Goodman and Carr – the backstory
The drop from 140 to 90 lawyers (2004-today) began to accelerate when a capital call (law firms are financed by the partners – with some bank lines to manage receivables – and the partners were allegedly asked to put in more $ to help finance the firm’s operatings) met serious resistance with some key rainmakers. Some have wondered how much of that capital call was due to the $30 million settlement payment made by Torys as a result of their Holinger involvement (Conrad Black’s jury selection continues today); many firms in the legal industry are self-insured, and every firm that is part of this self-insurance collective had to contribute to the Torys $30 million payment. Or perhaps that contribution – if G&C was part of the collective – caused an otherwise profitable year to turn less so, which provided even less of a working capital buffer in the following year. And meant reduced bonuses for the most productive partners as well, as they would invariably carry more of the burden than others in the firm.
Several of the senior partners left for other firms (A&B, Bennet Jones, Fasken, Goodmans, etc.), but most had to leave their capital investment in the firm “behind” (as is the norm) in the hopes of repatriating it later when other lawyers joined G&C’s partnership. With the news of yesterday, those former partners who found a greener pasture at a new firm may sadly get less than half of their capital back once G&C is wound up.
Fortunately, the legal industry is busy and thriving. Every single, talented G&C lawyer, student and clerk will find a spot at a new firm before too long. And they’ll probably see their hourly rates rise if they are moving to a more healthy law firm – small consolation if you’ve just lost some capital, of course. But if any business is susceptible to closing its doors, there shouldn’t be a surprise that law firms are also in that camp. They too are a business, after all.
But as for this unfortunate story being inexplicable…that it isn’t.