Building boom

Building boom
Marni Dicker and her legal department at Infrastructure Ontario are running on a tight schedule. The Pan Am Games are a year away and some projects are delayed but have to be finished on time and on budget. Earlier this summer one of the looming deadlines she was dealing with involved the Hamilton Tiger-Cats new stadium — Tim Hortons Field. For a period she met with team representatives every week. It eventually opened for the Labour Day Classic between the Ti-Cats and Argos. It will also host soccer games for the Pan Am Games next year.

It’s all part of the commercial building boom going on in southwestern Ontario. From transit infrastructure to the condo and office tower skyline, organizations like Infrastructure Ontario, Metrolinx, and Build Toronto are busy building the urban spaces of tomorrow.

As well, organizations like Ryerson University are also part of the mix, expanding beyond its purely academic borders to help today’s global entrepreneurs expand their reach globally. In this report we look at how the general counsel behind these organizations play a large part in the growth of the region.

As executive vice president, general counsel, and corporate secretary for Infrastruture Ontario, Dicker is overseeing some of the biggest projects in the province right now. An agency of the government, IO’s focus and priorities are very much aligned with the focus of the Liberal government — transportation and infrastructure are key areas and IO is the entity responsible for procuring and delivering those projects. Dicker’s main focus is the infrastructure and the venues for the Pan Am Games that need to be delivered in a year. Some are delayed due to construction-related issues and are taking up a lot of Dicker’s time. “The world is watching and we have to be on time and budget — we also have to be safe as thousands of international guests will be visiting,” she says.

Second to the Pan Am Games are all of the transportation projects currently on the go in the province — many of those IO is delivering in partnership with either the Ministry of Transportation or Metrolinx. “We are very focused on major transit projects,” says Dicker. “There’s the Windsor Essex Parkway, the Hwy. 407 expansion — the Eglinton light rail transit — we have a massive team.”

All of that means she is spending a lot of time with Mary Martin, executive vice president, general counsel, and corporate secretary for Metrolinx. Martin is also working to deliver on projects such as the Union Station revitalization, Union Pearson Express, and Eglinton Crosstown light rapid transit line.

Martin has seen her legal team at Metrolinx grow from seven to 15 lawyers in the last two years. Metrolinx has an annual capital budget of more than $2.6 billion and four operating divisions — GO Transit, PRESTO fare card, Union Pearson Express, and rapid transit implementation. “I’m constantly in hiring mode as I expand the legal department to take on the work of our growing organization,” says Martin.

The legal team at IO has also expanded over the last two years as well and currently stands at 32 lawyers, organized as a mini law firm by lines of business. Dicker came from SNC-Lavalin and has been using private sector experience to streamline processes. She was hired by IO president and CEO Bert Clark, who created the office of the general counsel at Infrastructure Ontario 18 months ago. Prior to that, legal services were “very segregated” in that the lawyers resided inside the respective divisions and not centrally managed. For example, if there was someone responsible for real estate law they lived in the real estate department. Now all of the lawyers and law clerks are centrally managed to ensure consistency in service delivery. “I have put a business slant onto legal services and I think that is a big role of the GC,” says Dicker. “I’m focusing on delivering legal services with our business in mind and coming up with business solutions. I’m interested in satisfying our shareholder, which is the province, but at the same time I personally am very focused on the industry at large,” she says. “For example, in the general contractor’s world — what they would like to see in our legal agreements. No one has listened to them before. Are we transferring too much risk? Are we maintaining too much risk? These are the big things I am delving into because there has been noise but no one has focused on it.”

When it comes to infrastructure and transportation there are various aspects of law in each and every one of them, and in order to do these mega projects there is real estate work to be done.
“For example there are easements and right of ways that have to be acquired before a hospital, road or transit system gets constructed,” she says.  The Eglinton light rail project, for example, crosses many property owners’ lands affecting shopkeepers. We’re spending a lot of time with legal teams and external counsel on procurement and construction matters,” she says.

When it comes to securing outside legal advice, IO has procurement guidelines on who can be awarded a contract. “The way we operate is we have a legal vendor of record and in order to get on our vendor of record it’s an RFP process where you have to show all your qualifications — anyone can respond to our VOR but have to meet the necessary requirements — so transactional work would likely go to a national firm with a lot of horsepower versus environmental, human resources, labour, and employment where I have a mix from a three person law firm up to the national law firms,” she says.

“If it has to go out to procurement, we would draw from our vendor of record list and then seek competitive responses for the purposes of awarding the ultimate work into using fixed fee structure or ceiling price so for our transaction work.”

Quality of life and a stable political environment help make Toronto the fourth most attractive place in the world in which to live and work, according to a new report from PricewaterhouseCoopers. But traffic congestion is one factor that pushed Toronto down from its third-place position in 2012. Over the course of the next 20 years, three million more people will join the daily commute in the Greater Toronto and Hamilton Area.  About half of the GTHA population lives and works outside of the City of Toronto. Building transit is a critical part of making sure the region continues to hum.

Metrolinx is mandated to take the lead to ensure the necessary transit and transportation infrastructure is in place to enhance both the quality of life and economic prosperity. On projects such as the Union Station revitalization, Union Pearson Express, and Eglinton Crosstown light rapid transit line, Martin prefers to retain as much work in-house as possible. The lawyers on her team work closely on integrated business legal teams from the planning stage to the procurement of the construction consortium and negotiation of the project agreements.

“As general counsel I sit at the executive management table and we meet at least weekly to engage in strategic planning, business planning, and project approvals,” says Martin.  “Because we do so many larger projects through alternative financing and procurement project plan, we have very tight project management plans and we report to our board on the status of our large infrastructure projects quarterly.”

At that table sit the CEO, CFO, and heads of four operating divisions, which provides Martin with both the opportunity to contribute to shaping plans and establishing priorities. “This allows me to better understand our organization’s objectives, which in turn allows my team to provide legal advice which is proactive and informed by a full context,” she says.

Given the complex nature of the work Metrolinx undertakes, some of it goes external to Ontario-based firms with experience in alternative financing and procurement. “In an in-house department unless it’s a large department you’re not going to have expertise in every area so we do look to the firms to help us out,” says Martin. “We tend to work with lawyers in the region because that’s where all the projects are so we use Toronto law firms with the required depth and expertise. Only a limited number do P3 or AFP. The projects are all in the Greater Toronto Hamilton Area so it doesn’t make sense to go outside Ontario.”

“We do a lot of real estate work because of the nature of work we’re doing,” she says. “We’re always buying rail corridors from CN/CP so I have looked for real estate lawyers and for lawyers in infrastructure who work on P3 transactions,” she says.

Some of the lawyers on her team are financed by other divisions. For example, the rapid transit initiative division is paying for two of her lawyers directly from its budget. “We’re continuing to look at that kind of approach,” she says.

Martin has also at times seconded lawyers from a large law firm and is interested in exploring alternative fee arrangements with outside law firms. “I’m very interested in it — I usually negotiate a discount from their usual rates and for the bigger projects we always do a competitive process. . . . When I retain legal I do not have to do it competitively but choose to do it for the larger transactions because I think it gets us a better deal.”

Martin has some concerns about the escalating cost of outside legal counsel. “I used to be on Bay Street and I can’t understand what is happening because the rates have far outstripped inflation in a time when there has been some economic downturn,” she says. “I’m kind of impatient with the rates — they seem too high.”

She plans to look at alternative service providers such as Cognition LLP in the future. “I think what they allow you to do is when you have a surplus of good work in the department and we want to focus on our larger projects, they allow you to use an outside organization with lower hourly rates. I’m going to be looking hard at that in the coming months and years. The people working for them are high calibre,” she says.

Steven Trumper’s team at Build Toronto is considerably smaller than either Martin’s or Dicker’s — he and another part-time lawyer, along with help from private practice firms, support the transaction teams at the organization. “We work primarily in the real estate sector in the City of Toronto,” says Trumper, general counsel of Build Toronto. “Our business remains fairly strong because real estate in the GTA remains strong. We’re seeing a lot of interest in our projects, particularly in growing areas of the downtown core, west of University/Spadina and the King/Richmond area.”

Build Toronto is owned by the City of Toronto and projects are typically mixed-use projects that provide citizens not only a place to live but also work. “We strive to build a special kind of place that enhances the fabric of the city, whether that be a market, an enhanced park, or affordable housing. We try and incorporate those things in all of our projects,” he says.

The city transfers surplus land — what it no longer needs for program delivery — to Build Toronto. “We take that land and rather than dumping it on the market and selling it as is, we try and create a vision for the property. A lot of the properties may have environmental contamination or other issues and we try and solve those problems and create a vision which we then partner with the private sector to implement,” says Trumper.

For example, a project currently under construction at 10 York Street is a 64-storey condo that is a joint venture with Tridel Corp. The location is a former police impound lot right beside the Gardiner Expressway in downtown Toronto. Another project further west in Liberty Village is a former fire truck repair station and it too is a joint venture for a new residential community that will include a park. A new bridge will go over the railway tracks and create a pedestrian link to Fort York.

“There are always lots of challenges — the biggest issue we have is a lot of our projects require multi-stakeholder input so everybody has various perspectives and they are not all in accordance with what we would like to do for the property or they have their own vision for the property. I would say building consensus internally and externally as to how to move a project forward and resolving problems to the satisfaction of the stakeholder group and executing on our vision is our biggest challenge,” he says. Because his legal team is so small, Trumper sends a lot of major transaction work to outside firms.

Also growing in prominence in Toronto’s downtown core is Ryerson University and along with it the organization’s legal department. “Ryerson continues to grow, so in terms of deals and excitement there’s so much in the unknown — we have deals coming in the door all the time and opportunities and possibilities,” says general counsel Julia Shin Doi.

She recently added to her team with the hiring of a commercial and procurement lawyer from Blake Cassels & Graydon LLP. “We’re excited about adding her and we’re looking to expand by another legal counsel with litigation and employment law and that will put us at five lawyers plus some part-time contract staff that come in,” she says.

In August, Ryerson launched its pilot law practice program and has three law practice program students joining the legal department from January to April 2015.

Shin Doi is also teaching a portion of the program and her staff is mentoring and doing legal contracts for the LPP’s systems providers.

On the governance front, she is also implementing Diligent Boardbooks, an electronic board portal system. “Universities are great places to work because we have such variety,” says Shin Doi. The university just did a deal with Level39 in London — Europe’s largest technology accelerator space for finance, retail, and future cities technology. “We have the Digital Media Zone here, which is an incubator and we’re ranked fifth globally and first in Canada. This agreement with Level39 will allow members to have access to space and start-up support in each other’s facilities. So members can work in London as well as Toronto. It is similar to what we have in Mumbai, India — we’ve worked with the Bombay Stock Exchange to set up an incubator there and that was my main deal last summer,” says Shin Doi.

Along with creating subject matter experts in the legal department Shin Doi is working to align legal counsel with the operational department. When it comes to controlling cost, Shin Doi is going to try Uniform Task-Based Management System coding in her department. “I know TD Bank uses it, the City of Toronto uses it; it will allow me to see efficiencies in billing. The firms will code their legal services according to code so you can see exactly how much time is being spent. We close every quarter and make sure we have a right number and get a forecast for the next quarter and see how much we need to do — whether we need to do more internally and what the external legal services providers need to do.”

She often works with specialist law firms like litigation boutiques on student matters and another for immigration and manages legal pricing closely. “In the end it comes down to relationships and the added value the firm provides to the client.”

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