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Sleepy Hollow no more

|Written By Mark Cardwell
Sleepy Hollow no more

When Pierre Cimon started practising law in his hometown of Quebec City 40 years ago, the picturesque provincial capital was dismissed by many as a sleepy bureaucratic backwater that relied on tourism and government to provide jobs.

The city’s small, tightly-knit legal community, too, was seen as decidedly down-home. “There were few national or international organizations here [and] there were no national law firms present — just a half-dozen large local firms that dominated the scene,” recalls Cimon, an eminent local litigator who is co-president of the Canadian Bar Association’s Canadian Legal Conference and Expo here from Aug. 17 to 19. “But things have changed dramatically since then.”


Mon dieu, oui! Long an international A-list destination for savvy travellers, Quebec is also now one of Canada’s hottest cities in terms of economic growth. Buoyed by a red-hot real estate market and booming banking, insurance, and high-tech sectors like computer animation and biomedical research, it has led the nation in several major economic and social indicators for much of this decade. And the long-range economic outlook is as beautiful as the view from the city’s historic ramparts.


To be sure, the local legal community has been transformed in lockstep with an economic renaissance that, in many ways, its members have aided and abetted.  Most of Canada’s best-known national firms — Fasken Martineau DuMoulin LLP, Heenan Blaikie LLP, McCarthy Tétrault LLP, and Ogilvy Renault LLP — are present here now, as are the province’s main ones — Stein Monast, LLP, Cain Lamarre Casgrain Wells, Joli-Coeur Lacasse Geoffrion Jetté St-Pierre, Langlois Kronström Desjardins, BCF, and Lavery de Billy. Most arrived via merger with local firms, a trend that began in the early 1990s and picked up steam as the region’s new economy started to surge and the Parti Québécois returned to power. “The globalization of the economy was forcing everyone to be part of a wider network,” says Cimon, who left one of Quebec City’s leading firms (Letourneau Stein, where he was managing partner) to open the Ogilvy Renault office in 1991 — just a few months after Faskens became the first national firm to hang a shingle in the provincial capital. “And to me it is quite obvious that the prospect of having a presence in an independent province was part of the strategy [of national firms].”


While the threat of separation has since waned, but still lingers, Quebec City’s economic development has been sensational. Mired 15 years ago in a deep slump that was mostly due to recession and cutbacks by government, which then accounted for roughly a quarter of jobs in the region, the city is today reaping the fruits of an unparalleled period of entrepreneurial-based economic growth and expansion.


Recent numbers from the Institut de la statistique du Québec, which tracks public and private building projects, show nearly $7 billion in construction and equipment has been invested in the region over the past year alone — only $600 million of it from government. They include two massive residential developments, a $41-million “green” office building that will reportedly be the province’s most environmentally friendly place to do business when it opens in 2009, a $1-billion upgrade to the Ultramar gas plant in Lévis and — if it gets final government approval later this year — the construction of the $850-million Rabaska natural gas refinery, also in Lévis. Add to that a half-dozen other construction projects of between $25 million and $115 million for local, provincial, national, and multinational companies, and it’s easy to understand why Quebec City has had the highest increase in non-residential building permits in Canada for the past three years. “It’s amazing the number of big construction projects going on here right now,” says Mathieu Comeau, a specialist in construction law and one of the more than 40 lawyers with Faskens’ Quebec City office. “Construction is probably the city’s most dynamic sector. It’s providing work for a lot of lawyers here.”


In addition to the presence of many of the province’s biggest public and private real estate owners and developers — such as the Société Immobilière du Québec, which owns and operates most of the provincial government’s properties; the 11 national banking and insurance companies that are headquartered here and which own about one-third of all real estate in the region; and local builders like the Germain group, which has a chain of award-winning boutique hotels across Canada — Comeau credits the three-year-old l’Agence des partenariats public-privé du Québec with helping to sustain the building boom. “[The PPP body] is definitely the new buzz in real estate here,” he says.


Other indications of the city’s prosperity are seen in a recent report issued by the Desjardins Group, which suggests the Quebec metropolitan area experienced a 3.1-per-cent growth in GDP between 2001 and 2007. Desjardins credits that performance — the third-best in Canada, behind Calgary and Ottawa — on the fruition of efforts aimed at diversifying the economic structure of the capital. By comparison, rival Montreal experienced growth of only 1.9 per cent, a lacklustre showing blamed on big losses in the number of manufacturing jobs there.


Likewise, Conference Board of Canada figures released last year show personal incomes have grown 20-per-cent faster in Quebec City than elsewhere in the province since 2000. Unemployment, too, has fallen by more than half in the same time frame to less than four per cent. Quebec also continues to rank among the safest and least expensive cities in which to live and run a business in Canada — at the time this article went to print in late June, there had not been a murder in this city of 700,000 since Oct. 31, 2006.


“Times are much better here now because the city is not as dependent on government,” says Stephen Gordon, an economics professor at Laval University.  He says, unlike other areas of the country, which rely heavily on one or two key sectors like oil and gas, agriculture, fishing, or manufacturing, the provincial capital has experienced growth in all sectors, from services and construction to tourism and finance, which represents nine per cent of jobs in the region. “No one sector is booming; they’re all doing well,” said Gordon. “And that’s good.”
“Economically speaking, the city has changed completely,” says Jean Brunet, a commercial lawyer and managing partner of Stein Monast, a half-century-old firm of more than 50 lawyers that merged with Montreal’s Desjardins Ducharme in 1992, a partnership that ended last year.  When he joined the firm in 1979, Brunet says it focused almost exclusively on providing commercial and fiscal legal services for some of the region’s biggest retail, manufacturing, and securities companies. “Many of them don’t even exist anymore,” he says. “Others, like the paper mills on the North Shore, migrated first to Montreal, then Toronto.”


In addition to adding fuel to the merger frenzy, Brunet says those changes have transformed the way many commercial lawyers here work and the type of services firms offer their clients, often in tandem with their big-city partners. “Our clients still need representation here, even if their headquarters are now located elsewhere,” he says. “The big difference now is that about 80 per cent of the files we do are with Toronto and Montreal, mostly in English.”


The advent of a new generation of homegrown clients with major-league clout, however, has resulted in many big files being driven and directed from Quebec City. In addition to manufacturing giants like construction material supplier Canam Group Inc., from the Beauce region, and real-estate empire Cominar, which Brunet helped to bring public and later convert into Canada’s first real estate investment trust, Quebec City’s major law firms have been both bolstered and transformed by the development of three niche sectors — high tech, life sciences, and processed materials.


Key research facilities — including Quebec City’s University Hospital Centre (known as the CHUQ), Canada’s largest biomedical research facility; DRDC Valcartier, Canada’s leading defence research and development centre; and the National Optics Institute, or INO, Canada’s biggest optics and photonics research centre — were all started up and are staffed by graduates of the area’s many vocational schools, technical colleges, specialized institutes, and Laval University, North America’s first and foremost francophone school. The centres have created hundreds of high-paying jobs and generated dozens of spinoff companies.


Many of the region’s top firms have altered and expanded their services to attract and keep pace with this new and emerging clientele. “Quebec City is still a relatively small or mid-sized commercial market, and there are only so many deals in a region like ours, so it’s important to be plugged into a team working on deals that sometimes don’t have anything to do with Quebec City,” says François Amyot, former managing partner of McCarthy Tétrault’s Quebec City office who now heads up its business practice group. “That being said, however, there are some really amazing people and products here to which we can put our expertise to contribution.” One way his and other major firms have done that, he adds, has been through the development of an integrated, practice group-based approach that is driven by the client’s needs, everything from the setting up of project financing and engineering to buyouts and takeovers in the U.S. and other fast-changing markets. Or, alternatively, the acquisition of local companies by foreign buyers. “It’s led us to do a lot of cross-border work on behalf of Quebec City-based companies.” “There are many more interesting things to do here now for lawyers,” adds Cimon.


Another evolution in legal practice as a result of the transformed business landscape — and the advent of high-tech companies that rely on R&D and the protection and/or transfer of technology and IP — has been a decline in the need to haggle with clients over fees. “That was traditional practice,” says Louis Rochette, managing partner of the city’s oldest firm, Lavery de Billy, which has 185 lawyers in four offices. Of the two dozen in its provincial capital office, three, including Rochette, work full-time on files involving the commercialization of R&D-driven products, which includes everything from drawing up contracts between research centres and pharmaceutical companies to licensing and the financing of grant monies. “Now ‘value-added’ is the important thing. It’s all about what we can bring to the deal.” As a result, he adds, the city’s larger firms have abandoned some traditional fields, like insurance law, which now rely on small law firms that are ready to accept modest fees. “All the real action is in commercial law here now [and] the services you need to have and offer are far more complex.”


According to David Blair, a partner with Heenan Blaikie Aubut whose family roots were planted in Quebec City in 1832 the increase in cross-border business, in particular, has provided tremendous advantages for the handful of true English-speaking lawyers in a city that is 95 per cent French-speaking. “Quebec City is an intimidating place for people from outside who want to do business here,” he says. “Some of our regulatory regimes are unique, like the need to register companies in French. Many want and need a lawyer who can help them understand and comply.”


For François Vallières, with Quebec’s biggest firm, Langlois Kronström Desjardins, an added benefit of practising law here is the variety of work and the quality of life. “Quebec City is not a first-tier city, and you can probably earn more in Montreal or Toronto, [but] there are some really good and interesting things going on here — and it’s a great place to raise a family,” says the 38-year-old father of two. At the same time, he adds, lawyers here are highly qualified — and are a bargain compared to rates elsewhere. “We work with many new and emerging clients so we can only charge what they can afford, but we help them to grow and when they get bigger, their transactions get bigger, so everyone wins.”

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