Culture unglued: the demise of Goodman and Carr LLP

On March 13, a decision was made at Goodman and Carr LLP that would send almost 200 lawyers and support staff onto the streets, and most didn''t even see it coming. How did a once vibrant, entrepreneurial, and ambitious law firm crash and burn at the turn of a meeting?

Steely grey clouds hung low over Toronto on March 13, although many of its residents had fled south for the school vacation break. For most of the lawyers at Goodman and Carr LLP, it was a usual workday, save for a 6 p.m. partners’ meeting.

But at day’s end as the partners assembled, there was no requisite meal set out for the dinner-hour meeting — just drinks, cocktails, and snacks, and a curious, palpable tension. About a half dozen partners holidaying with their families were dialed in to the meeting by conference call.

Quickly, the first bomb was dropped. Without much introductory formalities, Brad Hildebrandt of Hildebrandt International professional consulting services — which everyone was aware had been retained by the firm to troubleshoot business strategies — announced to the group that securities and mining specialist Jay Goldman had advised the week prior that he was leaving.

But before that information had sunk in, Hildebrandt, flanked by two associate consultants, proceeded to detonate the news that Goodman and Carr’s executive committee, based on a thorough review of operational affairs, had concluded that business should cease and desist and the firm be closed for good.

A visual presentation quickly followed the announcement, but as charts, graphs, and point-form prognoses flashed on the screen, the nut message delivered was still resonating.

Donald Carr, founding partner of the 42-year-old firm, was connected by speaker phone, unable to attend work that week due to illness. He too was hearing the definitive recommendation for the first time and appealed to anyone to conjure up a viable plan, assert a collective will to continue.

No one could — or would.

When someone finally called for an official vote on the matter, the suggestion seemed pointless, although a number of partners seated around the boardroom table threw their hands up in favor; others were preoccupied with thought, milling about nervously at the snack trays and nobody reported an official vote count.

“I felt like I was at a cocktail party held at a funeral parlor, with the corpse in full display,” says one long-time partner who didn’t want to be named.

And with that, a decision was made that would send almost 200 lawyers and support staff onto the streets, and most who were affected didn’t even see it coming.

So the question ensued among partners, associates, staff, clients, and the legal community at large: how did a once vibrant, entrepreneurial, and ambitious law firm that touted “hard working law” as its slogan, crash and burn at the turn of a meeting?

For the following month, Goodman and Carr’s web site advised, “The firm suffered the loss of a number of partners and it was decided that it was in the best interests of the clients, lawyers, and staff to windup the business at this time.”

Indeed, more than 30 partners had left the firm inside of the past year alone; Paul Bleiwas, the firm’s most recent managing partner, found himself overwhelmed with the winding down. He says that at the time of closing, there were “85 to 90 lawyers, I don’t remember the breakdown,” maybe “half” who were partners.

Conjecture that followed attributed the closure to an increasingly competitive market for mid-sized law firms to secure clients, talent poaching by competitors, rainmakers in search of top compensation, and the residual recuperation from much earlier losses — like top revenue-earning equity partner Jeff Blidner, who had left and joined client Brookfield Asset Management Inc.

The firm had sought a merger opportunity and was at one point late last year in serious discussions with Chicago-based Baker & McKenzie. But that fell through, to which Baker & McKenzie stated, “Given our global legal business, Canada, one of the major economies of the world, is an important market for us. We are committed to the Canadian market and are prepared to invest our resources in strategic growth opportunities.

We have a high regard for the firm of Goodman and Carr, its lawyers, and the quality of its practice. However, in the final analysis, we regrettably concluded that this opportunity did not provide us with the right strategic fit for our firm.”

While the merger would have ensured Goodman and Carr’s survival, alone its future was becoming precarious. The firm on its face was profitable but bench strength was depleted. Thus, the precise query was not why the firm folded, but why had so many partners left?

A culture unglued

To sustain a viable law firm, suggest experts, there has to be strong leadership and a constructive environment that encourages practitioners to thrive. At Goodman and Carr, the workplace culture within the firm was, by many accounts, counter-productive.

During interviews for this story, some partners declined to talk about their former workplace for attribution, sharing insights only on condition they remain “off the record.” Some were forthcoming yet circumspect or uncertain of specifics; others were frank.

But there was a general theme that the firm lost many of its lawyers because it didn’t have a culture that fostered their retention, the subsequent turnover fueling a symbiotic discord that became a self-fulfilling prophecy.

“Obviously the departures had a snowball effect,” Diane Brooks, an income partner for more than three years, says of the turnover. “It made people nervous and if you’re losing people and losing your ability to attract replacements, then the number keeps going down and you’ve got an infrastructure for a lot of lawyers and not enough left.”

Brooks, now at Blaney McMurtry LLP, says that during her time there, a mid-market squeeze for clients wasn’t evident. “I never really felt competition for clients. There’s a mid-market client that likes a mid-market firm and I never felt I was competing.”

Michael Herman spent his first 10 years in law at Goodman and Carr, left, and returned to the firm in 2002 from a corporate role. “For me personally, there was an awareness there were issues and that those issues were becoming more and more problematic,” shares Herman, a partner. “But in terms of ultimately the final decision [to close], I did not see it coming. It’s difficult for those of us who’ve experienced it to really sort of know for sure,” he says.

Partner Lorne Honickman dialed in from a family vacation “thinking I was going to be part of a meeting hearing from a consultant talking about what the new restructuring plan was. The next thing we’re hearing is the fact that the firm is winding up. The shock lasted for days.”

Honickman is particularly miffed the partners weren’t provided a meaningful reason for the closure. “I know I speak for a lot of people in my position,” he asserts. “There’s been no explanation given where I go to sleep at night and say ‘it couldn’t have been avoided, that’s what happened, and that’s understandable,’ ” he says. “It’s not understandable. I look forward to one day finding out what the reason really was.”

Those with capital at stake were given no opportunity to troubleshoot other means of recourse. “I did not expect the firm to close,” says Barry Tarshis, an equity partner. So at the meeting on March 13, “The question in my mind is, ‘Did I have adequate information to make a proper assessment of that?’ ”

Tarshis joined the firm as a lateral hire from the former Smith Lyons LLP during the early years of the millennium when Goodman and Carr was aggressively recruiting laterals to bolster its ranks.

But Tarshis says the lateral hires at the firm were basically left to sink or swim.

“Unfortunately, they didn’t understand how to deal with laterals because none of them were,” he says of the executive committee that oversaw recruiting. “Laterals are a different breed of cat than people who spend their whole lifetime at one law firm. They’ve left their birth firm, if I can call it that, which is always the hardest and having done so . . . they’re probably less tolerant of unsatisfactory situations.”

Tarshis is one of eight former Goodman and Carr lawyers who’ve joined Cassels Brock & Blackwell LLP and although he lauds his new firm, he didn’t have designs on relocating his practice at this point in his career.

On Goodman and Carr, he reflects, “Overall, it started out as the best experience and after a few years drifted into being a crummy experience, and then a terrible conclusion.”

Bitter sentiments

When laterals or any other lawyers gave notice they were moving on, the executive committee didn’t hold exit interviews. Nor was there a practice of communicating news of people’s divergence throughout the firm in any formal capacity. Such informalities fueled divisiveness.

To express dissatisfaction with the committee’s attitude towards the high rate of turnover and the workplace culture, three former partners who wished to remain anonymous provided Canadian Lawyer with the following statement:

“Women, as well as any man not in the ‘inner circle,’ were excluded and treated with disrespect. We had many good lawyers leave over the years. Especially as the years wore on, the prevailing attitude was that if you decided to leave, it was ‘good riddance to you’ . . . as if he or she was never any good anyway,” they wrote.

“The comments were shared regularly at the partners’ meetings and included denigrating comments about the departing partners’ practices and books of business. This behavior left no doubt in anyone’s mind what would be said about us if we decided to leave . . . or frankly what was thought about us when we were there.”

On the other hand, the remuneration system at Goodman and Carr was completely transparent, implemented after the firm disbanded the lock-step system — one of the last in Canada to persevere with the program that remunerated lawyers based on their year of call to the bar.

The new transparent system enabled everyone to know what others earned, adding to the environment of discontent and mistrust.


The gender memo

The perceived inequities were particularly pronounced along gender lines, which had been another catalyst for malcontent dating back to 1992, when a group of associates produced a lengthy memo to present to the executive committee.

The memo cited a lack of opportunity, encouragement, and inclusiveness for women to achieve equity partnership, section leadership, or executive status, and raised instances of harassment.

Laurie Pawlitza, an accomplished family law litigator and bencher at the Law Society of Upper Canada since 2003, participated in the memo as an associate. She eventually became an equity partner but left the firm just months before its closure to join Torkin Manes Cohen Arbus LLP.

“When I left in 2007, there still weren’t any women in those positions,” says Pawlitza. “So do I think that’s why the firm folded? No, I don’t think it’s the sole reason. Do I think it’s symptomatic of a more significant attitude? Perhaps. I expressed concerns about that repeatedly and so did many others, but to no avail.”

Upon disclosing her intention to leave the firm, she requested an exit interview with the executive committee to share her thoughts. Executive committee partner Steve Watson and then managing partner Paul Bleiwas agreed to meet.

A year earlier, Pawlitza and several women partners at the firm had presented the memo to Cosimo Fiorenza, a corporate tax lawyer who held the position of managing partner for a fleeting period. The women resurrected the memo after noting the 2006 executive committee had drafted a new governance structure and committees for the firm that didn’t include one female representative. There were also just two remaining women equity partners, Pawlitza being one.

While Fiorenza reportedly demonstrated interest in their concerns, he wasn’t ultimately afforded the time to follow through; his managing partner status was rescinded within months, and he left the firm soon after.

Pawlitza says her exit interview was that much more important as the gender issue “was not something that was on the radar screen for the younger management. As a bencher, I am co-chair of the retention of women in private practice working group at the law society, so I tried to focus my exit interview by reviewing the old memos, and indicating that we’d made no measurable progress,” Pawlitza shares. “Unbelievably, the response was that there was no problem with women in the firm; there was, at most, a ‘perception’ that there was a problem.”

Lori Stoltz left Goodman and Carr as an equity partner in 2006 after 16 years of service. She also was involved in the early 1990s memo. “It focused on harassment issues that by and large were not huge issues 15 years later. But more fundamentally, it dealt with these issues around formal and informal mentoring, progression within the firm for integration into leadership, and progression into equity partnership,” says Stoltz. “There was no movement on those issues in the 16 years that I was there. In fact, there was regression.”

Failed platform

Even if hindsight delivers clarity, the lawyers on the firm’s executives were not inclined to ruminate retrospectively.

“It was a very difficult period for the firm. We had the task of trying to right things and we did what we could and it was a very interesting and challenging task,” says Bleiwas.

“There are probably things I would have done differently but I don’t think any of these things would have created any material difference in the outcome.”

Gary Luftspring, chair of the firm’s executive committee and formerly its long-standing managing partner, contends the closure was due to Goodman and Carr’s inability to change its platform and create a narrow focus to reconstitute business.

“We made a strategic decision that we either had to fundamentally change the platform, either a merger or changing some of the internal workings of the firms, be it by practice groups or the types of things we were doing or not doing either by recruiting new people or stopping doing certain types of work,” Luftspring says. He acknowledges that over recent years “we could never come up with enough leadership people. I think succession planning was a problem.”

Luftspring says Fiorenza’s selection as managing partner was short lived because he had a certain style that didn’t work. “That doesn’t mean it was the wrong style. . . . He’s a very successful, capable lawyer. Was he the right guy to be the managing partner at the time? Obviously, many people thought not.”

Bleiwas “did what he could but by then, to a certain extent, certain things had been cast,” Luftspring says.
On the concerns expressed by women in the firm, Luftspring suggests that’s a topic for the profession at large. “There is within just about any firm, with one or two exceptions, huge issues involving women. Look at how many women graduate versus how many women really succeed in major law firms,” he says.

“The ones who succeed, it’s very interesting that by and large, they have done so by sacrificing. How do you deal with . . . mat leaves, different family situations, different levels of responsibility? And it’s not that it can’t be done or that women can’t succeed,” he says. “I don’t think we as a profession have worked out a model that particularly works.”

He concurs the firm didn’t have an official integration program for laterals, despite the aggressive focus on their hire. “You integrate as well as your lawyers allow it to happen and some lawyers integrated very well and others did not.”

Luftspring, now at Ricketts Harris LLP in Toronto, doesn’t see the point to exit interviews. “How much useful information are you really going to get?”

But ultimately, he says, if there was one thing the firm might have done differently, it would have been being “tougher” on people. “When you are tremendously successful you have to be tougher on who you are and what you want to be,” he says. “We were not as able to be as dictatorial and ruthless as maybe we should have been, especially when times are good,” he says. “I think that’s the time to make very, very tough decisions and we were never, as a firm, tremendously good at making those very tough decisions about people.”

At the time of this interview, Luftspring and the remaining partners at the firm were shoveling through 29 years of files pulled from storage. “The irony is there are very few rules with respect to storage of files. The law society doesn’t really mandate any destruction policies. And the truth is lawyers, not wanting to make any decisions, do nothing as opposed to when you’re in a small firm, you throw stuff out,” Luftspring remarks. “Let me tell you, I will have very different practices on a go-forward basis.”


End of an era

As might others, Goodman and Carr’s closure marks the end of an era; a final curtain on what, in its heyday, had been home to 140 lawyers. Some are glad founding partner Wolfe Goodman, who died last year, didn’t witness the demise. Donald Carr, now 78, politely apologized for not having time to speak about the closure. “We are, right now, going through thousands and thousands and thousands of files. . . . I’m meeting with clients in the evenings.” He was moving over to Miller Thomson LLP.

Equity partners don’t expect their investment back. “That’s very disturbing to many people, including myself,” says Barry Tarshis.

Like a sunset in the rearview mirror, the light fades, this time for good.

Look closely. “Are there other firms that can learn something?” queries Luftspring. “Maybe.”

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