Unlike their United States counterparts that either collapsed—  such as Washington, D.C.-based global firm, Howrey LLP, in March—  or took serious hits to their bottom line, Canada’s big law firms weathered the recent financial crisis and recession relatively well, says Ottawa lawyer Jordan Furlong, a partner with law-firm consultancy, Edge International, who also runs the Law21.ca blog, and is a columnist for The Lawyers Weekly.

“That’s not to say big firms in Canada didn’t suffer and feel some pain during the recession. But at no point did it get to the stage where rumours were circulating that X firm was in danger of falling apart.”

However, ... Read More »]]> Sean Weir, National Managing Partner of Borden Ladner Gervais LLP – Canada’s largest full-service law firm – talked to The Lawyers Weekly recently for Part 2 of its series on how law firms are weathering the recession:

Unlike their United States counterparts that either collapsed—  such as Washington, D.C.-based global firm, Howrey LLP, in March—  or took serious hits to their bottom line, Canada’s big law firms weathered the recent financial crisis and recession relatively well, says Ottawa lawyer Jordan Furlong, a partner with law-firm consultancy, Edge International, who also runs the Law21.ca blog, and is a columnist for The Lawyers Weekly.

“That’s not to say big firms in Canada didn’t suffer and feel some pain during the recession. But at no point did it get to the stage where rumours were circulating that X firm was in danger of falling apart.”

However, Furlong points out that the economic downturn was just the “opening act” of a major development that large Canadian firms will have to “get their heads around in a hurry.”

In the wake of the recession, he explains that there is increasing corporate and institutional client pressure on firms to lower their prices, and more importantly, make their prices more predictable while delivering the same level of service.

“Many general counsel’s outside legal-spend budgets have been cut, sometimes severely, and they simply can’t afford surprises from external counsel. It’s the runaway legal costs that are really killing them,” says Furlong, who believes competitive pricing and predictability have become “a permanent part of the landscape” for large law firms in Canada that “will have to find a way to cope with this.”

Already, cost-conscious legal departments are bypassing major law firms in the U.S. and dealing directly with legal process outsourcers (LPOs), according to Ward Bower, a principal of U.S. legal consulting firm, Altman Weil Inc.

“Law firms are reluctant to go to LPOs because of difficulties in supervision, quality control and potential malpractice liability. But I’ve heard from corporate counsel that think the quality they’re getting from legal process outsourcers is as good if not better than what they were getting when it was done within a law firm—  and they’re saving big money.”

Beyond giants emerging from global mergers, large law firms have to pay heed to the alternative business structure provisions of the U.K.’s  Legal Services Act, which come into effect in October.

Ominously described as the legal profession’s “Big Bang,” the legislation allows non-lawyers or corporate entities (think Walmart) to own and manage law offices. Capital generated from such operations could be used to acquire smaller law firms in Canada, which could then be consolidated into a larger national legal entity across the country and in turn become part of a Swiss Verein with a U.K. partner, says Bower.

However, he does not expect any major mergers involving large Canadian and American firms. “Once one of the big 10 Canadian law firms merged with a U.S. firm, it wouldn’t get any referrals from other U.S. firms, which is the source of a large percentage of their revenues.”

Gowling Lafleur Henderson LLP is “disinclined to want to merge with or become part of a large British or American firm,” says Scott Jolliffe, the firm’s chair and chief executive officer, who declined to say whether Gowlings has been approached with such an offer.

“The real growth these days is not in America or even in Europe. It’s in Asia, South America and Africa,” he explains, noting that Gowlings will be opening an office in Beijing this September. It has also had a London office since 2008, which now has 13 lawyers, along with its Moscow office, which opened in 1991.

In terms of head counts, big Canadian firms were spared having to lay off lawyers to the extent their U.S. counterparts had to undertake to stay afloat.

Unlike large firms south of the border, Canadian firms do not put all their eggs into one basket, says Sean Weir, national managing partner of Borden Ladner Gervais (BLG) LLP. He explains that mortgage-backed securities comprised a huge market for deals in the U.S. and “stopped dead overnight” following the collapse of Lehman Brothers Holdings Inc. in 2008.

Large sections of major U.S. firms that were highly specialized in what was once a very profitable area went from being “fully occupied to having zero work,” leaving many—  if not all—  of the lawyers without jobs.

Since no major Canadian firm is as focused, with as many lawyers invested in a specific practice area, there was no comparable fallout here. South of the border, it was pretty severe.

In 2010, there were nearly 2,900 fewer lawyers at the top 250 U.S. firms, which followed the departure of about 6,600 attorneys in 2009, according to  The National Law Journal’s annual survey of the largest law firms in the U.S. That marked the greatest multiyear decline since the  NLJ began conducting its survey more than 30 years ago.

“If you look at large Canadian firms, the rate of growth has slowed and most are marginally smaller than they were three years ago. But it’s not like they’ve blown off five per cent of their team,” says Weir. “That indicates to me that the fall off of work in Canada hasn’t been nearly as drastic as it was in the United States.

“Canadian firms are probably more balanced, so if they lose all work in one sector they have work in other sectors to keep them busy.”

Still, hiring at large Canadian firms—  particularly of articling students and associates—  was “definitely reduced” starting in mid-2008 when the U.S. economic crisis began to worsen, explains John Ohnjec, director of the Ottawa division of Robert Half Legal.

“Some national firms needed to cut back and get as lean as can be, which we wouldn’t have seen in prior years. There was not enough work to trickle down, so some people were left out in the cold.”

About six months ago, the previous hiring freeze began to melt. However, large firms are being “very cautious” in choosing talent, very often looking for lawyers with specific skill sets as opposed to choosing generalists, says Ohnjec, a former insurance-defence litigator. “For instance, if there’s a need for a lawyer with a specific securities background, they won’t hire someone who has only done some securities work.

“For the most part, big firms aren’t just looking for bodies. They’re looking for bodies that can churn out the work and be able to go out and find the work.”

Large Canadian firms have also not followed the example of some major New York firms that paid star law graduates a full one-year salary just to retain them while the economy improves.

A handful of firms here, though, had undertaken “guaranteed hirebacks” from about 2004 to 2008, says Weir, who adds that BLG did not use that approach.

“Some firms were saying to law grads that if you come and article with us, we’ll guarantee to hire you as a first-year lawyer.”

He says that a few major Canadian firms are also rumoured to use deferrals, in which a first-year associate is asked to start in, say, January instead of September and receive a lower rate of pay during that “sabbatical” period.

Success for firms has been based on a combination of geography and industry that drives their growth.

The insatiable global appetite for natural resources has made Calgary “a much more important legal centre than it ever has been before and big national firms have to be there in a big way,” says Bower. “They need to have an energy practice or they will miss out in an area of great growth potential.”

Most of the Seven Sisters have a Calgary office and big firms have been poaching lawyers from each other. The level of competition in Cowtown is illustrated by recent reported shuffles: Bennett Jones LLP acquired two veteran lawyers from McCarthy Tétrault LLP, which in turn acquired five lawyers from now-closed Calgary tax boutique, Venn Law, which was  opened a year ago by four former Calgary lawyers from Blake Cassels & Graydon LLP.

Blakes, meanwhile, beefed up its Vancouver office, acquiring partners from Bull, Housser & Tupper LLP, BLG and McCarthys, and “went from being middle of the pack to top of the pack,” according to Warren Smith, managing director for the British Columbia office of national legal recruitment firm, The Counsel Network.

As with Calgary, Vancouver is benefitting from growing global interest in natural resources, along with its own strengths in mining and an anticipated revival of the lumber sector, thanks to a rise in housing starts in the U.S. expected next year, says Bill Maclagan, managing partner of Blakes’ Vancouver office.

He believes other major firms, including BLG and McCarthys, will continue to have a “strong, strategic interest” in Vancouver, buoyed by last year’s Winter Olympics and the International Bar Association’s annual conference that attracted thousands of lawyers from around the world.

“The city is the Pacific gateway to the country, and to growing markets in Asia,” says Maclagan, a tax lawyer. “In recent years, Canada is seen internationally as having a very stable financial system and economy that is able to withstand the downturn in the financial markets and the manufacturing industry,” says Gowlings’ Jolliffe.

“Canada’s future looks good in part because of increased demand for resources, goods and services in Asia, South America and Africa.”

He expects the next boom for large Canadian law firms will come through the globalization of the practice.

“Many   foreign  companies are looking to Canada to increase their business, especially in resources, such as oil and gas and mining, and more Canadian companies are looking beyond Canada’s borders for their growth.”

Jolliffe says that Gowlings is focusing on expanding its “marquee” practices in IP, energy, infrastructure and mining to compete in a global environment.

“Those are areas where we can distinguish ourselves globally, ”he explains.

“To try and be all things to all people in today’s market is just foolish.”

This article originally appeared in the July 8, 2011 issue of The Lawyers Weekly.

Formed from a merger of five regional firms on March 1, 2000, Borden Ladner Gervais (BLG) LLP arrived on the national scene a year after seven other large firms were dubbed the “Seven Sisters.”

While not a sibling in that family, BLG is — a little more than a decade later — the Big Mamma of Canadian law firms. With about 760 lawyers at offices in Toronto, Ottawa, Montreal, Waterloo, Calgary and Vancouver, it is, by that head count, the country’s largest firm and the size of top firms in the U.S. However, BLG would not have come to be had it not been for one of the sisters, McCarthy Tétrault ... Read More »]]> Sean Weir, National Managing Partner of Borden Ladner Gervais LLP – Canada’s largest full-service law firm – talked to The Lawyers Weekly recently on the Firm’s growth and it’s “multi-heads-are-better-than-one” model:

Formed from a merger of five regional firms on March 1, 2000, Borden Ladner Gervais (BLG) LLP arrived on the national scene a year after seven other large firms were dubbed the “Seven Sisters.”

While not a sibling in that family, BLG is — a little more than a decade later — the Big Mamma of Canadian law firms. With about 760 lawyers at offices in Toronto, Ottawa, Montreal, Waterloo, Calgary and Vancouver, it is, by that head count, the country’s largest firm and the size of top firms in the U.S. However, BLG would not have come to be had it not been for one of the sisters, McCarthy Tétrault LLP, starting the merger trend when four regional firms got together and, after the Supreme Court of Canada (SCC) gave the go-ahead in the Black v. Law Society of Alberta [1989] S.C.J. No. 27, established Canada’s first national law firm.

The broader reach and multi-heads-are-better-than-one model inspired Howard, Mackie of Calgary, McMaster Gervais of Montreal, Scott & Aylen of Ottawa, Borden & Elliot of Toronto and Ladner Downs of Vancouver to come together, according to Sean Weir, who has served as national managing partner since BLG’s creation.

“We felt we could provide seamless service to clients across the country if we were a single firm as opposed to having agents in different provinces.”

However, he says that becoming Canada’s biggest law firm was never BLG’s goal.

“We wanted good practitioners with good clients, and had growth by winning new business.”

Still, the firm is not shy about promoting its top-of-the-heap status, and uses it as a “calling card” when searching for work internationally.

“It gives us a certain measure of respect,” explains Weir, who also practises corporate law focused on pension and financing matters. “Our size indicates stability, growth and continuity with clients.”

Lawyers from other firms seem to like those characteristics too.

“We’ve never had as many partners from other law firms looking to join BLG as we have over the last eight months,” says Weir, who started practising law in 1981 with Borden & Elliot. “Some firms may not have as broad a client base, may be more transactional in nature and may be having more issues with workflow than we are in today’s economy.”

Although the firm, like others, has experienced decreased volume in banking, acquisitions and securities transactions since the start of the economic crisis in October 2008, BLG’s broad-based practice (55 per cent of which is corporate work and 45 per cent from litigation or dispute resolution) has kept it financially strong. Having a stable institutional client base, composed of banks, insurance companies, hospitals, schools and governments has also served the firm well through the recession — particularly in Calgary, where the economy is thriving thanks in large part to the booming electricity sector and oil and gas industry.

Weir points out that BLG is experiencing growth in not only its energy practice, but also in its practice areas for public-private infrastructure projects, corporate commercial, securities and capital markets, mergers and acquisitions, class actions and commercial litigation.

“We’ve done better than most American firms, which have experienced a much more drastic reduction in deal flow over the last two years.”

He explains that large U.S. firms are built around significant deal flow and typically have three to five associates for every partner to keep business moving in and out the door. By comparison, major Canadian firms, such as BLG, usually only have one associate per partner.

“When the deal flow dries up in the States, there’s a huge amount of excess capacity very quickly,” says Weir, adding that the lesson for all law firms is to be “prudent in growth, understand where work comes from and not be overly aggressive hiring with the hope of becoming busy.”

He says that BLG is “unbelievably diligent” in only hiring senior lawyers as partners with “good practices” and expertise in “developing business,” and promotes associates who have been with the firm since their call to the Bar.
-From the July 1, 2011 issue of The Lawyers Weekly

1. Keeping the spark alive – ensuring foreign investors keep coming back for more

“Canada’s North was an alluring target for international development companies in 2011 and in fact in October, Fortune magazine ranked Canada No. 1 in its annual look at the Best Countries for Business,” says Weir. “Significant investment in the natural resource sector represented a boon for the Canadian economy but ... Read More »]]> In a constantly changing regulatory and business environment, it can be difficult for businesses to keep up. And 2012 will be no exception – both domestic and foreign investors will face challenges and meet opportunities doing business in Canada. From the evolving class action lawsuit to changing Aboriginal consultation requirements and a harder hitting tax man, Sein Weir, national managing partner at BLG LLP, predicts the issues likely to impact the corporate landscape and dominate headlines in 2012.

1. Keeping the spark alive – ensuring foreign investors keep coming back for more

“Canada’s North was an alluring target for international development companies in 2011 and in fact in October, Fortune magazine ranked Canada No. 1 in its annual look at the Best Countries for Business,” says Weir. “Significant investment in the natural resource sector represented a boon for the Canadian economy but our international partners faced Canada’s Aboriginal consultation requirements and environmental regulations.” What can foreign investors and Canadian natural resource companies do to mitigate red tape and keep these vital projects on the move?

2. Financial institutions and the economic recession – it ain’t over ‘til it’s over

Canada weathered the global recession better than other industrialized countries thanks to our banking system. Not one of our banks required a bailout, our economy grew 3.1 per cent in 2010, and we saw more foreign investors seeking Canadian capital and wanting to do deals. Sounds like we’re in the clear! On the contrary. Some say low interest rates, banks spreads, insurer liabilities and pension plan funding could create challenges for Canadian banks and insurers in 2012. How will banks and big businesses cope?

3. We can’t predict what the plaintiff class action bar will do next, but at least we can prepare for it

Class action lawsuits kept companies busy in 2011 as this type of lawsuit continued to develop and spring up from every angle. Some companies had incredible success, others were engaged in lengthy trials and others faced certification hearings. From securities to privacy to product liability, it appears that class actions will continue to attract corporate attention in the coming year. Development south of the border may limit the scope of the class action in the United States, but companies operating in Canada will want to follow a series of decisions to be released in Canada in the next 12 months to understand the risk facing their organizations.

4. You can’t run or hide – why you must turn and face the tax man in 2012

After cutting taxes in many countries to boost economies, governments around the world are doing what they can to recover revenues lost during the recession. Canada is no exception and businesses are seeing more frequent and aggressive tax audits. While Canada Revenue Agency has been actively pursuing audits on high net worth individuals for more than a year, companies will now face even greater scrutiny. From grading on non-compliance to assessments of reporting functions, Canadian businesses will feel the heat of the tax man in 2012.

5. Privacy in public forums – will we ever recover?

It seems like a lifetime ago that we dialed up the Internet, sat through the beeps and whirs and patiently waited for pages to load. What did people do before the Internet and the World Wide Web? For one thing, they maintained their privacy. 2011 brought the launch
of facial recognition for Facebook users in the U.S., high-profile cases of defamation liability via Twitter, and job loss for some Vancouver rioters whose photos appeared online. With the terrain changing so rapidly, how will web users protect their privacy in 2012? What will be the effect of: anti-spam legislation, new advertising guidelines for online tracking, evolving rules surrounding Internet/social media defamation, and employers finding out more and more about their employees’ antics outside of the workplace?

6. What the frack?

While large-scale commercial production of shale gas has not yet been achieved in Canada, many companies are now exploring for and developing shale gas resources in Alberta, British Columbia, Quebec, and New Brunswick. But fracking – the use of highly-pressurized fluid to fracture rock and release gas and oil from shale fields – is increasingly controversial. However, in the U.S. alone, fracking is responsible for increasing recoverable resources by 600 trillion cubic feet of gas and seven billion barrels of oil that would not otherwise be accessible. What changes to regulation and legislation are expected in response to community concerns? What direction is Canada going with respect to greater oversight and required consultation?

7. One for the history books: Social media mobilizes civil rights

Around the globe, 2011 will be a year to remember in terms of civil rights activists and political regime protesters using social media to build engagement and mobilize crowds. In fact, Time magazine even named “The Protester” as 2011’s Person of the Year. What have we learned from these movements and what can businesses do to protect themselves should a protest movement take place at their front door?

8. Saying sorry without fear of litigation? Apology legislation becomes more prevalent

Thanks to apology legislation, businesses in Ontario, British Columbia, Saskatchewan and Manitoba are more likely to come out of a crisis on top. Not only does this legislation allow businesses to express empathy for those affected by a situation, but there is growing evidence that apology laws actually reduce the number of lawsuits and the time required to settle them.

9. Overseas growth sounds attractive. But what about the tax authorities?

International trade and overseas expansion have never been more attainable for Canadian businesses. With continued scrutiny of transfer pricing arrangements, however, businesses must be prepared to meet the reporting and filing requirements of the relevant tax authorities. At the same time, growing businesses should be aware of the expanded exchange-of-information tax treaties and how these multi-jurisdictional relationships can contribute to profitable growth.

10. Canada’s green economy: Set to stay the course?

When it comes to the business of renewable energy, Canada is considered a land of opportunity. Favourable pricing and incentive programs have attracted international attention and foreign investment. But in 2011, the provincial government faced much criticism over the Ontario Green Energy Act, the FIT program and renewable energy prices in general. The Green Energy Act will remain under the microscope in 2012 as investors, consumers and governments examine the value of this program and the unconventional process of enacting it. How will this impact Canada’s role in the global renewable energy space, the opportunities presented to Canadian and international companies, and the Canadian economy?