down so quickly, it was a big upset. I would have never believed that when I stepped down." Heenan quickly became one of Canada's fastest growing law firms, expanding to Toronto in 1989, when entertainment and tax lawyer Norm Bacal left Montreal to set up the office. It opened offices in Vancouver in 1991, Trois-Rivières in 1992, Quebec City and Sherbrooke in 1998, Ottawa in 1999, Calgary in 2000, Victoria in 2006, and Paris in 2009. It also had a Singapore representative office. At its peak in 2010, the firm had almost 600 lawyers and 1,300 staff, says Tremblay. Heenan also had a co-managing partner structure. For 14 years, Bacal and Tremblay ran the firm. For the most part, the co-management structure worked and the firm grew significantly as the economy hummed along. Any squabbles they had largely stayed behind closed doors. Heenan would referee disputes and inter-office rivalries. "One of my jobs as chairman was to make sure that there wasn't any of that sort of competition going on," says Heenan. By 2012, Toronto was the biggest office with more than 200 lawyers, but the head office remained Montreal. Much of Toronto's growth came through lateral hires. The challenge with hiring laterally is a law firm is essentially stealing talent from other firms. That usually means paying more money and there is a leap of faith the incoming lawyer will live up to expectations. In some cases, law firms can end up overpaying for under perform- ers, fuelling compensation jealousies. Bringing in lateral hires also meant having newer lawyers who didn't grow up in the firm's congenial culture. Building a law firm comprising a large labour practice and mixing in corporate also has inherent challenges. Labour was seen

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