City Report: Montreal's legal economy continues to thrive

City Report: Montreal's legal economy continues to thrive
Montreal’s legal landscape appears to have adjusted to the seismic shift caused by the arrival of national firms and globalization at the turn of the millennium, with both large and mid-size offices now benefiting.

“The competitive landscape has changed a lot in the last five years,” acknowledges Stuart (Kip) Cobbett, chief operating officer of Stikeman Elliott LLP and managing partner of the firm’s Montreal office.

“It has caused a lot more dynamic market,” Cobbett says. “Ultimately, competition is good because it sharpens everyone’s game. Our firm has never been busier.”

Norman Steinberg, co-chairman of Ogilvy Renault LLP, agrees the introduction of two national firms in 2001 — Blake Cassels & Graydon LLP as well as Osler Hoskin & Harcourt LLP — has been a boon, particularly to the city’s major firms.

The biggest firms aren’t the only ones taking advantage of what de Grandpré Chait LLP managing partner Marc Rubin calls the stabilization of the legal landscape.   


Quebec economy strong
“The Quebec economy has been quite strong and there’s a positive business climate,” says Rubin, who also heads the real estate arm of the 70-lawyer regional independent firm.

“The marketplace is well covered by national firms and strong independent firms,” he adds. “There’s room for both types of players.”


Jauvin suggests boutique and mid-size firms “have to focus on our areas of strength and what we want to develop; recognize our forte.”

While he doesn’t necessarily see Montreal as a growing market, Jauvin says it is healthy and the smaller firms are still making money.

“Income isn’t a problem at this point, but the question is,  what about five years down the road?” he wonders.

One major firm continuing to expand under the current conditions is Fasken Martineau DuMoulin LLP, born of the 2000 merger with Montreal’s Martineau Walker, Fasken Campbell Godfrey of Toronto, and Russell & DuMoulin of Vancouver.

“We’ve doubled [in size] in Quebec the past 10 years,” notes Fasken Martineau managing partner Claude Auger. “We can make massive investments smaller firms can’t afford.”

Faskens, celebrating its centennial in 2007, extended its reach further earlier this year by first merging in February with London, England-based commercial firm Stringer Saul LLP to create the biggest Canadian legal office in Britain. Then in mid-March it joined with Ottawa communications law firm Johnston & Buchan LLP.
Quebec’s emerging technological development scene saw intellectual property specialist Bereskin & Parr follow Blake Cassels and Osler Hoskin to open an office in Montreal two years ago.

“It just came up as a matter of casual conversation at IP meetings in mid-2004,” managing partner Lloyd Sarginson recalled in a phone interview from the firm’s Toronto headquarters. “We began to think about getting more of the Quebec IP market and started more dialogue and it grew from there.”

He says it was decided a presence was needed in Quebec “because there was a lot of our kind of work there, but we couldn’t service it from Toronto. Montreal was the place for us to be to do it and we needed folks preferably from Quebec who had worked in that environment and had a following.”

One such person was patent agent France Côté, whom Bereskin & Parr raided from a Montreal-based national law firm to head the new office.

In a short time, Côté says the IP boutique firm became “one of the key players in Montreal.”

The office, which began with two professional staff members then doubled in size within less than six months and now employs more than a dozen people, is scheduled to move into new space twice the size next month because it has already outgrown the current premises.
André Vautour, managing partner at Desjardins Ducharme LLP, concedes his 140-strong office is one of the shrinking number of mid-size firms remaining in business, but he doesn’t have a problem with that.
“Our position is regional, Montreal and Quebec City, with no strategic objective to be national or to have a presence in Toronto,” he says.

Vautour explains it isn’t necessary to set up shop outside the province in order to get work from the rest of Canada and that being independent is in Desjardins Ducharme’s favour in that regard.

“Since there are fewer independent firms here, we get lots of Toronto, Calgary, and Vancouver business [from firms in those cities] who don’t want to give work to their competitors,” he notes.

End of greenfielding?
Most see an end to greenfielding into Montreal from Toronto or other Canadian cities.

“There’s no buzz in the marketplace about another Toronto firm coming,” according to Rubin. “We’re probably not going to see many more, if any. We don’t see any need to hook up with a Toronto-based firm.”

Pierre Sauvé — the managing partner at Bélanger Sauvé, formed by the 1967 merger of two Montreal firms — says, “There are lots of rumours about us, but we have no plans [to merge].”

Jauvin predicts if there are any more mergers, “It will be the consolidation of mid-point independents who don’t have the financial means to fight mergers.”

As far as work for everyone, Vautour admits lots of businesses have disappeared due to reasons such as globalization, but is quick to add: “There is an emergence, a new wave of businesses in the regions — entrepreneurs who are susceptible to grow and expand outside Quebec in the coming years.”

Cobbett at Stikemans also stresses there are still “significant corporate players around,” listing Bombardier, Quebecor, Air Canada, Gildan Activewear, and Garda World Security Corporation as some of the many examples of companies that maintain head offices in Montreal.

Head office decline
An analytical paper released by Statistics Canada last July entitled Head Office Employment in Canada, 1999 to 2005, states the number of headquarters in Montreal shrank from 596 to 536 during that seven-year period.
But the authors pointed out Montreal continues to be the country’s second most important head office center after Toronto — with Calgary rising quickly.

“Between 1999 and 2001, head office employment in Montreal declined, but since 2001 these losses have been fully recovered,” Desmond Beckstead and W. Mark Brown wrote in their 19-page report.

Although the revival wasn’t strong enough for Montreal to regain its 1999 23-per-cent share of head office employment, they said it had a 21-per-cent share in 2005.

Montreal is also home to more than 60 prestigious world organizations ranging from the International Civil Aviation Organization and International Business Aviation Council to the Asbestos Institute and SITA, a leading service provider of IT business solutions and communications services to the air transport industry.

The industries still driving the local economy are aerospace, information and communication technologies, life sciences, and manufacturing — even though Jauvin says he has closed more plants than he has opened of late.
All agree another key to survival for firms big and small is keeping star staff. Even the industry giants aren’t immune to losing their best and brightest either.

“A lot of very smart, committed young kids are coming out of the law schools [an average of 900 a year graduate from the Barreau du Québec bar school] and the trouble is keeping them,” says Cobbett. “We’ve lost
some very good young lawyers to firms in Paris, London, and Singapore.”

Barbara Shore of Shore & Associates, which specializes in the staffing of senior in-house counsel positions and the strategic recruitment of lateral hires for law firms in Montreal, says the lure of working overseas has become much more accessible for junior and intermediate associates with top skills.

“In addition to the fact that international firms compete with local firms in on-campus recruitment of new grads, legal recruiters are also retained by the major international firms to recruit associates for their office,” she says.

“Keeping star staff has become a complex issue. Law firms are working hard to retain and keep their star performers motivated and committed,” Shore says. “Legal career options are vast and varied. Luring lawyers from one firm to another is more aggressive, and with the recognized acceptance of legal recruiters, the task of identifying and attracting the best is effectively outsourced.”
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