As Atlantic Canada’s economy matures and prospers, many local businesses have achieved a national and even global reach in recent years, and their regional law firm advisers have grown up right alongside them.

No longer are regional law firms willing to cede the top-drawer transactional work to the national law firms based in Toronto or Calgary, as many have done in years past, says Michael Harrington, chairman of Stewart McKelvey Stirling Scales’ partnership board, interviewed as part of Canadian Lawyer’s second annual peer ranking of Atlantic Canada’s leading law firms.

Harrington, who is based in St. John’s, Nfld., cites driving forces that are allowing law firms to gain enough specialized transactional experience to maintain a legal platform that fully services all their clients needs. They include: industry growth and consolidation; an international commodities boom that has fueled three massive offshore oil and gas development projects in Newfoundland and Labrador; and the Nova Scotia Companies Act, unique legislation that has pushed a wave of cross-border work setting up tax-efficient, unlimited liability companies.

“One of the greatest strengths is our growing areas of specialization and our ability to handle larger, more complex matters for our expanding clients, particularly on corporate/commercial matters. We’ve done income trust work for some of the largest clients, without them finding the need to go to Toronto-based firms for that work,” says Harrington, who notes the drive toward a standardized national securities regime has also helped regional law firms conduct complex transactional work without the assistance of Toronto- or Calgary-based lawyers.

“We’ve also been involved with some junior capital companies and capital pool companies. In the past, you needed regulatory approvals from the Alberta Securities Exchange or (TSX) Venture Exchange. We’re able to do that work for clients now from the province. We have some very large transactions; they are now ones we can do ourselves and that’s enhanced our practice.”

Peter Wright, Moncton, N.B.-based chairman of Patterson Palmer, agrees that regional firms are now keeping more of the sophisticated legal work that might have been ceded to national firms in years past. “There’s lots of opportunity there and it’s really for the top firms to manage that process. It’s theirs to gain. And if it’s not managed properly, there’ll be more ground to lose,” he says.

But it takes a critical mass and a well-developed law firm infrastructure to support the lawyers working on the biggest deals, the experts say. For instance, Stewart McKelvey has just launched a secure extranet that allows clients and lawyers to access and manage legal documents online, a feature offered by the biggest national firms.

In fact, the drive to specialize and to achieve the critical mass needed to become eligible for the country’s biggest deals may have largely fueled the merger wave that has overtaken the region’s largest law firms over the past 18 months. The 2005 merger of McInnes Cooper with the 53-lawyer Halifax office of Patterson Palmer “has given us a depth, particularly on the corporate finance and corporate law and business transaction side generally, explains Bernie Miller, McInnes Cooper’s new Moncton-based CEO and managing partner.

Meanwhile, the merger of Cox Hanson O’Reilly Matheson with Patterson Palmer’s New Brunswick, P.E.I., and Newfoundland and Labrador offices, announced in March and slated for August, has been delayed by client conflicts. However, it is hoped that the new 173-lawyer Cox & Palmer will be in business before the end of the year, distilling Atlantic Canada’s four fully regional firms into three, each hovering around the 200-lawyer mark: Stewart McKelvey (221); McInnes Cooper (180) and Cox & Palmer (173). No one expects another fully regional law firm to emerge in Atlantic Canada anytime soon, saying the mergers have helped the firms achieve economies of scale that up-and-comers would find hard to achieve.

“It gives us a critical mass to make investments in our infrastructure that we think are important,” Danny Gallivan, CEO and managing partner of the Halifax office of Cox Hanson, says of the pending merger. “The more lawyers you have, the more you can afford to invest in your service platform. We’ve gone out and invested in ways such as hiring a director of professional development.”

However, the smaller and mid-sized firms are not much troubled by the consolidation of the fully regional firms from four into three. Wayne Myles, managing partner St. John’s, Nfld.-based Benson•Myles, sees it as “an exceptional opportunity” to pick up new work referrals. “When you get that kind of concentration and consolidation of local players within the region, there just inherently have to be greater client and file or transactional conflicts,” Myles explains.

In fact, the 23 lawyers from Patterson Palmer’s Truro and Halifax offices, who have opted out of the merger and have set up shop as Patterson Law, have already received referrals from their former partners, says co-managing partner Dennis James.

Anyway, with the recent easing of mobility restrictions in Prince Edward Island and New Brunswick, even single-office firms like Halifax-based Wickwire Holms and Blois Nickerson & Bryson can enjoy a fully regional practice. “We’ve had a whack of things going on in P.E.I. out of a particular receivership,” says senior partner Carl Holm, adding that about 30 per cent of Wickwire Holm’s litigation billings over the past year have been related to matters in New Brunswick or P.E.I. “There was a large insolvency matter, a receivership in Newfoundland — the Hickman matter — it’s about a $100- to 200-million Companies’ Creditors Arrangement Act, which changed into a receivership, in which everybody in Newfoundland was engaged and I ended up acting as a conflict counsel for the trustee. It was a very nice file.”

Still, Atlantic Canada’s lawyers are not immune from the same challenges facing the legal profession right across Canada. “The biggest challenge is to maintain the highest standards in the delivery of law when many of the institutional clients are themselves bottom-line oriented,” says John Barry, managing partner of Saint John, N.B.-based Barry Spalding. “There are more requests for proposals, there are clients becoming much more demanding, very much so. And they want the same results for a lot less cost. It’s a real problem.” Other lawyers observe the same phenomenon, mainly from insurance companies, which they say are simply implementing national sourcing reporting and pricing policies and procedures across the country, as are other regional companies that have expanded nationally.

Bruce Clarke, one of three managing partners at Halifax-based Burchell Hayman Parish, says Atlantic Canada, like other areas of Canada, is becoming more centralized in the largest urban centres, to the benefit of the law firms located there. “One of the things you see here is a fabulous economy, the Halifax regional municipality has almost like a reverse donut economy — powerful in Halifax, but not as strong in other areas. So more and more legal work is coming to Halifax as more and more businesses and industry are coming to Halifax, but I wonder whether that’s a good thing for the longer-term — pulling jobs and the economy away from smaller centres.”

Still, most lawyers at the leading law firms say the region’s economic growth and prosperity have created more opportunities than challenges.

As John Young, managing partner of Dartmouth, N.S.-based Boyne Clarke, says:
”It would be very difficult for law firms here to do badly. It would be possible, but they’d have to try hard.”