In another sign of changing times in Canada’s once-staid legal market, Montreal-based Heenan Blaikie broke apart in February. The law firm’s collapse attracted keen interest south of the border, as Am Law 100 firms such as Dentons and Baker & Mc­Kenzie rushed to pick up the pieces. Global giant DLA Piper, which has offices in more than 30 countries but not in Canada, made a run at taking on as many as 70 Heenan lawyers before talks failed.

Although not one of Canada’s elite Seven Sisters law firms, 40-year-old Heenen Blaikie had 500 lawyers and nine offices across Canada (plus one in Paris), and was noted for its strengths in corporate, IP litigation and labor and employment. It counted former Canadian prime ministers Jean Chrétien and Pierre Trudeau among its lawyers. But an exodus of partners over the past year weakened the firm; disputes over compensation and the firm’s leadership as well as a drop-off in transactional work were cited as the main factors that led Heenan Blaikie to officially go bust on Feb. 5.

Its demise marks the first dissolution of a truly national Canadian firm. A 1989 decision by the Supreme Court of Canada permitted lawyers to form partnerships across provincial borders. That sparked 20 years of consolidation among large Canadian firms, who were able to grow with little competition from international firms. The relatively low profitability of top Canadian firms—where rainmakers can be expected to bring in between $3 million and $7 million a year in billings, as opposed to $15 million to $25 million for a top U.S. earner—has made many Am Law 100 firms cautious about investing in Canada.

In recent years, however, international firms have begun to move into Canada, starting in 2011, when London-based Norton Rose—now Norton Rose Fulbright—acquired top Canadian firm Ogilvy Renault. Less than a year later, Norton Rose had also absorbed Calgary-based Macleod Dixon. The United Kingdom’s Clyde & Co snapped up Nicholl Paskell-Mede in 2011, and in 2012 Toronto-based Fraser Milner Casgrain merged with the Anglo-American SNR Dentons and Paris-based Salans, creating what is now Dentons.

Dentons in particular moved quickly to take advantage of Heenan’s collapse: At press time it had taken on 46 former Heenan lawyers, including Chrétien. Baker & McKenzie picked up a 13-lawyer corporate, tax, finance and banking team from Heenan’s Toronto office. Among Canadian firms, Montreal’s BCF has taken on the most Heenan refugees, hiring Canadian Olympic Committee president Marcel Aubut and 30 other lawyers.

In early February, Roger Meltzer, the head of DLA’s global corporate group and cochair of its Americas arm, confirmed that his firm was in “serious negotiations” to hire between 55 and 70 Heenan Blaikie lawyers in Calgary and Toronto. He told our sibling publication The Am Law Daily that he was keen to stop referring to Canadian shops work that his firm could handle if it had a base north of the 49th Parallel. [Disclosure: Meltzer sits on the board of directors of ALM Media, the parent company of The American Lawyer.] Within days, however, negotiations ended. DLA said that the two sides were “unable to agree to economic terms and accommodate the needs” of Heenan lawyers.

Does Heenan’s fall signal tougher times for the Canadian market? The energy and natural resources boom has helped the country’s big firms avoid some of the cutbacks hitting their counterparts in the U.S. and the U.K. Some wonder whether a slowdown in those sectors might be leading to a shakeout in the Canadian legal industry.

“To some extent Canada was immune from the immediate impact of the [global] recession,” says R. Scott Jolliffe, chair and CEO of Ottawa-based Gowling Lafleur Henderson, which has hired 17 former Heenan lawyers. “Now there’s been a couple of dry years for transactions, which has further depressed the market, and then [you have] the standard issues like an oversupply of lawyers, demand for better pricing and increased competition all putting pressure on firms,” he says.

Not everyone believes that Heenan Blaikie’s collapse is a canary in the coal mine. “The Heenan Blaikie story is more a function of things specific to them than a reflection of the national firm model as a whole,” says Clay Horner, chair of Toronto-based Osler, Hoskin & Harcourt, the new home of nine Heenan lawyers.

Meanwhile, PricewaterhouseCoopers announced in March that it would enter the Canadian legal market by acquiring the 12-lawyer Bomza Law Group, an immigration firm with offices in Calgary, Montreal and Toronto. Perhaps a spring thaw is in the offing.