Book Review: Heenan Blaikie: The Making and Unmaking of a Great Canadian Law Firm

Earlier this year, I was invited by the Canadian Bar Review to write a review of a book by Professor Adam Dodek of the University of Ottawa Faculty of Law titled: Heenan Blaikie: The Making and Unmaking of a Great Canadian Law Firm. I found the book an excellent read and I highly recommend it. My review is included in the current issue of the CBR, now available online. I’m grateful to the Canadian Bar Review for both the opportunity to write this article and for their permission to reproduce the excerpt below.

This is a gripping account of a Canadian law firm’s rise and fall from the 1970s to the 2010s, and of the contemporaneous transformation of our country’s politics, economy, and legal sector during that period. Perhaps most usefully, this book is an insightful exploration of the myriad elements required to build and sustain a successful modern law firm — vividly illustrated by Heenan Blaikie’s failure to assemble or adhere to almost any of them.

Prof. Dodek persuasively argues that the seeds of Heenan Blaikie’s shocking failure were embedded in its founding and began to flourish during its meteoric rise. The handshake agreement in 1973 among Don Johnston, Roy Heenan, and Peter Blaikie that birthed the firm came to assume mythic proportions within its culture. “The Handshake” represented a refreshing and liberating informality in legal practice, a more carefree and less punishing approach to work. This was to be a legal workplace built on collegial trust, a “different kind of law firm” where you could be yourself, work only the hours you wanted, and still make a good living.

That’s a lovely vision for a law firm, especially in the 1970s, when law practice in Canada was as cloistered and protected as it’s ever been. It might even have been a sustainable vision, had history proceeded differently. Had Heenan Blaikie remained a full-service Montréal-only firm with a dominant labour law practice, whose lawyers traded greater income and higher status for shorter workdays and healthier lives, we would be telling a different story today.

However, seismic political events — especially the two Québec referenda and the failure of the Meech Lake Accord — would shift the balance of economic power in Canada from Montréal to Toronto during the last 20 years of the 20th century, making a presence in Ontario’s capital essential for any firm with nationwide ambitions. And perhaps the waves of merger and expansion that swept through the Canadian legal sector in the 1990s would have defeated the original vision in any event.

But Heenan Blaikie was an ambitious firm. Its lawyers liked to call themselves “entrepreneurial” and said they were committed to “growth.” So when innovative tax partner Norm Bacal strong-armed the firm into opening a Toronto location in 1990, one that swiftly grew to rival and then overtake the founding office in Montréal, it was a natural and sensible decision. So too were later expansions to Vancouver and Calgary, and even an affiliate office in Beverley Hills.

Smaller regional offices in places like Kamloops and Trois-Rivières were more difficult to justify, never mind an eventually disastrous expansion to Paris, but nobody was asking difficult questions about these decisions or looking too closely at pesky issues like profitability or strategic goals. Heenan Blaikie was a “different kind of firm” where the good times kept on rolling. Until they didn’t.

To be clear, there’s nothing wrong with growth and ambition for a law firm. But growth for its own sake and ambition without goals and guardrails are dangerous. And in my experience, law firm lawyers who describe themselves as “entrepreneurial” often mean, “I get to do what I feel like doing.” But real entrepreneurialism combines the rush and excitement of independent business with the equally bracing possibility of humiliating failure and financial ruin.

Law firms can accommodate entrepreneurial lawyers, of course; such lawyers are often the engines of new business development. But they need to be managed carefully, and they ought not to form a substantial minority of even majority of the partnership. An entire law firm of “entrepreneurial lawyers” inevitably would breed a reckless corporate culture, which is exactly what manifested at Heenan Blaikie.

Growing and expanding beyond Montréal was not Heenan Blaikie’s fatal mistake. The mistake, one that would inevitably lead to failure and collapse, was to retain the original firm’s ragtag governance structure and business culture throughout this expansionary period. Heenan Blaikie was a multi-million-dollar international legal conglomerate that often seemed to be run like a side-hustle family business.

The most incredible oversight was the firm’s refusal to employ a written partnership agreement — a foundational management protocol in place at every comparably situated law firm — until 2002, a mind-boggling dereliction of governance standards. But governance and management failures appear in almost every chapter.

• Significant business decisions, especially those concerning new office locations, were made by a few influential partners with little supporting data or strategic planning.
• Revered co-founder Roy Heenan exercised de facto veto power over significant proposals, ruling the firm like a patriarch.
• Major lateral hires were made without anything like proper due diligence, leading to the recruitment of several high-flying yet notorious partners whose impact on the firm proved to be disruptive or even destructive.
• Standards for partnership admission were low and unproductive, and equity partners were rarely forced to leave, creating both profitability problems and bottlenecks at the partner level.
• Practice groups within offices, and offices in different locations, were poorly integrated; tensions that arose within and among them were consistently ignored or swept under the rug.
• There was little to no financial transparency for the partners, and most of the partners appeared perfectly content to be in the dark on these critical matters.
• The firm simply did not plan for the future: As Prof. Dodek puts it, there was “no strategic planning, no succession planning, no planning for the end of big cases, no planning for an economic slump.”

Halfway through the book, you’re no longer wondering how Heenan Blaikie collapsed. You’re asking yourself how in the world it remained standing for so long.

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Book Review: Heenan Blaikie: The Making and Unmaking of a Great Canadian Law Firm appears in Volume 103(2) of the Canadian Bar Review, released at the end of September. This excerpt is published with permission of the CBR.