The Minden Gross LLP office in Toronto, on Dec. 22.Christopher Katsarov/The Globe and Mail
Minden Gross LLP, a mid-sized business law firm based in downtown Toronto, is on the verge of collapse, after a series of high-profile departures and failed merger talks with KPMG Law.
Earlier this month, partners who left the firm in recent years – and who are still owed capital repayments – were notified that the firm was “no longer financially viable,” according to an e-mail that was viewed by The Globe and Mail.
“There is no reasonable expectation that we will be able to continue to operate beyond the spring of next year, if that,” Irvin Schein, a member of Minden Gross’s executive committee, wrote in the Dec. 1 letter. As a result, the former partners were told that capital repayments were being suspended.
On Friday, Timothy Dunn and Enzo Sallese, both members of the firm’s current executive, confirmed that the partnership has voted to wind down the firm after nearly 75 years in operation. The transition will take a few months, they said.
Minden Gross will be the first major Canadian law firm to fall since Heenan Blaikie LLP collapsed in 2014. Prior to that, Goodman and Carr LLP folded in 2007, and Holden Day Wilson LLP in 1996.
“It’s not the first time this has happened. That’s cold comfort. But we’re going to do right by our people and our clients,” Mr. Sallese said.
In the December e-mail to former partners, Mr. Schein said the firm’s cash-flow squeeze came as a result of an “inordinate” number of recent departures from the partnership, some of which resulted in a “substantial loss of business,” as well as a loss of confidence from the firm’s remaining lawyers.
There have been more than a dozen departures from Minden Gross in the past three years, but Mr. Dunn said that until recently, none of those were out of the ordinary for a law firm. What changed was that in mid-October, two of the three members of the then-executive committee – managing partner Brian Temins and Samantha Prasad – shocked the partnership with news that they were going to leave for Cassels Brock & Blackwell LLP.
“I think it’s fair to say there was some disappointment in the partnership about how that transition occurred,” Mr. Dunn said. “Optics are a big thing in the legal market. When two members of your executive committee leave the firm, it is a task to manage communications with your stakeholders and also internal partners.”
The Globe reached out to Mr. Temins and Ms. Prasad for comment. In an e-mail, Mr. Temins – on behalf of himself and Ms. Prasad – said the two were looking forward to the next stage of their careers.
“Although it was a tough decision to make the move after many years, we are very pleased with our new national platform at Cassels and the diversity of expertise that our new partners bring to our own practices,” Mr. Temins wrote.
Mr. Dunn said that before Mr. Temins and Ms. Prasad’s announcement, no one could have imagined the current turn of events. In fact, he said, the firm was having a good year. There was also an exciting new opportunity on the horizon.
In the late summer, Minden Gross was approached by two different suitors about a potential merger, with one emerging as a real contender. Mr. Dunn said that the firm had been approached in the past, but never seriously considered a merger.
“Until this year, we decided that this wasn’t worthwhile to pursue because we were doing very well,” he said. “I think in recent years, because of the changing nature of the legal profession, we took a closer look at moving into a potentially larger platform.”
Mr. Dunn and Mr. Sallese would not discuss the names of the interested parties, but three individuals with knowledge of the negotiations said the primary candidate was KPMG Law. (The Globe is not naming the sources, who are not authorized to discuss the talks.)
At the time that Mr. Temins and Ms. Prasad resigned, those conversations were in the very preliminary stages, Minden Gross confirmed.
In the Dec. 1 e-mail, former partners were told that the firm was in advanced discussions with a “much larger entity” that was interested in acquiring Minden Gross and most of its lawyers and staff. The hope was that the process could be complete within “weeks, if not days.” But the deal fell apart on the evening of Dec. 10.
Kevin Dove, a spokesperson with KPMG Management Services, said the firm does “not comment on such matters.”
Minden Gross was founded in 1950 by Arthur Minden, Edwin J. Pivnick and Morris A. Gross, and quickly developed a reputation for its commercial real estate work. This year, it was named a Top 10 Ontario regional law firm by Canadian Lawyer magazine. As of mid-October, Minden leadership says the firm had about 65 lawyers – it’s now down to around 55 – and more than 100 additional staff, including clerks, personal assistants, business office staff, the marketing group and hospitality employees.
“It was a wonderful place. I couldn’t think of anywhere better to start my career. I grew there. I learned there. They were my family. I was sad to leave and the fact that it’s going through troubles breaks my heart,” said Adam Perzow, a partner at Borden Ladner Gervais LLP who worked at Minden Gross for more than 20 years. (Mr. Perzow did not provide the Dec. 1 partner letter to The Globe.)
Mr. Perzow left for BLG in 2019. This was the beginning of a period of transition at Minden, with high-profile departures such as Leonard Baranek, Leah Silber, Michael Goldberg and Melissa Muskat heading to Aird & Berlis LLP between 2020 and 2023; Howard Black and Sheila Morris leaving for Miller Thomson LLP in 2021; Andrew Elbaz, who chaired Minden’s securities practice, moving his entire team to Cozen O’Connor LLP earlier this year; and Rachel Goldman Robinson and Matthew Getzler heading to Torkin Manes LLP.
Among current and former partners – as well as within the legal community in general – there is significant consternation and confusion with respect to Mr. Temins’s departure in particular.
“Not in my 25 years of being on Bay Street, have I seen a managing partner leave for another firm, while holding that position,” said Adam Lepofsky, the president and founder of RainMaker Group. “As I understand it, there were only three people on the executive committee and two left. That’s unheard of. That leaves a firm in an exceptionally precarious position. Highly vulnerable.”
In their interview with The Globe, Mr. Dunn and Mr. Sallese said Minden Gross has enough money on hand and cash coming in to offset any outstanding liabilities. Paramount in that process, Mr. Dunn said, is ensuring that client files are transitioned safely to the new firms.
“Part of our wind-down resolution is ensuring that all of those client interests are protected,” Mr. Dunn said.