Goodman and Carr LLP, which once reigned as one of Canada's top tax and real estate law firms, is closing its doors after suffering a steady exodus of partners.
The Toronto firm's partners voted to disband the mid-sized practice of about 90 lawyers at a meeting in its downtown head office Tuesday night, marking what is believed to be Canada's largest law firm closing. People familiar with the session said the vote was triggered by growing uncertainty about the firm's future following failed merger talks with a variety of competitors, including Chicago-based Baker & McKenzie.
After talks with Baker & McKenzie failed last month, people close to Goodman and Carr said some senior partners began to explore moves to other firms. Further departures would have been devastating to a 42-year-old practice that has seen its lawyer strength shrink dramatically from 140 in 2004.
Although the loss of talent at Goodman and Carr was widely known, the decision to shut down what insiders say is a profitable practice shocked its clients and competitors.
"Goodman and Carr was a great law firm with a lot of great lawyers. It is a pity to see this happen, I don't know what went wrong," said Jeff Blidner, managing partner with one of the firm's clients, Brookfield Asset Management Inc.
Mr. Blidner was formerly a partner with Goodman and Carr.
The law firm's demise is the latest sign of stresses on mid-sized shops. Larger competitors are increasingly aggressive about recruiting top lawyers from mid-sized firms to boost their business. A number of second-tier firms have seen historic clients devoured by takeovers, and they lack the international reach to serve foreign companies that increasingly dominate Canadian business.
"The competition is intense," said Adam Lepofsky, president of recruiting firm RainMaker Group. "To survive you have to be incredibly focused, business-oriented and have very strong leadership."
Steve Watson, a business and financing law specialist appointed to oversee the wind-up of the firm, said it has been a challenge to recruit and hold on to lawyers in the "extremely competitive" Toronto legal market.
He said he believes what prompted the vote was the recognition that the firm was at a point where it was in the partners' best interests to take control rather than be subject to market forces.
"Clearly, the firm has lost some people. It's clearly a matter of trying to recruit and retain people."
In the past two years, Goodman and Carr has seen some of its top-ranked lawyers move to competitors, including insolvency and restructuring specialist Aubrey Kauffman to Fasken Martineau DuMoulin LLP and tax expert Cosimo Fiorenza to Bennett Jones LLP.
Mr. Watson said the closing was not triggered by financial concerns. Indeed, some of Goodman and Carr's senior partners have recently said publicly that the firm is profitable.
"That a profitable firm with so many partners decides to shut down tells you how tough things are," Mr. Lepofsky said.
Goodman and Carr's closing is believed to be the largest in Canada.
Previously, the biggest law firm to shut down was Toronto-based Holden Day Wilson LLP in 1996. Holden Day at its peak had 90 lawyers after a merger in 1990, but the firm was devastated in 1993 by a fatal accident involving popular partner, Garry Hoy, who playfully took a run at a window during a reception at the Toronto-Dominion Centre.
In front of dozens of lawyers, the window gave way and Mr. Hoy fell to his death 24 floors below.
The combined challenge of recovering from Mr. Hoy's death and holding together a newly merged firm proved too great for Holden Day's partners.
By 1996, more than 30 partners had left the firm, and Holden Day closed its doors amid controversy about unpaid bills and compensation.