Canadian Lawyer

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 27 as calling the shots. It had blue chip clients and political clout, but as Toronto grew its corporate practice, it put pressure on the firm's political make up. But Heenan felt the mix worked well. Labour lawyers bill steadily and rack up the hours, which allows corpo- rate lawyers to hunt deals. "Labour could put in their hours and bill monthly and corporate can look for the deals nationally and internationally and they came into some fairly significant profits. That's the way it worked most of time," he says. Others, however, saw it differently. There was a lack of cross- selling, noted one Quebec corporate lawyer, because labour law- yers focus their relationships on human resource professionals. Corporate lawyers, on the other hand, are looking to the CFO and CEO for business. So corporate lawyers can help labour lawyers make entrees into companies, but not so much the other way around. "After a while, you get tired and don't want to reciprocate anymore. But that issue, I don't think, is unique to Heenan, it was just compounded by the fact that Heenan was a major force in labour," says Gall, a labour lawyer. "Law firms have to figure out what they're going to be. If you're going to be a business law firm, a deal-making firm, then everything else is secondary." Labour and corporate also had disparate rates and costs for running their practices. The mix works well when everyone is busy, but is a disaster if things slow. When deals dry up, the corporate department slows dramatically, yet there is heavy over- head in terms of bodies and space. Labour law has fewer peaks and valleys. Lawyers say disparate practice groups across the firm also made it difficult to arrive at consensus on things like interna- tional expansion and firm strategy. Even within practice groups there were discrepancies. Some lawyers had a domestic practice and saw offices in Paris and the use of international business consultants as unnecessary. Others note practice groups were not aligned across offices and lacked their own budgets. By not being more integrated, it would open the firm to inter-office rivalry, observes Patrick McKenna, a management consultant to law firms based in Edmonton. International efforts questioned S o what happened? Many lawyers point to incidents involv- ing Montreal lawyer Jacques Bouchard, Jr. as opening a fissure. Bouchard, director of international business, made headlines in The National Post in 2011 for his relations with controversial lobbyist and political consultant Ari Ben-Menashe, who was attempting to obtain attack helicopters for an African country. It caused a backlash. An internal investigation was com- menced, which fomented dissent between partners and manage- ment. Bouchard resigned in late 2011. Heenan's name also came up in the investigation into Griffiths Energy International Inc. bribing of a Chadian ambassador's wife in 2011 to land lucrative oil leases. The judge hearing the charges against Griffiths exonerated Heenan, noting the law firm advised against such bribes. However, what those incidents did, lawyers say, is chip away at the trust partners had in management and cast a shadow over the firm's international initiatives, which were already a bone of contention for some. The firm was paying international consul- tants in places like China and the Middle East to bring in work and the Paris office, which was central to the international efforts, was losing a few million dollars a year. That added to the grous- ing and some started questioning the firm's direction. Others, however, saw it as the future. "There was this lack of confidence," says David Blair, a transportation lawyer who left the firm for McCarthy Tétrault LLP in October 2013. "You need to have a global vision that everyone buys into." Succession bungled W hile this played out, Heenan was about to undergo a leadership change as part of its succession plan. Roy Heenan stepped down as chairman at the beginning of 2012. The two co-managing partners were also both supposed to leave at the end of 2012, which made no sense, so Tremblay agreed to step down at the end of 2011. Heenan says under the partnership agreement, replacing a co-managing partner required the executive committee to establish a subcommittee that would vet candidates and then put forward a recommendation to the executive committee. Robert Bonhomme, a hard-nosed labour lawyer described as a quick study, got the nod and took over beginning in 2012. However, that didn't sit well with some lawyers in the firm, particularly in Toronto. The process was perceived as lacking transparency and for lawyers often the process is more important than the result, which created a negative atmosphere around Bonhomme's ascendancy. When it came time to replace Bacal, the Toronto partners demanded a vote, rather than the selection process used for Bonhomme. However, one of the concerns about an election, lawyers say, is that it doesn't always bring out the best candidates. It becomes a popularity contest or an "anybody but" contest, creating more rivalry. But through an election, Kip Daechsel got the nod and stepped into Bacal's shoes at the beginning of 2013. Both Tremblay and Bacal were told to step back and let the new leaders find their footing. Lawyers say the new leadership faced greater scrutiny by part- ners still reeling over the prior incidents. The cross-examination was "just ridiculous," said one Toronto lawyer. Complicating the transition was the state of the legal econ- omy, which was tanking, and Heenan faced its first significant slowdown. In the first nine months of 2013 deals were abysmal, according to Mergermarket Ltd., falling to the lowest levels since 2004, and Toronto was feeling the pinch. Blair says when "weath- ering storms you need to have a little bit of experience. All of a sudden there was a pretty big storm that came along and no one had been there before to weather it." Observers say one of the problems was Bonhomme already had a year under his belt when Daechsel came on board. Daechsel, described as a nice guy and a good lawyer, was part of the Toronto corporate group. The two were immediately at loggerheads. Bonhomme wanted to quickly cut costs, some say indiscrimi- nately, to cope with declining revenues, particularly in Toronto, which he claimed was unprofitable. Some lawyers dubbed the cost cutters the "Tea Party." Daechsel wanted to ride out the storm and lawyers say he later prepared a report that showed Toronto was profitable, and Montreal wasn't, which only added fuel to the fire. Both men declined to comment for this story.

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