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The collapse of another major firm would be a shock to both the legal and business communities, following as it does on the shut down of Heenan Blaikie. The firm’s partners announced on Feb. 5 that they were winding up the firm, which at the time had some 575 lawyers with offices across the country and in Paris.

The direct cause of Heenan’s collapse is not clear. With some $75-million in profit, cash flow difficulties do not appear to have been the primary cause. However, Heenan’s transactional practice reportedly dropped by as much as 85% in recent years, leading to requests from management that partners take a 15% pay cut. That led some of the firm’s stars to leave, which in turn prompted the general exodus.

In addition, National Post’s Theresa Tedesco and Brian Hutchinsonhave reported that the trouble started with some shady dealings in Africa to which other partners took offense and that led to the departure of partner Jacques Bouchard. In a more general sense, several of the 20 or so lawyers who left Heenan in the two years before the problem spiraled out of control attribute the wind-up to a failure of leadership. Indeed, when the rumours started in January, it was Norm Bacal, a former co-managing partner, and not the firm’s current management, who was the spokesperson.

To date, about 500 of these lawyers have been absorbed by other firms, with the largest takers being national firm Dentons Canada, which took on some 46 lawyers, and Quebec regional firm Lavery, De Billy, which took on some 44. Heenan lawyers have also joined other large and mid-sized firms and specialty boutiques. Some have formed their own firms. In Vancouver, 21 lawyers led by prominent counsel Peter Gall left to form a powerful litigation boutique that is sure to be a force in the market.