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Balancing act

In-house departments in Quebec juggle provincial specific legislative and regulatory issues along with challenges of cybersecurity and growth through acquisition.
|Written By Jennifer Brown
Balancing act

Regulatory matters loom large for most in-house departments these days, but for the insurance and financial services sector in Quebec a general strike by government lawyers in that province has delayed some much-anticipated revised legislation.

“We are awaiting the amended legislation to come out in terms of the [Quebec] Insurance Act and the Act Respecting the Distribution of Financial Products and Services,” says Jennifer Dibblee, vice president, legal services and corporate secretary with Industrial Alliance Insurance and Financial Services Inc.

“I think it would have come out at the end of 2016 if it hadn’t been for the fact that the lawyers for the government have been on strike since early fall, so that has slowed down the actual publication of the draft legislation.”

The 1,100 members of the union Les avocats et notaires de l’État québécois have been without a collective agreement for more than 18 months.

“We are expecting both the Insurance Act and Distribution legislation to be going through its review and overhaul and new legislation coming in 2017,” Dibblee says, adding that the company participated in the consultation process in 2015 and 2016. “Once we see the draft legislation, that will be an issue for us to follow closely to bring work into the department in 2017.”

The Industrial Alliance head office is located in Quebec City. There are 38 lawyers for IA spread across the country in four offices including Quebec City, Toronto and Vancouver.

Being in the financial services sector, Dibblee handles a lot of regulatory work that is specific to the province and nationally. Industrial Alliance is an insurance company, but it also has a wealth management business line that includes mutual fund distributors and a mutual fund manager. “It is a very highly regulated environment. Regulatory work is and will always be a key focus of this department. It always seems the speed and evolution of regulatory renewal is constant,” she says.

Dibblee and her team do much of the regulatory work themselves in-house, but they use external counsel and boutique firms for certain matters. A number of years ago, Dibblee says IA made the decision to move away from big firms and look at who the experts are in the local jurisdictions and take a more boutique firm approach.

Industrial Alliance continues to grow organically as well as through acquisitions and one area in which it is looking at new growth is via the United States.

The provision of insurance products by digital delivery is also part of the strategic plan for development and growth at IA, says Dibblee. “The distribution of insurance is moving to the Internet [and] relationships are becoming more paperless with digital signatures, so we have to keep an eye on the underlying legal issues that may raise,” she says.

“I have asked the legal department to consider those issues over the coming months and years to make sure we’re able to meet those needs and make sure we have the bench strength to make sure we know how we can provide support [so] when the business wants to do something in a new way we can support them in that regard.”

Boralex is another Quebec-based company looking to expand in markets outside Canada. The renewable energy company develops, builds and operates renewable energy power facilities in Canada, France and the United States. “What we’ve been doing in Canada lately is transactional work with other companies,” says Sylvain Aird, general counsel of Boralex Inc. “Not competitors, but mostly developer operators of existing projects. Some have involved municipalities in Ontario and Quebec. It’s very diversified in terms of the kind of deals we do. We basically follow legislation or regulation in the various jurisdictions in Canada, which are all different.”

The Boralex legal team consists of nine people —  there is another vice president for North American affairs as well as junior lawyers and two paralegals. Boralex also works extensively with external counsel.

“In M&A deals, I feel the level of work, which is sometimes around the clock, necessitates that we associate ourselves with external counsel. In addition to that,  we also finance our acquisitions by way of project financing. We often do an M&A acquisition-type deal at the same time that we do financing of the project. So that’s double the work so we definitely need to go outside,” says Aird.

Where he doesn’t rely on external counsel so much is for what’s core to Boralex  — the purchase of wind turbines and operating and maintenance services that the various turbine manufacturers provide. “We’re pretty hands on for that. We hold the pen on that type of contract,” he says.

Boralex does a lot of deals outside of Canada. “We did a French/U.K. deal in 2016, so now we own projects in Scotland. We are pretty international,” Aird says.

The company also attempted some deals in the U.S and is keeping its eyes on that market, aided by a U.S. global law firm.

“In Canada, there are still opportunities, but the whole renewable energy industry is kind of in a ‘wait and see’ mode because there are not so many provincial programs that have been put forward. Ontario has suspended its long-term plan,” he says.

“Quebec still has a few opportunities — the government says it’s going to launch a program, but we don’t see what it is right now. Alberta is new to the game. We’re active there. We just closed an M&A partnership with a local developer there,” Aird says.

Boralex faces a long lead time in delivering any project that can involve objections from environmental and community groups opposed to wind farms.

He has been adding lawyers over the years and is hoping to add a more senior position to the team by the end of March. Aird says he is looking for people who have done M&A work in the past and who also have expertise in financing.

“We don’t do much litigation — we are capital driven. I joined 12.5 years ago and this year we will be 10 lawyers. We’ve doubled every five years.”

At Montreal-based VIA Rail, Denis Lavoie is director of risks, insurance and claims and all litigation from Halifax to Vancouver. Risk is a major factor for the transportation giant that is looking to stay competitive for the future.

“Risk is a new way to see a business,” says Lavoie. “If you’re an insurance company or big bank, there is a framework there — you must have a chief risk officer and you have to have a risk structure in place; but for all the operational companies like VIA, it’s up to the board of directors or upper management to decide to go ahead with risk management structure.”

That’s the structure VIA decided to go with three years ago and Lavoie was appointed director of the initiative. Yes, he says, while VIA runs trains at high speed with four million passengers a year, safety is a key risk, but also important is how it manages reputational risk and IP risk, equipment risk — all that can affect a company such as VIA.

VIA has six lawyers on the in-house team. On the corporate commercial side, 90 per cent of the transactions are done internally, but litigation matters such as human rights and passenger claims are handled by external counsel by firms across Canada with large national firms. Over the last few years, to reduce costs, VIA has been using some small boutiques in Toronto

and Montreal.

In the last two to three years, cyber-risk has become a larger concern. In November, VIA went to the board of directors with a new proposal for cyber-insurance and Lavoie is working on it now with the company’s broker, Marsh, and put a new cyber-insurance policy in place. On the prevention side, he is working closely with the IT group to build an infrastructure process to protect against a cyberattack.

VIA also has to make sure it is running the business in compliance with regulations for the industry. Lavoie says although VIA is a passenger rail company, the Lac-Mégantic rail disaster in 2013 brought a new way of seeing the business of a railway operator. It also impacted insurance policies and concerns around safety management.

Emerging risk is also a topic of interest for the board of directors. “They are always asking what will be the key risks in the next 12 months or three years for VIA,” he says.


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