Calgary: Resilience of oil town lawyers put to test

Calgary: Resilience of oil town lawyers put to test
“It’s hold on to your hat,” says Joe Lougheed. “Don’t get bucked off and look to the future.” That is his straight-from-the-hip assessment about business, and specifically the law business, in Calgary these days.
Lougheed is a partner with Dentons LLP and a member of one of the oldest and most storied families in Alberta.

The Lougheed family knows only too well Alberta’s glorious booms as well as its painful, discouraging, and devastating busts. There has been a member of the family in the law in Calgary in every generation since 1882. Lougheed knows this city and the province like few others. He says law firms are not immune to Alberta’s current economic realities, but he characterizes the mood in the city’s law offices as “guarded yet optimistic for the long term.” In Lougheed’s view, the oil and gas industry is undergoing global changes and Calgary is part of that. “We are in this together with our clients and we will come out of this cycle with them, too.”

Take a walk around Calgary’s downtown and you can’t miss the evidence of the collapse in the price of oil. There are a lot of “For Lease” signs on empty offices. With a commercial vacancy rate in the 18-per-cent range, the lunchtime crowds are smaller, the sidewalks quieter, downtown restaurants are closing, and rush hour is not quite as busy. Residential real estate has gone very, very cold. Even Calgary’s taxi industry had a million fewer riders last year, and prime downtown parking, once the second most expensive in North America after New York (a sort of weird boasting point during boom times), has become a comparative bargain. That is what the province-wide loss of tens of thousands of jobs has done to this city. And among those losing their jobs are lawyers.

The epicentre of the layoffs is, of course, the oil and gas sector, where everyone is getting hit from janitors to geologists to corporate counsel. “We don’t have exact numbers,” says Kate Ryder, an in-house lawyer in Calgary with a major energy company. She is also chair of the Southern Alberta branch of the Canadian Corporate Counsel Association. “We are certainly seeing an increased number of members who are seeking work and are not currently employed,” says Ryder. “There is a lot of uncertainty out there and a very limited number of jobs” and she is seeing more corporate counsel accept contract or short-term positions. “These are people who wouldn’t normally take that kind of work.”

Some in-house lawyers are looking to move elsewhere, but that is an extraordinarily unattractive strategy for anyone owning real estate. With Calgary’s soft housing market, selling now would almost certainly result in a loss, potentially a substantial loss, for anyone who bought property in the last decade. “The timing is terrible,” says Ryan. Nevertheless, some former in-house lawyers are taking a deep breath and moving out of the province.

In spite of the savaging of the energy industry’s corporate counsel in Calgary and Alberta, the CCCA still held its national conference in Calgary earlier his month. “You might call it a vote of confidence for those who are out of work., says Ryder. “We will recover.”

 “Lawyers work in a sea of money” is the colourful way John Brussa, vice chairman of law firm Burnet Duckworth & Palmer explains the law business. “Law firms are reacting to the fact there is less money in the system.” As a result, he says legal work surrounding mergers and acquisitions and financing is down, while insolvency work is “probably a growth business.” As he painfully points out, “with $30 oil there are lots of defaults. In Brussa’s estimation, regulatory work is the least affected. However, when the ups are balanced against the downs, “the law business is down,” he says.

The veteran corporate law leader has had some emotional meetings in his cluttered corner office with clients as well as some younger lawyers in his firm. “People are afraid,” he says. “I’ve spent a bit of time keeping spirits up, telling people not to panic.” He points out he has been through the downturns of the ’80s and ’90s when a lot of dreams for a lot of people died. “It’s hard to see the sun at the bottom of the well,” he says philosophically, “but I can see the sun.”
At Dentons, Lougheed recalls going though some steep downturns when he was a young lawyer. “If you want to stick to the Calgary analogies,” he says, “this is not my first rodeo.” He agrees with Brussa that in any firm with a diverse client list there are going to be winners and losers. “Sadly, insolvency becomes more active.” But he points out things are not all bad. For ranching, agribusiness, and tourism, “there are some benefits to the low dollar; the sky is not falling.”

At Alberta-based Field Law, managing partner Jim Casey says, “We are bracing for a very challenging 2016,” but his firm is also seeing opportunities. One is the availability of significantly discounted rental office space. As a consequence, Field is moving its Calgary operations to a new downtown location this fall. In Casey’s view, “this downturn is the worst I will have seen in 30 years of practice.” But the firm can trace its roots back 100 years in Alberta, and Casey says it is confident enough to take a counter-cyclical approach and has not cut either lawyers or support staff. “One of the greatest challenges of law firm leadership is thinking of the big picture. The recovery will come.”

Jay Park, of Calgary-based Park Energy Law, spends a fair amount of time in London, England because his oil-and-gas-based practice has a global reach. Park has been an Alberta lawyer for 35 years and has lived through four major oil downturns. Canadian Lawyer found him in his London office. He is philosophical. He points out that energy law firms tend to be driven by transactions and disputes. He says there has been an uptick in disputes because in hard times “people tend to be more intransigent.” But Park says, “We have not yet seen the divestment and acquisitions activity common in prior downturns.”
However, he believes “there is a pent-up demand” for that to start happening as soon as people are confident the price of oil has bottomed out.

Such a scenario, of course, would be good for law firms in the energy sector such as Park’s and he is confident there is more transaction work on the horizon. “Buyers with assets would like to buy oil and gas properties at a low price, but there are not yet sellers ready to enter into transactions on those terms.” He thinks that may start happening later this year. He bases his prediction on the old line: “The cure for low prices is low prices.”

Those low prices are having an impact beyond just the corporate towers. Wayne Barkauskas is a Calgary family lawyer with Wise Scheible Barkauskas as well as being president of the Alberta branch of the Canadian Bar Association. He says while the business of family law “remains almost recession-proof,” billing has become an issue with more clients facing cash-flow issues. And that, he says, is a problem, “especially for young family law lawyers. They have fewer resources to withstand that kind of thing.”

Money problems are everyone’s problems, notes Barkauskas. As an illustration, he points to a shift in the root cause for many of the marital problems his clients are dealing with. “When times are good and people break up, they usually fight about money. When times are bad, people break up and fight about whose fault it is they don’t have enough money.”

In the Calgary law business as a whole, Barkauskas is not aware of any specific job loss numbers, but “anecdotally, lawyers are losing their jobs as much as anyone else.” He says “the people being affected the most dramatically are young lawyers, they’re always the first to be let go, and, of course, students seeking articles.” His firm has been contacted by a huge number of law students. “It’s never been like this before, not even close.” He says unless someone really wants to do family law they rarely apply for articles with a firm such as his because “the experience is necessarily more limited.” But now the wave of applications “tells me the bigger firms are hiring fewer students.”

Barkauskas’s advice to unemployed lawyers and students, in fact to the whole profession, is “be flexible.”
He tells his own story of how he was once in-house counsel for Canadian Airlines. But when it “imploded,” as he puts it, in 2000, and hundreds of people lost their jobs, he made a dramatic career transition. It was a transition that surprised even him. “I hated family law,” he says, “but when I stuck my toe in it, turned out I loved it. I tell young lawyers you don’t find your career; your career finds you.”

The courtrooms and hallways in Calgary’s downtown Courts Centre are as busy as ever. A lot of people think bad times will be good for members of the criminal bar. It is not quite as simple as that, says Andrea Urquhart, who has been a criminal lawyer in Calgary for about five years. She and three other lawyers have just opened a new firm, Roulston Urquhart Criminal Defence. Urquhart says they are all working hard to make it a success. “It would be fair to say everyone is feeling the impact of the downturn,” says Urquhart. “There is work; it’s just the type of work that is changing.”  That doesn’t necessarily mean a reduction in clients. What is changing is the way the clients pay for their defence.

In good times, a high-rolling oil worker, charged with assault, for example, would think nothing of laying out top dollar for a good lawyer, but those kinds of clients have pretty well dried up. “They’re still getting assault charges,” says Urquhart, “but they just can’t afford a lawyer to help them with it. So we’re seeing a lot more legal aid files.” The legal aid fee scale is, of course, significantly below what most private clients are charged, and legal aid itself is struggling because of underfunding by the cash-strapped Alberta government. “I think we’re all feeling the hit. But as a young lawyer, the downturn can impact you in ways it may not impact people who have been at the bar for 20 years.” Urquhart says the dwindling stock of private retainer clients tends to rely increasingly on more established practitioners.

But she isn’t discouraged. “Calgary always tends to come back from these kinds of downturns; it’s got a lot of energy. There’s still a lot of people who need the help of criminal defence lawyers.” But she admits, “We are all feeling cautious.”

There is at least one area of the law that has not been hit by the recession: personal injury law. “People are always going to get into accidents,” says Litwiniuk & Co.’s managing partner Todd Litwiniuk. Because Litwiniuk, like most personal injury firms, operates on a contingency fee basis, “no costs up front, no costs during litigation,” clients only pay legal fees if they win their personal injury lawsuit, and most successful suits include fees in the settlement. In fact, Litwiniuk & Co. has expanded. Last month, it opened a new branch office in the south part of Calgary and it may soon be hiring. Fred Litwiniuk, Todd’s brother and a partner in the firm, points out that during bad economic times business can sometimes improve because unemployed people lack the safety net provided by a regular job. “Typically, when things go bad, they’re more likely to resort to the legal system.”

However, with few exceptions, the law business is feeling this recession. But Calgary would not be loved and hated across the country if it was full of complacent quitters. Most businesses including the law business are tightening belts, cutting frills, and not turning down any clients. The mountains remain eternal just an hour’s drive from the city and visible from the office towers downtown. The air is clean, and the sparkling Bow River runs right through town. “This has got to be one of the best places to live and practise law in Canada,” says Lougheed, an undaunted and unabashed ambassador for the city in both good and bad times.

For senior lawyers, such as Lougheed, confidence in Calgary and its economy remains unshaken. The across-the-board consensus is that things will “settle down” in about a year. “Calgary is resilient,” says family lawyer Barkauska. He points to this city’s history: “Most people came to Alberta with nothing, so it is a pretty optimistic culture.” As for getting through the province’s current hard times, “We’ll weather it,” he says. “We always do.”

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