What ABS Can Also Mean

In the legal industry, ABS is an acronym for “alternative business structure.” It can also mean “About business, stupid.”

It’s taken six months for me to read Breakdown by Norman Bacal, his first-person account of the rise and fall of Heenan Blaikie LLP. The delay was because my time has been limited and the story was like reading about the Titanic – we know how it ends.

The demise of any law firm is horrible, especially for those who knew Heenan in its glory days as one of Canada’s largest law firms, and even more so for everyone who was a member of the firm when it collapsed.

Heenan wasn’t the first Canadian law firm to fail, and its failure traits – shared by other law firms currently operating in the Canadian market – mean it’s unlikely to be the last.

Three core reasons for Heenan’s failure appear as themes throughout the book. In ascending order of importance, they are: management training, leadership, and business. An examination of these themes is worth reviewing.

Management Training

Lack of formal management training is a serious omission and a problem in many if not most law firms that I’ve seen since my consultancy began in 2001.

I’ve seen very few management-level people – lawyers and others – who would not benefit from the rigors of formally learning to manage people; lead teams; communicate effectively; scope, scale and execute processes and procedures; prepare and defend budgets; understand and be conversant with financials; and so forth.

Rarely do firms send management personnel, lawyers included, for formal management training. There is an unspoken notion – especially among lawyers – that they’re smart people so should instinctively know how to manage both people and processes. On the flip side, lawyers are known to say, “I went to school to practice law, not manage” which, ironically, is an argument that supports the hiring of formally-trained management professionals.

Perhaps it’s a lack of conventional business structure that curtails some law firms from sending management people for training. Maybe it’s the cost, both in money and non-billable time. Or possibly it’s a misguided perception that training is not a worthwhile investment since talent is fluid and if a formally trained manager departs, the firm’s investment in them leaves as well.

Of course that’s a very shortsighted view. The long view is that if all law firms provided formal management training, it wouldn’t matter so much if talent left since they would take their training with them to wherever they landed in the what-goes-around-comes-around fashion in which the world inevitably works.

I was privileged to go through two formal management-training programs early in my working life. The first provided excellent grounding in conventional management. The second was a more esoteric style of training that opened my mind to unconventional thinking, people, situations, and problem-solving.

Both experiences have served me extraordinarily well and, hopefully, been helpful for those with whom I’ve worked. Another benefit is that formal management training continues to be just as helpful in my personal life as my professional work.

Formal management training is vital. If your firm doesn’t offer it, ask for it. If you don’t get it, take the time to do it and pay for it yourself. It’s one of the best investments you’ll ever make and you will reap the returns for the rest of your life.

Leadership

Leaders lead from the front. They set direction, strategy, and tactics and use leadership skills to help others understand why the plan is important and how they can perform an active role. Instigating leaders can then hand off to people who head various units so that they, in turn, can lead their teams.

This doesn’t imply that top leaders have to be extroverted stand-and-command types since many are shy, quiet, reserved introverts. However, the hallmark of many leaders is that they can usually be identified even when they’re in a crowd. It’s something that both natural and trained leaders exude. They just have “it.”

Somebody has to lead and not everyone wants to do it. Nor should they.

Heenan was a three-headed hydra led by co-managing partners and one of the founders. An argument can be made that a management threesome enables a deciding vote, but there’s another school of thought that three’s a crowd.

In the world of business, it’s mercifully rare that an organization has more than one head honcho as it begs the question: who’s running the show? For any business, including law firms, too many cooks in the kitchen and unclear or segmented leadership creates confusion and uncertainty for clients, staff, lawyers, other stakeholders, and the legal market at large.

Business

The most important message is that law is a business. Business is about commerce. Take your eye off the bottom line and pretty soon you’ll be looking at trouble.

Generally speaking, some lawyers seem to set aside the idea of law as a business in favour of a notion that law is a calling. Following that train of thought, there’s also a perception that law firms aren’t operations of commerce, but instead are collectives.

Law firms are not collectives. Neither are they clubs, even though outwardly and sometimes inwardly – even to the extent of still having partner lounges – some law firms appear that way.

Ironically, the theme of business didn’t fully emerge until page 265 of the 323-page story. This could have been by design or edit since timelines swing back-and-forth throughout the book.

At this point in Heenan’s history, it’s 2013 when the firm was heavily fractured and Norm looks back to a meeting many years before, shortly after he became managing partner.

It reads:

Roy Heenan, Guy Tremblay, and I, along with a few key partners in Montreal and Toronto, organized a dinner with the leaders of Coopers & Lybrand. At the time they were our largest client and auditors. This was a social evening designed to look for opportunities to deepen our relationship. After dinner we went around the table introducing ourselves and our business objectives with a view to finding some common ground. Roy began, explaining how “Heenan Blaikie is about the practice of law at the highest level in a collegial atmosphere among people who genuinely like working with one another. We take care of clients and one another and let the bottom line take care of itself.” A few minutes later it was the turn of the chair of Coopers, who said, “We run a business with a view of maximizing our bottom line.” He had nothing more to add.

That’s because there was nothing more to say. There still isn’t and won’t ever be.

Coopers & Lybrand became Pricewaterhouse Coopers, now known globally as PwC, a hard-driving, worldwide professional services firm that, like other members of the Big Four, include legal among a wide-array of business enhancement offerings. As for Heenan Blaikie, after a 40-year run it closed in February 2014.

So, while KISS is an acronym for “Keep it simple, stupid” – a design principle hatched by the U.S. Navy in 1960 advocating simplicity, ABS that’s usually an acronym in the legal industry for “alternative business structure,” can also mean “About business, stupid” – a reminder that if you’re not taking proper care of your law firm’s business, you’ll soon find yourself out of it.