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Riding the high tide

|Written By Jean Sorensen

No one is ‘fighting for nickels’ while ‘dimes rain down’ in Vancouver’s booming legal market.

Vancouver’s law shops are riding the province’s economic high tide and business is booming. The problems that Vancouver law firms face are those spawned by a sizzling economy — tight office space, rising operating costs, keeping staff, and scrambling to keep court dates. But firms are flush, there’s expansion, clients have a do-it attitude, and there’s even a more conciliatory mood for settling disputes. Bottom line: no one is fighting over nickels when there are dimes raining down. As one lawyer puts it, if a firm is not doing well today, the problem is with the firm. Their biggest problem seems not to be finding work, but lawyers to do all the work.

Keith Mitchell, managing partner for Farris, says of the Vancouver legal community, “We don’t create the work, we are service providers,” and currently, B.C. is “an economic powerhouse.” Previously, the Vancouver hub reflected a feast-or-famine, provincial resource-economy built on minerals, forestry, and energy. But the economic craters that B.C. experienced over the past decade forced firms to lifeline new sources of business within the Pacific Rim area (such as new business investment or incoming wealth from China) and also to tap into the technology boom. Now that the resource sector has boomeranged, combined with newly-developed sectors, legal firms are enjoying a spike in business. “If a firm isn’t doing well in the province, the problem is with the firm,” says Mitchell.

Blair A. Rebane, a partner at Borden Ladner Gervais LLP, says he’s always been busy, but the biggest change in 2007 is that “things are very positive and it’s a pretty rosy outlook” for the next few years. During the lean years, individuals were more likely to fight long and hard over dollars in litigation. But today it’s all changed. It’s all about looking forward, new opportunities, and prospects. “If there is a problem, they want to move forward on it,” he says, adding, “clients want deal makers today.”

“Our business has been a reflection of the economy,” says Mitchell, adding that newer growth areas continue to emerge as the marketplace evolves and refines. “We are very big in technology, biotechnology, as well as private-public partnerships [P3] deals,” he says.

P3s are also a future growth area for Fasken Martineau DuMoulin LLP, as is the renewed emphasis on environmental issues, says managing partner Will Westeringh. P3s “five years ago were just emerging, and now it has become a trend and it continues to be strong,” he says, adding that the firm forged an in-house team to handle these deals. A renewed focus on the environment, from energy sector emissions through to impact issues, is driving new business.

 Moving to meet client demands for P3 deals and environmental issues is the new reality in the marketplace, Westeringh believes. “Increasingly, law firms have to understand the business of the client and provide business advice and guidance. The firms that succeed are those that help them to achieve their goals. That’s a trend that has started and we see it increasing,” he says. Corporate clients want to feel the legal firm is part of a team participating in a corporate strategy. “You are providing better client service, you know what the objectives are, and your advice provides information on trends and opportunities,” he says.

“2007 has been a brisk year”, says Lex Pacifica Law Corp. owner John Shevchuk, no stranger to B.C.’s pendulum economy during his 22 years in practice. The upswing has given momentum to commercial litigation, a growth area for his boutique firm. The firm’s foundation work lies in administrative law, “but we have seen a lot more activity in the commercial front — not that the administrative law has gone down any.” As commerce increases, so have disputes — but with a difference today. There’s more dollars around and “the number of cases that go to trial are small,” with most settled by alternative-dispute-resolution methods, says Shevchuk.

Overall, 2007 has been “a very strong year in all areas, especially securities, mergers and acquisitions, corporate finance, and real estate in particular; even labour and litigation has been busy,” says Westeringh.
Today, mining and especially the energy sector — where “billions” of dollars are raised for oil ventures — are creating new opportunities. Startup companies have been “a big thing for us in the last while,” says John Smith, managing partner of Lawson Lundell LLP, adding they were marked by pent-up demand from industry sectors during slower times, combined with investors looking to the vibrant Western economy. Corporate and real estate investment, 2010 Olympic Games construction, the needed restructuring of B.C.’s forest industry, and rebounding resource sectors all point to Vancouver being “a busy part of the world for lawyers,” he says.

Rebane, whose client base at BLG is entrepreneurial in focus and raised in an electronics age, says these individuals are flourishing in today’s economy and expect they will have access to their lawyer even on weekends via tools such as e-mail, BlackBerry, or cellphone. They are reflective of the energy that is happening in the city. “They want someone who can tell them how to get things done,” he says.

Vancouver’s economic rush has been compared to that of the 1970s, but Don J. Sorochan, managing partner of Miller Thomson LLP, doesn’t see it quite that way. “The neckties are better,” he chuckles. The real difference, he says, is that in the ’70s, the provincial economy revolved around forestry, mining, and natural resources. Today, tourism attractions, such as Vancouver as a major Alaskan cruise ship terminal and skiing and snowboarding destinations; the movie industry; technology; real estate development; growth in financial institutions; and construction have put diversity into what was once a one-trick-pony economy. Sorochan says his firm has been active on the corporate side, with many companies wanting to raise funds through the capital market.

Historically, the firm has been focused on litigation, and while that side of the business is continuing, the firm’s growth area is in solicitor business law practices. This reflects the firm’s transition from a mid-sized regional to part of a national firm, he says.

It’s not all roses and sunshine. Lex Pacifica’s three-man shop added a fourth member recently, and in terms of expansion, “There’s not a lot of younger lawyers around right now” for boutique firms to choose from, says Shevchuk. They once relied on referrals from larger firms shedding articling students, but the biggies are hanging on to rising stars. “The talent pool is getting smaller,” says Shevchuk, who is considering the possibility of looking at out-of-province applicants.

Aware there is competition for good staff in Vancouver today, Faskens has a full-time professional development manager to assist students and associates with client development, marketing, and further downstream issues, such as succession planning within the firm, says Westeringh. New entrants also participate on client teams to increase their exposure and give clients a broader range of legal opinions. This approach, he says, establishes a good career path internally for younger members, who will be needed to fill the company’s new offices in the Bentall Five building in December, as it leaves a 40-year-old residency at the MacMillan Bloedel building.

“We have been extremely busy,” says Smith of Lawson Lundell, but that momentum started building back in 2004 when the economy rekindled. “When things start changing — whether it is for the better or worse — they need lawyers,” he says. There are definitely more open doors at firms and opportunities in the marketplace. “Five or 10 years ago, it would have taken a fair amount of courage to strike out and go it alone.”

 Smith says there’s now a focus on grooming junior members in the firm. During the static ’90s, firms were a utilization mode and hadn’t really developed a core of practitioners to deal with today’s busy pace. “But, given where we came from, we could not have handled this extra capacity,” he says. Lateral hiring and more new entrants are meeting needs. “We have taken on 10 students and have a 60- to 70-per-cent hire-back ratio,” he says.

Finding junior associates is still a difficult task, says Paul A. McDonnell, a partner at Singleton Urquhart LLP. “Candidates are clearly getting multiple offers.” There are “rumblings” about signing bonuses seen in the U.S., but as yet they have not crept into Vancouver.

While opportunities and salaries are a good B.C. draw for candidates, McDonnell believes one of the main attractions is still the West Coast lifestyle — a moderate climate, culture, ethnic diversity, and outdoor recreational opportunities ranging from sailing to skiing, at the city’s doorstep. In a recent search for new juniors, the firm got responses “from right across the country.”

When David A. Garner, managing partner of Alexander Holburn Beaudin & Lang LLP, was a summer student 20 years ago, “I could count on one hand the number of students that got positions from my class.” Some went to smaller towns for positions, even working for free, he says. “Let me tell you, no one is doing it for free
today.” Garner agrees with many in saying that finding good entry-level and junior associates remains a challenge, and he’s gone outside the province to find them.

On another note, he says Canadian lawyers who went elsewhere are now returning home, lured also by a stronger dollar. Applications are coming from the U.S., Commonwealth countries, Australia, and New Zealand. “We just hired someone from South Africa,” says Garner, pleased to find a seasoned lawyer with international experience to bolster the firm’s capabilities.

“2007 has been a good year,” says Garner. He’s looking to add “10 to 15 lawyers in the next short time.” Some staff has left for lateral positions or to establish boutiques, but the firm remains on a growth path. The firm also holds a valued ace — one that many firms envy: realizing that office space was at a premium, it locked it down.

“We have extra space,” Garner says, adding it will facilitate both longer-term growth and lawyers who want to share space and support services.

While junior and mid-level lawyers are moving about, seniors are staying put. “You have seen the amount of mobility at the senior level you have seen in some cities — such as Calgary — where one group moves to another,” says Smith.

As Garner notes, Vancouver’s office space has also dramatically tightened. The drive to revive downtown Vancouver’s core with residential towers has cut into available commercial space, sending prices soaring. “If anyone is looking to renew their lease right now, they are in for quite a shock,” says Shevchuk. More business is coming into firms, he says, but there is also more pressure on costs, such as increased salaries and overhead, as rents rise.

“Significant increases” and “consistent figures” right across the board is how McDonnell, of Singleton Urquhart, describes the wave his firm is riding. Since 2003, there’s been a 20-per-cent increase in staff, with 31 lawyers in house, rising to 40 by the end of the decade. Finding space and people are today’s challenges, he says, adding that in the last two and a half years, the firm has moved to larger office space and had three additional expansions.

“It’s a nice situation to be in,” he says of the firm’s growth, but “not something we could have predicted” as commercial solicitor’s work has shot forward with an enriched B.C. economy.

There is a downturn in some work. “Insolvency work is not as much as it was a few years ago,” Garner says, but insurance claims have increased — a mystery to companies, as past years have been quieter. And companies want to settle disputes faster, especially in construction cases. As building cranes reshape the city’s horizon, few companies want drawn-out court battles, says Garner, opting for mediation instead. “It’s better to move onto the next dime than fight over a nickel,” he says.

Firms also realize that “things are just taking longer in court today — things that used to go three or four days can take up to 15 days,” says Garner. That cost is added to by lost opportunity as executives and managers are tied up in court. A fact of doing business in Vancouver today, says Shevchuk, is longer case prep time. “It is getting harder to meet the deadlines imposed by the court, not because the legal firms cannot do it, but because expert witnesses (i.e. evaluators, appraisers, or environmental consultants), they are also having a busy year,” says Shevchuk.

In addition to high cost, the other factor driving settlements is that “construction was one of the leaders [pilot projects] in mediation” required before a case to a B.C. court, Garner says. The growing focus on mediation is “a big change” in B.C., and the current economy is finding the ideal environment for settlement rather than confrontation. “I am a proponent of flexible thinking, whether it is litigation or mediation,” he says.

A challenge for 2008 that Mitchell sees is the unpredictability of financial markets, which are being offset by strong  developing nations. “Everyone is paying attention to the financial institutions and watching them keenly,” he says, now that B.C. has a “global economy.”

Rebane says three big challenges exist for firms today. The first is keeping staff that firms need to ensure they offer competitive salaries and benefits and also providing support services to lawyers. “It doesn’t do a firm any good to have people burn out,” he says, adding that retraining and rehiring are added costs. A second challenge is that when things are busy, market development is often neglected and new opportunities fall through the cracks. They can be the firm’s future growth. Finally, ensuring there is a good connection to the client so that small, unattended issues do not compound and lead to the loss of business.

Stephen Wortley, chairman of Lang Michener LLP, says that increasingly more Vancouver work has an international flavour. The industrial rise of China has created a new dimension of business opportunity in the legal sector for firms, such as Wortley’s, with a core strength in public-company-related corporate financing and offerings. Chinese firms are coming to Canada eager to find capital, and are establishing companies or joint venturing with Canadian companies wanting to utilize the lower-cost manufacturing facilities in China. Handling these new business ventures has added a “unique” dimension to the city’s legal community and “this is a huge change for us,” he says, adding resulting clients have annual revenues of $50 million. It’s opened new areas of practice for lawyers and his firm visits China four times a year to pulse business opportunities.

 To better enable the firm to deal with growth, new business, and staff, Wortley says the firm recently went from one chief executive officer to three professional managers; a practice director, a director of business development, and a chief financial officer. “This has helped us manage and support the growth,” he says, although the city’s tight supply of office space has the firm considering separating the non-core administrative functions off site.

 In the past, says Wortley, Vancouver may have been viewed as place to come for the lifestyle, but while it still offers much, the continuing international influence in the marketplace has created new opportunities. “It’s not a place where your career is limited,” he says.

“I’ve been practising for 22 years in Vancouver and I can’t recall a better time than now,” he says.