A lesson in crisis management when allegations unexpectedly surface

As the managing partner of a professional services firm, one never knows when — or from where — the next issue will arise. Accordingly, in such situations, dealing with unexpected events — rather than running the business — becomes the focus.

Over the past couple of weeks Harry Blum, managing partner at Collins Barrow Toronto, has been in that position, thanks to allegations — all unproven — that arose against Sheldon Carr, a founding partner at the Toronto firm. Collins Barrow Toronto is part of Collins Barrow — a 26-member co-operative that operates nationally.

“In light of those allegations [made against Mr. Carr] he tendered his resignation,” said Blum, whose challenge is to separate the allegations from the firm itself.

The allegation were made against Carr in his personal capacity as one of the three trustees to the estate of Syra Kamin, the widow of Cadillac Construction founder Jack Kamin.

In a notice of application regarding the management of the estate filed on April 13, 2016, the two other trustees sought to have Carr removed as a trustee. They also sought orders to have Carr produce tax and financial documents related to the estate, and to have Carr and his wife Bonni repay millions in transfers and disgorge “all amounts, profits, property and/or benefits” received through their dealings with Syra Kamin’s personal and business interests.

On the surface, Blum’s task should be easy. “All that work was done personally. Collins Barrow Toronto and none of Collins Barrow entities are party to this litigation,” said Bloom, adding the Toronto office was “not aware of this [Carr’s work as a trustee]. This is not a claim against the firm.”

Once Blum became aware of the allegations — which relate to more than $5 million of funds being transferred from the estate — it acted. “We only found out about it from the lawyers,” who were acting for the estates’ two other trustees. “They asked for co-operation,” noted Blum, adding that after being made aware of the allegations, a conversation took place with Carr, which resulted in him tendering his resignation.

“The main reason [to be pro-active],” noted Blum “is that we are trusted advisors to thousands of clients across the country and we want to make sure that the message out to our client base — and we have communicated to Mr. Carr’s clients as well — that we are here to help them and assist them.”

Part of that message, Blum said is that “we can’t hide the fact that he was a partner here, but he wasn’t acting in a partner capacity. Collins Barrow is not a trust company so we can’t act as an estate trustee per se.”

In response to what Blum will do to minimize the damage to Collins Barrow Toronto from the allegations about Carr, he indicated the focus would be on three matters: He would point out the firm’s strengths; he would point out that Carr is now a “former” partner; and he would be be in contact with the firm’s clients to let them know “we are here to service them.”

“Our team is intact. What’s unfortunate is that this is really a personal issue and not a business matter. But the business is impacted in that he has clients that continue to need to be serviced. It’s been fairly seamless from our part,” noted Blum.

Carr has not responded to requests for comment.

Randi Rahamim, a principal at Navigator Ltd., a firm that’s often called in to handle crisis management situations, said Collins Barrow Toronto was doing the right things by “reaching out to clients and being pro-active.” She added that while people “expect things to go wrong, people will judge you on how you handle things.”

Rahamim, whose firm’s clients have included former CBC broadcaster Jian Ghomeshi and former Ontario attorney general Michael Bryant, also advises on the “need to launch a third party review and communicate the results to clients [because] you need to ensure that there is no pattern of inappropriate behavior.”

Financial Post
bcritchley@nationalpost.com

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