Behind the doors at Heenan Blaikie’s collapse

Former co-managing partner details law firm’s spectacular demise in book

Norman Bacal considers himself an introvert, and his preference for listening over talking was one of the tools he used to work his way up the ranks to emerge as a national co-managing partner of law firm Heenan Blaikie.

Heenan, if you’ve forgotten, was the subject of a spectacular and rapid collapse in the early months of 2014.

One might have expected the normally taciturn Bacal to quietly fade into the background, taking his personal account of the Heenan failure with him.

Not so. As of Feb. 28, his version of those events is now published in a 323-page book called Breakdown.

Several histories of big Canadian law firms have appeared over the years. Most are authorized accounts that are pretty much sanitized of any of the scandalous deeds or horrific embarrassments that would interest leisure readers. Breakdown is a different story.

Unless another Heenan insider comes forward with an account of the firm’s collapse, this book will be the most important read for anyone who wants to understand how a national law firm — established in Montreal and arguably one of the lowest risk businesses there is — can implode so spectacularly.

Heenan’s partners voted the firm out of existence in early February 2014. The firm had still made money in 2013, but profits dipped to the point that too many partners decided to move to other more profitable shops.

Losing those partners stripped Heenan of revenue, compounding to the financial strain. By early February 2014, the remaining partners recognized they had to close the doors.

Afterwards, Bacal stewed over the collapse. His wife, an accountant who later in life became an artist, gave him a notebook and ordered him to write down his version of events.

Out poured a handwritten draft of 900 cathartic pages. It was a bit much, but Bacal thought he had something.

As a practitioner, Bacal was a tax lawyer who developed niche expertise in financing films. He even sat on the Lions Gate board of directors for a decade.

Bacal sent his manuscript to a friend in the movie business who helped him trim the account and beef up the story arc. Which stands to reason: Heenan’s collapse is basically a Greek tragedy in 21st century guise.

Bacal explains how founding partners Roy Heenan, Peter Blaikie, and Trudeau-era cabinet minister Donald Johnston founded the firm on principles of “frugality and caution” back in the 1970s.

The firm was known for its collegial atmosphere, and it had an almost magical ability to attract well-connected rainmakers to the letterhead, among them former Liberal prime ministers Jean Chrétien and Pierre Elliott Trudeau, former Quebec premier Pierre-Marc Johnson, and former Supreme Court of Canada justice Michel Bastarache.

The firm eventually grew nationally, and even opened an office in Paris. By the early part of the century it had 1,100 employees and annual billings in the range of $250 million. Even so, Bacal says it never occurred to anyone at Heenan that putting day-to-day management of the firm in the hands of lawyers with no management training could be a problem.

“Only a law firm would contemplate this as normal behaviour,” he writes.

As the firm grew, the modesty and collegiality that served as the firm’s cultural glue gave rise to pressure to boost profits. This took the firm in some dark directions.

An event from 2011 particularly rattled the partners. The National Post reported that a Heenan partner in the Montreal office, Jacques Bouchard, was involved with an attempt by businessman Ari BenMenashe to sell Russian helicopters and other heavy equipment to the Central African Republic. Bacal writes that internal firm controls actually prevented Heenan from being involved as counsel on the arms deal.

Still, the potential transaction angered some of the partners, particularly in Toronto, who insisted on an internal investigation. “The Bouchard debacle underscored a growing rift between Montreal and Toronto partners on a number of different matters,” Bacal writes.

That rift hit just as the firm was shifting leadership. Founder Roy Heenan would retire as firm chairman in 2012. Since 1998, Bacal and Guy Tremblay had been the firm’s two co-managing partners. Tremblay, who was based in the firm’s Montreal office, left management in 2012. Bacal, who was based in the Toronto office, would step down in 2013. The two new comanaging partners would be Kip Daechsel in Toronto and Robert Bonhomme in Montreal.

In Bacal’s account, Daechsel and Bonhomme never gelled as coleaders. They oversaw a tougher, more aggressive compensation process that tore at the fabric of the firm’s partnership, Bacal writes. “This new anger and mistrust was engendering a perceptible change in values. Profits were beginning to trump people,” he writes.

It’s hard to judge how fair this assessment is. As narrator, Bacal has the power to sugarcoat his involvement in the story. He certainly provides some measure of mea culpa, but he’s not afraid to blame the firm’s leadership shortcomings on some of his partners. Still, the story is a powerful tool for anyone who wants to understand how a big law firm — or any big professional partnership — manages itself. No other book may ever reveal so much about what actually happens behind closed doors at one of the biggest law firms in the country.