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‘We had a happy firm where people liked each other. We didn’t try to be the highest-paid firm but the happiest firm in the country,’ Roy Heenan says of the law firm that bore his name. (CHRISTINNE MUSCHI FOR THE GLOBE AND MAIL)
‘We had a happy firm where people liked each other. We didn’t try to be the highest-paid firm but the happiest firm in the country,’ Roy Heenan says of the law firm that bore his name. (CHRISTINNE MUSCHI FOR THE GLOBE AND MAIL)

Death of a law firm: Behind the collapse of Heenan Blaikie Add to ...

Roy Heenan always believed the firm that bore his name should be a place where people loved coming to work.

Over four decades, as Heenan Blaikie LLP grew from a small Montreal operation into one of Canada’s first national law firms, with more than 500 lawyers in its ranks and ex-prime ministers on the payroll, his vision was zealously maintained. The firm hosted monthly cocktail events, awarded quarterly “staff appreciation” gifts ranging from scarves to chocolate fondue sets, and even bought cars for its partners.

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But, after a trickle of partners fleeing the firm turned into a torrent, that world abruptly fell apart this week. In a conference call on Wednesday evening, the remaining partners said goodbye to each other and voted to dissolve the firm. Hundreds of support staff, in addition to a dwindling number of lawyers, were suddenly jobless – although Heenan Blaikie remained profitable, earning $75-million last year.

No single culprit was to blame for the largest failure of a law firm in Canadian history. A terrible year for merger-and-acquisition deals had brought long-simmering tensions between the firm’s Quebec offices and its Toronto branch to a boil. But there was also dissension at the top and an increasingly tough environment for law firms in general.

Underlying it all was the fragile nature of a professional partnership, where the departure of a few partners in search of bigger paycheques elsewhere can lead to a “run on the bank” that propels those who remain out the door.

A pivotal moment for the firm came when Mr. Heenan stepped away from his role as chairman in 2012. His hold on the firm was such that partners could never agree on his replacement, creating a leadership vacuum that he and others say resulted in infighting between offices and practice groups, battles over who deserved what share of the firm’s declining revenue, and an inability to make the changes many observers say law firms need to make to survive in the 21st century.

While co-founder Peter Blaikie was also instrumental in the firm’s growth, it was Mr. Heenan – chairman from its founding in 1973 – who convinced Pierre Trudeau to come to work for the firm after Mr. Trudeau left politics in 1984, a move that greatly enhanced Heenan Blaikie’s profile. (Jean Chrétien would later follow in his political mentor’s footsteps.) It was Mr. Heenan’s art collection that graced the corridors of the firm’s offices and it was Mr. Heenan’s strong hand that dominated internal discussions.

Heenan Blaikie was governed by an executive committee and had an unusual two-headed structure with a pair of national co-managing partners, one in Toronto, and one in the firm’s birthplace of Montreal. But until his resignation as chairman two years ago, it was Mr. Heenan who called the shots.

“No one, not even [prominent Heenan Blaikie partner and Canadian Olympic Committee president ] Marcel Aubut would stand up to Roy,” a former Heenan Blaikie lawyer said. “When he spoke, people just shut up.”

In an interview on Friday, Mr. Heenan blamed the firm’s executive committee for failing to replace him and abandoning the firm’s people-first philosophy, allowing the firm to succumb to infighting and ultimately die.

“We had a happy firm where people liked each other. We didn’t try to be the highest-paid firm but the happiest firm in the country,” Mr. Heenan said. “Unfortunately, that started to disintegrate when I stepped down.”

With no one succeeding Mr. Heenan in the strongman role, the firm’s partners also elected to replace its two long-standing managing partners, Montreal’s Guy Tremblay and Toronto’s Norman Bacal, who founded the firm’s Toronto office in 1989. Both had been at the helm, with Mr. Heenan, for 14 years.

The transition came at a terrible time for the firm, which grappled – as all Canadian law firms did – with a drying up of corporate mergers and acquisitions in the first several months of 2013, something Mr. Bacal called a “perfect storm.” A small number of partners began to leave.

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