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Heenan Blaikie’s actions questioned

Giving false hope ‘a classic Employment Law 100 blunder’
|Written By Yamri Taddese

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.

‘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,’ says Howard Levitt.

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?"

  • Matthew Bin
    It's not just employees who were screwed by this firm. My company did contract work for HB, and their last few invoices remain unpaid. We're out over $10,000 and there is little chance we'll ever see the money. (HB did, of course, bill their own clients for the work my company performed.)

    About our only recourse is to wait until these people file for bankruptcy, and then I can line up with the other creditors for pennies on the dollar, if anything. Shameful.
  • Cheryl
    Danny Kastner is wrong. When it comes to ESA pay in lieu of notice, according to Section 61 of the ESA pay in lieu must be paid in a lump sum unless the employee consents to it as salary continuance or if they have a letter from the Director of Employment Standards approving such salary continuance with no option of a lump sum (neither of which HB has) HB is now paying out the lump sums to those who demanded it. The firm was a wonderful place to work and I was sad to have to leave
  • crooks!
    Agreed. If I was in this situation I would not only sue heenan blaikie I would also sue each individual partner that way even if the company declares bankruptcy which is clearly in the companies plans although they have not made that public you the terminated employee would have recourse. If the partners are making things difficult it's because they want you the employee to walk away. Bottom line they know the law but have no regard or respect for it if they don't pay you what you are entitled to so go for the lump sum and call the ministry of labor to find out exactly what you are entitled to so they don't pull a fast one on you. Best of luck.
  • Tim
    While it may be common and acceptable to receive severance in the form of continued pay, it assumes that the company will continue on and receive future income. If there are cash flow problems now that prevent them from paying everyone, how are things going to better down the road considering that they have closed up shop and aren't bringing in more money? This seems very fishy. Good luck to all involved and hope that they don't try stiff you though judging by past actions by the firm, it looks like that's what they are going to do.
  • crooks!
    Exactly Penny, good points. What I would add to your note is that if they don't pay you an option is to go to the ministry of labor who will give you access to a lawyer for a 30 min consultant, no charge. That call will put everything into perspective as far as all of your rights so that you can decided to take action either through a lawyer via small claims court (25k cap) or through the ministry directly (10k cap). Note that action via a lawyer in court will cost you or you can do it yourself for cheap, the other option is through the ministry at no cost.
  • Penny
    Notice of severance and termination package or not the law clearly states that they have until either 7 days after the date of termination or the next regular scheduled pay day to pay out the lump sum. If they do not pay what you as a terminated employee are entitled to they are breaking the law. Given what is all over the internet on how the company is handling the situation be prepared to retain council. P.s. They are required to pay you out lump sum, the only way they can pay you out through continuation of pay is of you agree and sign stating that's what you prefer, if you prefer the lump sum option you should get the FULL amount at the latest on your next scheduled pay day.
  • SC
    Nice that the Toronto support staff received "information about their severance packages". Sadly, the Ottawa staff did not fare so well. It is absolutely disgusting and an abomination how this company has dealt with their staff (who basically were constructively dismissed once their phones, computers and furniture were repossessed).
  • Jim
    As the father of a son finishing up second year law at U of T and recently elated at being accepted as a placement this coming summer at Heenan Blackie following the interview process I can only advise him that "Life is a game with many rules but no referee. One learns how to play it more by watching it than by consulting any book". He was lowest rung on the ladder but for him it is no less painful. My sincere best wishes to all those of you caught up in this very sad story.
  • Dianne Tired of BS
    Heenan disposed of the labour department, told them all to leave weeks before this winding down, so there was no one left to discuss the proper way of doing things, or the more credible way of finishing off the company. This so called termination committee called up the ESA and found out what the minimum was to pay the employees.
  • Claire
    True it is about big retainers to pursue justice. Someone was quoted $2,000 for a demand letter to start with.
  • David S
    It's all about money and money most of us who were let go do not have. I don't have the $5,000 to hire a lawyer to chase these buggers down and coral them into a court case. Neither is there a governing entity who would side with us. Get it right! Lawyers want tons of money to pursue other lawyers. Litigation is for the rich not for secretaries who make 45K a year. Employees were told at a town hall meeting that the economy of the firm is fine and that they did not plan lay offs, etc. Misleading yes indeed, but would anyone want to take on a class action without an upfront retainer of 20K? I don't think so.
  • Cornelia
    Absolutely, pursuing justice in this case would involve retainers after retainers, and you cannot tell me lots of labour lawyers out there are experienced in pursuing an LLP and their former partners strewn about. Some lofty legal angels gave you a minus 2.

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