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Central Canada’s leading regional law firms may have more in common with the most prosperous U.S. law firm than some of the country’s national firms, the largest of which hovers around the 700-lawyer mark.
“The most profitable law firms south of the border aren’t necessarily the largest,” says J. Gregory Richards, managing partner of Toronto’s 82-lawyer WeirFoulds LLP. “The most profitable law firm in the U.S. according to American Lawyer’s survey, is a firm of 185 lawyers in one location, New York City. By U.S. standards, that’s positively miniscule.”
While Canadian law firms do not make their annual revenues public, and it’s a safe bet Bay Street’s earnings are still straining to crack the Wall Street stratosphere, there is a dawning realization that there’s a critical mass unique to each partnership. And managing partners at Canadian Lawyer’s top 10 mid-size regional law firms in Ontario and Quebec acknowledge their own profit-maximizing sweet spot isn’t necessarily arrived at through the seemingly indiscriminate growth patterns employed by some national firms.
“We think our scale is probably a realistic scale for the Canadian market. It doesn’t mean we’re not going to recruit or add practice areas or strengthen existing ones — it’s a dynamic market — but we don’t think we need to be bigger just for its own sake,” says Andrew Kent, managing partner of the 190-lawyer McMillan Binch Mendelsohn LLP, which placed first for the second year in a row.
Indeed, many law firm executive committees are musing aloud about the inevitable impact on their client base given the wave of mergers and acquisitions, many of them by U.S. and other foreign interests, that has been relentlessly consolidating the Canadian and global business landscape over the past few years.
“It wouldn’t surprise me if there were some (law firm) mergers,” says Gary Luftspring, chairman of Toronto’s
110-lawyer Goodman and Carr LLP, which took third place honours in this year’s ranking. “If you look at the number of clients who have disappeared over the last couple of years, it’s huge. If you look at the national (law) firms or even the so-called, tier-one regional firms, I don’t think there’s enough work nationally for the number of firms that are chasing it.”
Nor are the national firms, with high-end legal fees that top out at $700 an hour and team-structured approach to legal files, well-positioned to encroach on the less eroded mid-cap client work so efficiently serviced by the leaner firms. “Can they compete with the solid regional firms? Probably not,” says Luftspring. “I think there’s lots of opportunity for mid-market (law) firms.”
Other managing partners interviewed by Canadian Lawyer magazine also spoke of a need to calibrate their firm’s optimal size and practice specializations with almost surgical precision as the legal services industry comes under greater pressure.
Eldon Bennett, managing partner of Toronto’s 120-lawyer Aird & Berlis LLP, which climbed two spots this year to fifth place, expects the regional marketplace to become more competitive as the financial markets become more globalized, forcing the Toronto Stock Exchange to compete for listings of Canadian companies with overseas bourses, drying up some of the legal work that has historically fed the national firms. “I think we’re better able to cope with that [than the national firms],” says Bennett. “We’re probably a more resilient size.”
Still with any economic change comes opportunity for the nimble. Luftspring points to the re-emerging tech sector and the strong entrepreneurial market, as well as creative tax work, such as advising wealthy individuals. “That’s not work that the biggest firms want, yet it can be very lucrative, very important, and it’s very satisfying for those who do it,” he says, acknowledging that he, like some of his rivals, is closely watching for signs of an emerging private health care sector in Canada, in light of the Supreme Court of Canada’s groundbreaking 2005 Chaouli ruling.
As Richards puts it: “I think it was Wayne Gretzky who said: ‘You don’t want to skate where the puck is, you want to skate to where the puck is going to be.’”
1. McMillan Binch Mendelsohn LLP
Total Lawyers: 190
Offices: Toronto; Montreal
Lawyers by Office:
Toronto: 140, Montreal: 50
Core Practice Areas: Mergers and acquisitions; antitrust/competition; banking and finance; commercial real estate; corporate and tax; structured products/derivatives/hedge funds; corporate restructuring; international business and trade; labour and employment; litigation and dispute resolution; mining; securities and public markets; and securitization.
Key Clients: Honda; Brookfield Properties; Stelco; RBC Financial Group; Bank of Nova Scotia; Novartis; Boehringer Ingelheim; GE Capital; ING Canada; Mercedes-Benz; Boeing; Monarch; Canderel; Morguard; Maple Leaf Sports & Entertainment; Aramark; Armstrong World Industries; Kilmer Capital; Borealis Capital; Canon; BMO Nesbitt Burns; BASF; Mead; Crystallex; Boliden; Catterton Partners; McKenna Gale; Toronto Hydro; First Asset Funds; Technicolor; Comerica; Kraft; Kohler; Hershey’s; Tyco Group of companies; JPMorgan Chase; Becton Dickinson; Nickel Institute; NYK; Invista; GMAC Commercial Finance; Medisys Health Group; La Senza; Intrawest; American Iron & Metal; Monit Group; MDS Aerospace; and Coastal Corporation.
Notable Mandates:
Counsel to RSM Richter, receiver for Ravelston Inc.; creditors’ committee in Stelco’s current restructuring; Bank of Nova Scotia as agent for the financing of the recent Masonite acquisition; ING on its recently filed $1-billion shelf prospectus; BPO Properties Inc. in its investor documents in the purchase of the $2.2 billion O & Y Portfolio of office buildings, including the 72-storey First Canadian Place; Royal Bank of Canada and RBC Dexia Inc. in their new office tower lease; Honda Canada Inc. in its $160-million greenfield development of an engine plant in Alliston, Ont.; AmerisourceBergen in its acquisition of Trent Drugs and Asenda Pharmaceuticals; Western Forest Products in its acquisition of Cascadia Forest Products and TFL 37 forest lands; and Sony in its acquisition as part of a consortium of MGM.
Star Alumni:
Newton Rowell, chair of the Royal Commission on Dominion-Provincial Relations, and later Ontario chief justice, founded McMillan Binch. Other alumni include: the late William Howland, former Ontario chief justice; the late Ontario Superior Court justice Samuel Grange; Ontario Superior Court Justice Sarah Pepall; Quebec Superior Court Justice William Fraiberg; retired Quebec Superior Court justice Benjamin Greenberg; former senator Leo Kolber; former prime minister John Turner; former International Trade minister Jim Peterson; and Tony Clement, federal Minister of Health and Minister for the Federal Economic Development Initiative for Northern Ontario.
Pro Bono/Community Service:
Patron of the Western Business Law Clinic at the UWO’s Faculty of Law; launched the new “McMillan Binch Mendelsohn classroom” in the law school faculty building; established McMillan Binch Mendelsohn Scholarships at University of Windsor, University of Western Ontario, Queen’s University, and University of Ottawa; donated $300,000 to Osgoode Hall Law School’s scholarship endowment and $333,000 to the University of Toronto Faculty of Law; United Way Campaign.
Affiliations:
Member of State Capital Global Law Firm Group, an association of firms representing all 50 U.S. states.
The Firm:
McMillan Binch Mendelsohn LLP’s legacy traces back to 1903 and the firm founded by Newton Rowell. In May, central Canada’s leading regional law firm celebrated the first anniversary of the synergistic merger between Toronto’s 103-year-old McMillan Binch with Montreal’s Mendelsohn GP. With a sophisticated business services practice that rivals many national firms, the 190-lawyer firm markets itself south of the border as “America’s Canadian Law Firm,” building on the legacy set during the 1940s and 1950s when Bill Binch cut a swath through the mid-western United States in his Oldsmobile, soliciting legal business of mid-sized companies expanding into Canadian markets. Last year, the firm reported no interest in expanding beyond Ontario and Quebec, however, newly appointed managing partner Andrew Kent says McMillan Binch Mendelsohn has been eyeing the Calgary market. “It’s no secret that we were in an association with (western firms) Bull Housser and Milner Casgrain, as they were then known for 10 years from 1989-1999, and I don’t think it’s any secret that the three firms considered doing a deal in 1999 and elected not to,” says Kent. “We’ve had opportunities to be ‘national’ that we’ve passed on. For better or worse. Whether we should or shouldn’t have, we did.” Asked whether the firm is currently negotiating a merger with a western law firm, Kent is coy. “I have to give you the CIA answer: neither confirm nor deny.” Stay tuned. . . .
2. Cassels Brock & Blackwell LLP
Total Lawyers: 180 Offices: Toronto Lawyers by Office: Toronto: 180
Core Practice Areas:
Advocacy; banking and financial institutions; business re-organization and insolvency; competition; construction; corporate/commercial; cross-border issues; energy and utilities; franchising; government relations; health; information; communications and entertainment; income trusts; insurance; corporate and regulatory; international trade; labour and employment; mergers and acquisitions; mining; municipal; planning and environmental; pensions and benefits; product liability; real estate; securities; tax and trusts; technology; and corporate finance.
Key Clients:
University of Toronto; Canadian Tire; Kinross Gold Corporation; Pfizer Inc.; Teranet Enterprises Inc.; Manulife Financial Corporation; Rogers; Cushman & Wakefield LePage Inc.; Goldcorp Inc.; Rose Corporation; Royal Bank; GMP Securities LP; Interac Inc.; E.D. Smith & Sons; Harley-Davidson Financial Services Canada; Equinox Minerals Ltd.; Sprott Securities Inc.; and Lundin Petroleum AB.
Notable Mandates:
Acted for Goldcorp Inc., which entered into an agreement with Barrick Gold Corporation to acquire certain mining assets and interests of Placer Dome Inc. for $1.485 billion; Harley-Davidson Financial Services Canada in a $1.1-billion global line of credit facility; Canadian counsel to Lundin Petroleum AB in the $720-million acquisition of outstanding shares of Valkyries Petroleum Corp.; GMP Securities Ltd. in an $81-million secondary offering completed by Harris Steel Group Inc.; Goldcorp Inc. in its $70-million acquisition of the Bermejal Gold Deposit in Mexico; and E.D. Smith Income Fund in its acquisition of Seaforth Creamery Inc. and its $60-million treasury offering.
Star Alumni:
The late Margaret Hyndman, first Canadian woman to appear before the Imperial Privy Counsel and appointed King’s Counsel in 1938, the second woman to be so honoured in the British Commonwealth; the late John Graham, chairman emeritus of Rogers Communication Inc. and one of the founding members of the Canadian Life and Health Insurance Association; W. David Griffiths, who was a judge of the Ontario Court of Appeal; Joseph O’Brien, formerly a judge of the Ontario Superior Court; and Cameron Stewart, vice-president, secretary, and general counsel of Canadian Tire Corporation.
Pro Bono/Community Service:
Donation to the Toronto Foundation for Student Success for school nutrition programs; sponsored the Barbra Schlifer Commemorative Clinic’s 12th Annual Tribute; raised more than $7,000 for multiple sclerosis research during the 2006 Super Cities Walk for MS; real estate lawyer David Eveline represented pro bono 14 buyers of Habitat for Humanity homes; and bronze sponsor of the 2005 Becel Ride for Heart.
Affiliations:
World Services Group; a global non-profit association.
The Firm:
Established in 1888 as Cassels & Cassels, this top-ranked business law firm underwent five more name changes before settling on Cassels Brock & Blackwell LLP five years ago. After 120 years, it has grown to 180 lawyers, 133 of them partners, two counsel, and 45 associates, supported by more than 200 staff. Housed within six floors of Toronto’s Scotia Plaza tower, Cassels Brock is one of the few law firms of its size in Canada that operates out of a single office. Cassels Brock represents a wide range of companies, from entrepreneurial start-ups to mid-market enterprises to global corporations, handling files ranging from tax advice for the small business owner to cross-border mergers and multinational class action lawsuits. Managing partner Mark Young recently hired nine lawyers to expand the firm’s competition law, financial services, and securities groups. This firm also has a strong tradition of doing significant community service work. As one Canadian Lawyer survey respondent noted, Cassels Brock is an “excellent firm that made the decision to grow as a regional firm.”
3. Goodman and Carr LLP
Total Lawyers: 110 Offices: Toronto Lawyers by Office: Toronto: 110
Core Practice Areas:
Business; banking and insolvency; technology, securities; litigation; tax; real estate; leasing; municipal; and personal planning.
Key Clients:
BFI Canada Inc.; BMO Capital Corporation; Bentall Retail Services LP; Brookfield Asset Management; cars4U Ltd.; Cedara Software Corp.; Chubb Insurance Company of Canada; Comweb Group Inc.; European Minerals Corporation; FNX Mining Company Inc.; George Brown College; IBI Income Fund; Laurentian Bank of Canada; McDonald’s Restaurants of Canada; Menkes Developments Inc.; Mills Corporation; Niagara Health System; Nitrochem Corp.; Northland Power Inc.; Orlando Corporation; Quinlan Road Limited; Research In Motion Limited; Richtree Markets Inc.; Royal & Sun Alliance; St. Joseph Printing Limited; Shoppers Drug Mart; Sobeys Inc.; Sterling Centrecorp Inc.; Summit Real Estate Investment Trust; TD Meloche Monnex/SNIC; The Toronto Land Partnership; TransGlobe Property Management Services; Trilon Bancorp Inc.; Willis Canada Inc.; and WorkBrain, Inc.
Notable Mandates:
Acted for Brookfield Properties Corp. on agreement to acquire all of the shares of Trizec Properties, Inc., a publicly traded U.S. REIT, and Trizec Canada Inc.; cars4U Ltd. and Chesswood Income Fund to convert cars4U into Chesswood, and the proposed IPO of trust units by Chesswood; reached a multi-million-dollar settlement of the “Baby GS” litigation case, a precedent-setting case in Canada, the U.S., and the U.K. arising from the failure of physicians to recommend HIV testing; Tricon Capital, with $515-million equity and mezzanine loans to developers in Canada and the U.S.; Tricap Management Ltd. in the Companies’ Creditors Arrangement Act restructuring of Stelco; Brookfield Bridge Lending Fund in a $450-million financing of the Hudson’s Bay; owner and operator of Bowring in its CCAA restructuring; commission counsel to the Ipperwash Inquiry into the shooting death of aboriginal protestor Dudley George; and excess insurers of Hollinger International directors in a hearing related to the $50-million settlement of a derivative action against the outside directors.
Star Alumni:
Allen Karp, former CEO of Cineplex; Jeffrey Blidner, vice-chairman of Brookfield Asset Management; Joseph Freedman, general counsel of Brookfield Asset Management; Harvey Shapiro, co-CEO of NovaDent Inc.; Ken Kirsh, co-CEO of Gamma North Peel Laboratory Limited; Sandra Cowan, partner and general counsel of EdgeStone Capital Partners Inc.; Karen Hacker, general counsel of St. Joseph Printing Limited; and Wolfe Goodman, who still comes to the office from time to time, is one of the deans of Canadian tax law and a recipient of the Law Society Medal.
Pro Bono/Community Service:
During a six-month period this year, Goodman and Carr lawyers contributed more than 1,200 hours to pro bono work. Almost half the firm’s lawyers are involved in charitable or community organizations, including: Amnesty International Group; Baycrest Foundation; York University; March of Dimes; Canadian Association of Family Enterprise; Canadian Friends of Boys Town Jerusalem; Canadian National Institute for the Blind; Canadian Piggy Bank Charitable Fund; Canadian Red Cross; Hellenic Heritage Foundation; Hong Fook Mental Health Association; JVS Toronto; Jewish National Fund of Canada; Mount Sinai Hospital; North York Harvest Food Bank; Ontario HIV Treatment Network; Ronald McDonald House; Theatre Passe Muraille; Three Trilliums (assisted living for handicapped people); UJA Federation; and United Israel Appeal of Canada Inc.
Affiliations:
None.
The Firm:
Established by a group of 11 lawyers in 1965, Goodman and Carr has trimmed its ranks from 140 lawyers to 110 in the past year with the assistance of talent-raiding national firms that seem to view the top-ranked regional firm as an excellent training ground. Perhaps to help stem the talent-drain, the firm recently appointed a new managing partner, Paul Bleiwas, a 36-year-old tax whiz described by chairman Gary Luftspring as representing the firm’s “youth movement.” After expanding in the 1980s and 1990s, Goodman and Carr later closed short-lived offices in North York, Ottawa, and New York, and is today content in its mid-sized regional status. Known for its entrepreneurial culture, embodied in its respected “Hard working law” slogan, the firm’s client companies tend to be led by lean management teams who insist on the same efficient style in their legal service providers. “The people we’ve been able to recruit tend to be of a type: young, entrepreneurial, wanting to be more of a voice with their clients than simply doing sophisticated legal work,” says Luftspring. “That’s clearly what we’re about. That’s something that we’re watching and those are the type of people we’re looking for.”
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