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Learning from Heenan Blaikie’s miscues

When national law firm Heenan Blaikie LLP blew up in early 2014, I covered the story for Canadian Lawyer, writing about a Frankenstorm of events that caused the firm’s demise.

So when former Heenan co-managing partner Norm Bacal’s book Breakdown: The Inside Story of The Rise and Fall of Heenan Blaikie came out in early March, I was curious to read it.

Bacal’s 325-page tome provides interesting insight into the birth and demise of a national law firm, and it should be mandatory reading for anyone who aspires to be part of law firm management or works in Big Law. It should also be on the reading list at most law schools, which do a poor job of preparing law students for the business side of practising law.

Writing the book was obviously a cathartic experience for Bacal, who spent 30-plus years of his career helping to build a multi-million-dollar business only to see it dissipate on a partnership vote a few years after he stepped down.

While I suspect some of his former partners will see the book as nothing more than a vanity project and an attempt by Bacal to distance himself from the firm’s demise, I think that would be simply sour grapes on their part. His account is heartfelt, he admits to mistakes and re-lives some of the pain experienced in watching what he built burn.

However, don’t expect a tell-all book. He doesn’t dish dirt on partners. In fact, Bacal bends over backward to praise many of them.

Rather, Breakdown is a clinical analysis by a tax lawyer of how the firm was put together and factors that led to its demise.

It starts with his early days at the firm, its founders, the culture they built and the bond that held the lawyers together.

The Heenan culture was special, he writes, likening it to a marriage: “We had to make these difficult men and women feel valued and loved and attached to a culture that was the foundation on which we built the firm. We had to learn to tolerate one another, particularly when someone said or did something that was perceived as hurtful or disrespectful. We also had to learn to say we were sorry.”

But like many marriages, things change over time. The firm grew bigger. New offices and lawyers were added and the firm hit some headwinds, which slowly chipped away at the sacred bond that held the partners together. Those headwinds included suffering a rogue lawyer that sowed distrust among partners over the firm’s strategy to engage consultants, a Paris office that was costing the firm money, growing animosity between the key Toronto and Montreal offices and a shift in approach to compensation.

One of the big issues at the end, Bacal writes, was leadership and the inability to put into place a successful succession plan.

Law firms should pay heed to his succession warnings. Heenan was a multi-headed management hydra. Not only did it have a co-managing partner structure, it also had a chairman. As well, an executive committee was responsible for strategy and a national management committee dealt with operations.

As Bacal tells it, he and fellow managing partner Guy Tremblay from Montreal were able to work as a team within that structure. However, when it came to succession, things fell apart.

New Montreal co-managing partner Robert Bonhomme had a different view of what the firm should be and wanted cuts. Meanwhile, Kip Daechsel, who replaced Bacal a year after Bonhomme was already on the job, felt the firm could weather the slowdown and was loathe to cut.

Needless to say, those counter viewpoints were unproductive. The firm lost its outward vision on its market and became internally focused. As the economy tanked in 2013, management became engrossed in internal squabbles and the executive committee lost focus on the big prize. At one point, Bacal writes: “We now had two groups looking at management issues and no one considering direction.

“Once the two firm leaders were in deadlock, the organization had no effective means to pull itself out of its tailspin.”

Throughout points of Bacal’s storytelling, you want to shout at the partners to pull up, can’t they see where this is headed?

Bacal admits to mistakes — raising what he calls the rule of 75. That’s where 25 per cent of the decisions you make will turn out badly.

He writes that “no one forgets the missteps” and tells a painful story about how his hopes to eventually chair the firm were dashed.

Bacal says that one of the biggest mistakes was not ensuring the new co-managers had leadership training, since they were taking on a job “for which they had no experience.” The same goes for the executive committee.

Bacal believes the firm could have survived had it stuck to its principles and would have weathered the economic storm had it not slashed fee earners and created an environment where money drove decisions and created internal competition over compensation, which added to partner unease.

As pressures from clients to drive down legal costs increase and competition stiffens with new entrants, Bacal’s book is a reminder that no law firm is too big to fail or immune from shifting winds.

Jim Middlemiss is a principal at