As Heenan Blaikie LLP closes its Toronto office, the way the firm has treated its support workers is an example of “lawyers doing everything they advise against,” according to a prominent employment lawyer.
The firm closed down its Toronto office on Feb. 28, a week after support staff received information about their severance packages following a long wait and three weeks after Heenan Blaikie announced its collapse.
Support staff also told Law Times they attended a town hall meeting in January where Norman Bacal, the founding partner of the Toronto office, told staff it was “time Heenan kicks butt again” and urged everyone “to stick with Heenan Blaikie.”
Employment lawyer Howard Levitt says if support workers take the issue to court, the firm could face the possibility of enhanced damages for providing a false sense of job security as doing so has “a devastating human morale impact.”
“If you’re not certain of what the status is, you don’t give representation to employees saying, ‘Things are great,’ and give them representation of job security,” he says.
“I understand you don’t want everyone abandoning ship if the rumour is already out there that things are difficult. I understand that psychologically,” he adds.
But there’s a risk in creating unrealistic expectations, he continues. “First of all, it is disingenuous when it may or may not be the case. And secondly, the impact of being fired is exacerbated by these unrealistic expectations you touted knowingly. There is a real issue of misrepresentation if they knew at the time that things weren’t as rosy as they suggested and they obviously must have known that.”
Giving false hope to employees is “a classic Employment Law 100 blunder,” he notes.
“It’s lawyers doing everything they advise against,” he suggests.
According to Levitt, law firms have a higher fiduciary duty to their employees than other employers.
“I think the courts will say that because first of all, as lawyers, we have added duties under law society rules that the rest of the population doesn’t. Second of all, we’re deemed to be experts in this area and other employers aren’t. [Other employers] just get advice. We are the dispensers of advice.”
Levitt also notes Heenan Blaikie’s reputation for its strong labour and employment practice group. “They should know better, they should have known better,” he says.
In response to a Law Times request for comment about the support workers’ concerns, Bacal suggested speaking instead with another legal assistant who worked for the firm. When contacted by Law Times, the assistant had no comment.
Former Heenan Blaikie partner Ken Kraft, who’s part of the firm’s transition committee, and co-founder Peter Blaikie also didn’t respond to requests for comment.
Support staff members, who first complained about delayed information about their severance packages, say they’ve at last received the details but are upset with the limits on their entitlements. Some employees have learned they’ll receive their entitlements through salary continuance as opposed to a lump-sum payment.
One staff member, who spoke on condition of anonymity, says not receiving a lump sum puts her and her colleagues in a risky situation in case Heenan Blaikie files for bankruptcy. “What they’re doing is really shady,” she says.
According to Danny Kastner, an employment lawyer at Turnpenney Milne LLP, a partnership as a whole can file for bankruptcy but he notes it’s not unusual to pay out entitlements through salary continuance.
“There is nothing inherently suspicious about severance paid as salary continuance rather than as a lump sum,” he says.
“It’s quite common and perfectly legal. Could it mean a lower severance recovery for former staff in the event of insolvency or re-employment clawback?
Possibly. However, dissolving companies very often take the route of paying severance as salary continuance because of limited cash flow.”
Some employees offered six to eight weeks of salary continuance feel they deserve more, a source tells Law Times.
After Law Times published an article about support workers being “pissed off” at how the firm is managing its dissolution, more staff went online to air their frustrations.
“I was assured at the town hall meeting that this downslide was only temporary and there were no planned lay offs, etc.,” one commenter wrote on Law Times’ web site. “I took out an RRSP loan which I am now responsible for and they only [g]ave me six weeks severance. Had they let me go any other time last year, I would have been entitled to four months’ pay.
“They dropped us on our heads and then threw us under the bus.”
Another commenter wrote: “We were strung along and then treated worse than garbage.”
Staff also complained about having to pack files in boxes after former Heenan Blaikie lawyers “ran out the door.”
Meanwhile, the Law Society of Upper Canada noted Heenan Blaikie’s representatives have promised to manage client files with due diligence in response to questions about whether the regulator has an active oversight role in the wind down and transfer of client files.
“Representatives of Heenan Blaikie have discussed the firm’s plans with the law society. They have indicated that its lawyers take their responsibilities to the courts, to clients, to the law society, and to other stakeholders seriously,” said Roy Thomas, a spokesman for the law society.
“They are in the process of making the necessary transitional arrangements and they are fully aware of the need to do so in a professional, orderly, and businesslike fashion.”
For more, see "A lot of angry people at Heenan" and "How did Heenan Blaikie fall so quickly?"