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City Report: Winnipeg’s legal economy steady as she goes

|Written By Geoff Kirbyson

Manitoba has long been known for its well-diversified economy, so it should come as no surprise that partners atM some of the province’s biggest and highest-profile law firms say a plethora of industries are driving the legal community today and will continue to do so tomorrow.

A long-standing joke in the Keystone province is that if it had a nickname, it would be “Eddie” because of the long-standing “steady” performances by, among others, the financial services, manufacturing, real estate, and natural resource sectors.

John Stefaniuk, a partner at Thompson Dorfman Sweatman LLP, predicts Manitoba’s legal industry will continue to be stable for the near future with some modest growth potential. He says most recent economic forecasts call for Manitoba’s GDP growth to slightly outpace that of Canada for the next couple of years.

“There will be a bigger pie and legal work is a part of that pie,” he says. “I think there’s a lot of potential growth in the natural resources industry, including oil and gas, mining, hydro electricity, and wind power. There’s a lot of legal work associated with these activities,” he says.

Winnipeg’s financial sector — the third largest in the country, trailing only those of Toronto and Montreal — is a substantial presence in the province led by perennial powerhouses Great-West Lifeco Inc. and IGM Financial Inc. While the pair of sister firms often engage non-Manitoba firms — their majority shareholder, Power Financial Corporation, is based in Montreal, after all — other companies, such as Wellington West Capital Inc., are a growing source of legal work. The 13-year-old firm, which had less than $1 billion in assets at the beginning of the decade in a single office, is perennially on the acquisition trail and is now closing in on $7.5 billion in assets across its national network of 28 offices.

Simply because it’s the largest insurance company in the country doesn’t make Great-West immune to lawsuits. In late October, the company was ordered to make about 250 retired employees whole after it changed an indexing formula in their pension plan without permission. Robert Tapper, founding partner of Tapper Cuddy LLP who represented the pensioners, estimated their payout will be between $32 million and $35 million.

Bruce King, managing partner of Pitblado LLP, says the growing number of healthy aboriginal-owned businesses is also keeping lawyers hopping. The biggest and most mainstream by far is the Tribal Councils Investment Group of Manitoba. Representing 55 Manitoba First Nations and more than 100,000 First Nation members, it has meaningful ownership stakes in Arctic Beverages, Perimeter Airlines, Bieber Securities, Big Freight Systems, First Canadian Fuels, First Nations Bank of Canada, True North Sports & Entertainment, Paragon Pharmacies, Westfield REIT, and Radisson Hotels.

King says there are also countless other examples, such as the Brokenhead First Nation, which runs the wildly popular South Beach Casino an hour north of Winnipeg.

Real estate, particularly on the commercial side, is another key driver of Manitoba’s legal market, King says.

“That’s probably going to continue for awhile. Winnipeg’s prices have been pretty low. Shopping centres are getting flipped with fairly good returns. People are putting up condos and doing condo conversions, too,” he says.

Carmele Peter, chair of the executive board at Aikins MacAulay & Thorvaldson LLP, agrees. She says a small but growing part of its business centres around real estate investment trusts. That’s largely due to Winnipeg being one of the country’s biggest centres for REITs. In fact, three of them — Lanesborough REIT, Huntington REIT, and Temple REIT — are owned by the city’s high-profile real estate mogul, Arni Thorsteinson. In four years, the trio has amassed more than $1-billion worth of apartment buildings, hotels, shopping centres, and office and industrial properties across Canada.

“Because of low interest rates, people were looking for investments with more substantial returns than GICs. They were more willing to take funds out of conservative investments and into the REIT market because of the returns they were seeing,” Peter says.

Dave Hill, founding partner of Hill Abra Dewar, says what’s unique to today’s legal situation is the current bounty of work flies in the face of historical precedent. He says litigation traditionally goes up when the economy goes down, as was the case in the early 1980s and from 1988 to 1992.

“There were shareholder fights and oppression remedies. There was lots of litigation going on,” he says.
Hill says he’s at a bit of a loss to explain the growing amount of legal work in a strong economy.

“The more deals that are going on, there’s a greater chance a deal can go sour. That can cause litigation,” he says.
He says the collapse of the Crocus Investment Fund — a story that made national headlines in late 2004 and early 2005 — continues to have legs for the legal community. A $200-million class-action lawsuit by disgruntled shareholders against the labour-sponsored fund was expanded earlier this year to include the provincial government for alleged abuses of power.

Maple Leaf Distillers, arguably the biggest dog in the Crocus portfolio, is fuelling legal activity as well. In September, a group of prominent investors in the distillery and its parent company, Protos International, sued Astra Credit Union for $5.9 million for participating in an alleged “cheque-kiting” scheme that allowed the two firms to access millions of dollars in unauthorized loans. One of the plaintiffs was former Winnipeg Jets captain Thomas Steen, who claims he lost $500,000 in the two failed companies.

“The misappropriation of funds is a major activity. Investors who have invested in these companies have found out their money isn’t there and they’re taking the promoters to task,” he says.

Stefaniuk says local firms don’t get all of the legal work from Winnipeg-based companies but that doesn’t mean an inordinate amount of business is flowing out of the province.

“The changes to lawyer mobility rules have resulted in more Manitoba work being done by lawyers in other jurisdictions but also more work in other jurisdictions is being done by Manitoba lawyers. It goes both ways,” he says.

In fact, as other parts of the country, Alberta in particular, have done well, the Winnipeg economy has benefited, Aikins’ Peter says.

Continued low interest rates have also contributed to an acquisition-friendly environment, as businesses in various industries have been more willing to get financing or undertake expansions both in Canada and in the U.S., she says.

But it’s not all wine and roses for Winnipeg lawyers, King notes. He says Canada’s Internet pharmacy sector, once a billion-dollar industry concentrated in the Manitoba capital, has fallen on hard times.

“That trend has come to an end. The firms are wrapping up because the drugs are originating from other provinces or countries,” he says.


Regional firms rule the roost

There are no national firms with operations in Manitoba but the legal community is more than adequately served by a number of strong regional firms.

The largest is Aikins MacAulay & Thorvaldson LLP, which has 91 lawyers covering a full range of disciplines, including: intellectual property; family; labour and employment; bankruptcy, insolvency, and corporate recovery; and banking. It also takes great pride in its volunteer work, highlighted earlier this year by most of its staff lending a hand in the construction of a Habitat for Humanity house in north Winnipeg.

Pitblado LLP is focused strictly on business law with its team of more than 60 lawyers. The areas of expertise at the more than 100-year-old firm include: banking and financial institutions; corporate and commercial; information technology, intellectual property, and privacy; insolvency, bankruptcy, and restructuring; labour and employment; real estate and construction; securities and corporate finance; and taxation.

Thompson Dorfman Sweatman LLP, with 79 lawyers, is one of the oldest and largest firms in the province. The full-service firm is a founding member of Lex Mundi, the world’s leading association of independent law firms. Some of its areas of practice include: aboriginal; environmental and sustainable development; intellectual property; property and development; and securities.

Fillmore Riley LLP is a full-service law firm with nearly 60 lawyers. Its practice areas include: aboriginal law; commercial litigation; construction; insolvency and restructuring; real estate; securities; technology and intellectual property; transportation; and wills and estates.

Taylor McCaffrey LLP has 59 lawyers. The full-service firm takes great pride in the role its lawyers play in continuing legal education, including lecturing at the faculty of law at the University of Manitoba and the bar admission courses. Several of its lawyers can provide service in sign language.

Hill Abra Dewar isn’t one of the biggest firms in Manitoba but it has handled some of the highest-profile cases recently, including the $5.9-million lawsuit against Astra Credit Union. The nine-lawyer firm also represented Domo Gasoline Corporation Ltd. in its recent $6.5-million win against Shell Canada Products Ltd., a subsidiary of one of the world’s largest corporations. It has also been active in litigation against the Crocus Investment Fund.


Kicking back in the’Peg

There are about 1,850 lawyers in Manitoba, including 1,500 in Winnipeg, but the province’s hospitality industry isn’t benefiting as much as you might think.

Bruce King, managing partner of Pitblado LLP, says Winnipeg lawyers typically don’t flock to certain watering holes at the end of the working day as their counterparts in many other cities do. He says most people from outside the city don’t recognize how concentrated the industry is in Winnipeg.

“You’re riding up and down the elevators with two-thirds of the business lawyers in the city. You eat in the same food court. . . . If you want to have a conversation in the Velvet Glove lounge, you’ve got to make sure the lawyer from the other side isn’t sitting at the next table,” he says.

Thompson Dorfman Sweatman LLP’s John Stefaniuk says many of the city’s younger lawyers can often be found at Earl’s on Main after work while their mentors are more likely to be sitting in Rae and Jerry’s, the steak house just as famous for its prime rib as it is for its 1950s décor. During lunch, lawyers of all ages hit up Garry’s Deli and Nathan Detroit’s Sandwich Pad in Winnipeg Square.

“By and large, people are interested in putting in their time at the office and going home to spend time with their families. That’s part of the quality of life we have in Winnipeg,” Stefaniuk says.

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