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Growth is driving the pulse of the prairies

|Written By Jennifer Brown
Growth is driving the pulse of the prairies

For in-house counsel in Manitoba and Saskatchewan, growth and regulatory change are the top drivers dictating the kind of work and the volume coming their way and that has been a steady trend for the last few years.

“Growth and change — it is just relentless,” says Sheldon Stener, general counsel and corporate secretary with Federated Co-operatives Ltd. of Saskatoon.

“We’ve been on a growth agenda doing acquisitions and growing business units and looking for acquisition opportunities — that’s been taking up a lot of time.”

The 2013 World Co-operative Monitor ranked FCL in 58th place, up from 66th in 2012, with sales of US$8.1 billion. It was also the 13th largest co-op in the wholesale and retail trade sector.

“It’s been exiting for us but you have to have the capacity to handle it when it comes because you don’t know when it’s going to come. When it hits, it hits pretty hard,” says Stener.

FCL completed the acquisition of 17 fertilizer, seed, and agriculture chemical supply centres from Viterra Inc. in November 2013. It bought the supply centres from Viterra, the grain-handling arm of Glencore Xstrata. In 2012 it also bought Calgary-based junior oil company Triwest Exploration Inc. for $138.4 million.

FCL is owned by about 225 retail co-ops located throughout Western Canada. The co-ops are “member-owners” of FCL. The company has a growth mandate and keeping up with the deals is the main focus for Stener and his in-house team of three. “It’s something that’s new for us to be on this aggressive growth agenda. The opportunities are presented not on our schedule but on someone else’s schedule so we don’t really control the pace of the work. When a vendor comes looking you have to be able to do it, adjust and get it done.”

When the work is too much for the in-house team at FCL, Stener’s first choice is to approach local counsel and if they need expertise they branch out to larger centres.

“For some of the specialized competition law we might go to Toronto — but we primarily work with legal firms in Winnipeg, Calgary, Edmonton, and Vancouver.”

Growth is also driving the agenda at Sask Energy Inc., says senior legal counsel Terry Jordan.

“As a corporation we’re really caught up in growth so we’re always looking for efficiencies and cutting red tape,” says Jordan.

Over the last five years Sask Energy has seen a 10-per-cent increase in its customer base with 7,600 in 2013 and 7,300 new customers in 2012.

“We haven’t really had an increase in staff in legal or as a corporation. They’re trying to meet additional demand either through contracting or efficiencies,” he says.

 There are five lawyers in the legal department at Sask Energy now and they do send work out. “I have a couple of external counsel I work with regularly on different things. If I need an opinion on the law in Ontario I go out but for the most part we keep it local,” he says.

With a strong focus on health and safety, one of the areas Jordan has been spending time on lately is “significant” changes to the province’s Occupational Health and Safety Act.

Regulatory legislation also keeps the department busy. “We buy and sell a lot of gas because we’re a distribution utility and in Saskatchewan most of our customers buy directly from the distribution utility as opposed to gas retailers. So we’re very interested in whether the derivatives regulations are going to affect the way we buy and sell physically delivered gas. It looks like we’re going to be OK on that side of things but we also do over-the-counter hedging on an instant so if we have counter parties in Ontario now we have to look at and that gets us looking at Dodd Frank and the European equivalents.”

In Manitoba, regulatory work also keeps Candace Bishoff, general counsel and director of law at Manitoba Telecom Services, and her team of five lawyers busy. She says they are “expected to be on top of everything” and lately that includes Canada’s Anti-Spam Legislation as well as privacy issues related to PIPEDA.

“We’re federally regulated but also subject to provincial oversight as well so amendments to the Consumer Protection Act significantly impacts the way we do business,” she says.

Regulatory issues involving the CRTC also keep Bishoff and her team busy as do a “proliferation” of class action claims filed for things like recovery of system access fees paid by wireless customers. “It’s like there’s no consequence to the representative plaintiff and yet the costs incurred by the defendant are high — it doesn’t matter how poorly the claim is handled on the plaintiff side,” she says. “When it’s filed it triggers us to defend and as soon as you get served with a class action claim whether it proceeds or not you have to impose a litigation hold. When it’s a one-customer claim it’s easy, when it’s a class action claim it’s not so easy.”

Often MTS has to engage external counsel in other provinces on these matters and Bishoff says it can be “very costly and inefficient.” The department engages lawyers from regional and national firms but budget is often an issue.

“We definitely use local counsel wherever possible because we are familiar with them. In some areas you don’t have expertise here. You need a balance,” says Bishoff. “I just about roll over when I see some of the hourly rates for some of the Toronto firms. We will ask for budgets — we went out and asked for the firms to give us a budget on class action — take us through to certification and we’re going to hold you to that. There is a huge difference between the nationals and the regionals.”

Manitoba is now getting its own legislation that will require notification following a data breach which will have many companies asking questions, says Judith Payne of Pitblado LLP. Enacted in October, once the Personal Information Protection and Identity Theft Prevention Act is brought into force companies like MTS who have been focused on PIPEDA will now have another piece of legislation to consider.

“We didn’t have our own private sector privacy law and now with our own legislation with its own quirks in terms of compliance both here and with companies in the U.S. it’s a nightmare for them,” says Payne.

Even though it’s a Crown corporation with a monopoly, Manitoba Public Insurance is always trying to improve services to its client base and the legal department tries to follow that by improving the services provided to the corporation, says Michael Triggs, director of legal services with the organization.

The corporation is going through a major update to its information technology capabilities which involves several multimillion-dollar master service agreements with various IT providers which can be time-consuming and protracted.

“We handle a bit of the work internally but we don’t have the expertise of the big worldwide service providers so we retain external counsel. Some of the things we have done is ask that the senior partner be the only one who works on the file because of the depth of knowledge can tell us what we need to know in about 30 seconds as opposed to the junior who would spend a lot more time on it. We have found it to be much more cost-efficient,” says Triggs.

Triggs says Manitoba Insurance uses both large national and Winnipeg law firms for work in bordering provinces. “Generally speaking we have found that Winnipeg law firms charge less than Calgary, Edmonton, Vancouver law firms do and the work is just as good and we have strong relationships with them and have reduced costs.”

Law firms in Manitoba find they are also getting more work not only locally but also from central Canada for things like employment law says Bob Sokalski of Hill Sokalski Walsh Trippier LLP.

“It may be a function of demographics but there seems to be an uptick in employment law,” says Sokalski. “Baby boomers who are getting to a level in their corporations and they’re earning high salaries and a strategy in some corporations is to cap their severance exposure and remove someone with high exposure.

So they either bring in someone junior to pay them much less or hire back someone in their 50s or 60s on a year-to-year contract.”

It’s a strategy that’s become more frequently deployed. Sokalski has acted on both sides of those kinds of disputes.

For companies on growth paths regulatory change can have a serious impact says Reis Pagtakhan, a corporate immigration lawyer with Aikins Law in Winnipeg who has done a lot of work lately on changes to the federal Temporary Foreign Worker Program.

“We had a meeting with members of the CCCA’s Manitoba chapter recently and many were almost shell-shocked that these things seem to come out of the blue that can affect their business and businesses they might be looking at acquiring or merging. It’s really hard to keep up,” he says. “I think it may affect growth coming in the next 14 months or so.”

He says the “accumulative duration rule” which indicates most temporary foreign workers — not all, but most — that come through labour market opinions have a maximum of four years in Canada. The first set of people who will hit that cumulative duration will be in April 2015. “So you may find businesses with large numbers of foreign workers not able to renew their foreign workers. So if you’re looking at growing or acquiring a business what happens if dozens or hundreds of your workers have to go home — that will really affect valuation and how you move forward to fill the gaps.”


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