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Law firms in cities outside Toronto, Montreal, and Calgary are fighting to hang onto clients as companies centralize the way they make decisions and dish out legal work. At the same time, they need to develop a strategy for dealing with national law firms looking to cherry pick their best clients.
If you can’t find Brian Babcock in his office, then check the local airport. Chances are the Thunder Bay, Ont., lawyer is catching a plane to Toronto in a bid to land the latest piece of work that drives his litigation business.
It wasn’t always like this. It used to be that the lawyers at Weiler Maloney Nelson, a 13-lawyer business law firm, could simply rely on a stream of work generated through local contacts — people like the branch manager of a national bank or insurer, a local entrepreneur, or the general manager of a subsidiary from a larger company operating in the region — which is virtually devoid of general counsel.
However, times are changing and a new economic climate has emerged that is impacting the way that law firms situated outside of Canada’s primary urban centres attract clients.
Companies are coalescing their decision-making authority around places like Montreal, Toronto, and Calgary, with the result that local or regional offices are being stripped of their independence and the ability to divvy out legal work in favour of the head office.
It’s upsetting traditional relationships local law firms have with their larger clients and is forcing lawyers at firms to reach out to parts unknown in a bid to rebuild ties with those clients.
But that’s not the only challenge they face. The “Wal-Marting” of the economy and the creation of big box retail centres, featuring national chains, has largely homogenized the retail sector and ended the days of the local, independent store owners, who would simply call up the lawyer down the street to iron out their legal hassles.
That work is now done from afar. Factor in the rise of national law firms and the changing mobility rules, which allow lawyers to practise outside their normal jurisdiction, and it is squeezing local business law firms.
Babcock notes that Toronto-based lawyers can arrive in Thunder Bay in the morning, advise a client, and be back in their office before the end of the day for $300 in airfare.
He says the shift has been gradual and “started about 10 years ago but has accelerated over the last five.”
It’s something that Don Douglas, a Winnipeg lawyer at Thompson Dorfman Sweatman LLP, has also noticed. “There’s no question it has had an impact. We feel it.”
But not everyone is feeling the pain. John Hannah, a corporate lawyer at Berge Horn in Kelowna, B.C., says “to the limited extent that we’ve seen it, we are not concerned. We would be concerned if we perceived it to be a growing problem. We’re not sensing an increase, it’s simply always been that way.”
It also depends on how vibrant the local economy is.
Judson Whiteside, managing partner at national law firm Miller Thomson LLP, notes that some municipal centres “have their own economy. They look after themselves,” he says, citing areas such as Kitchener-Waterloo and Guelph, Ont., where there is a lot of manufacturing and a growing technology base. Cities like Ottawa, Vancouver, Halifax, and Edmonton also have strong standalone local economies.
But for areas that are seeing regional decision-making moved to a larger urban centre, it can be painful. Paul Kuttner, a law firm marketing expert, says when corporations centralize their decision-making, the impact on law firms can be “quite dramatic.” He cites the case of one law firm: “Virtually overnight, a substantial portion of revenue evaporated because the regional office of the local banking centre no longer had the authority to hand work out. It took a better part of eight months for one lawyer to get his practice back on its feet.”
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