The 2006 Who's Who
in Canadian Law Firms:*
International Players, Domestic Heavyweights and High-Performance Boutiques
John Alexander Black
“A lawyer without history or literature is a mechanic, a mere working mason;
if he possesses some knowledge of these he may venture to call himself an architect.”
—Sir Walter Scott (1771–1832)
*This article orginally appeared in January of this year in the 2006 LEXPERT® American Lawyer Guide to the Leading 500 Lawyers in Canada, which is published each year by LEXPERT® and American Lawyer Media Inc. for US in-house counsel. The article may of course be of equal interest to Canadian in-house counsel, as well as law firms across Canada generally, and for this reason is reproduced here in its entirety.
For many US in-house counsel, serving their corporate clients means handling a growing number of matters outside the United States. Globalization in its various manifestations, such as the North American Free Trade Agreement (NAFTA), has generated a raft of new problems for in-house counsel, including the identification and selection of outside counsel in foreign countries.
Altman Weil Inc., a leading US legal consultancy, and the Association of Corporate Counsel (ACC) recently conducted a survey of chief legal officers. Detailed responses to many different questions, including those about problems raised by globalization, were received from 77 senior in-house counsel. It is noteworthy that 39 per cent of these chief legal officers felt that identifying the right outside non-US counsel was one of the greatest challenges globalization created for them. The purpose of this publication is to assist US corporate counsel in such matters with respect to Canada.
US/CANADIAN CROSS-BORDER MARKET
Since 1994, when NAFTA gave rise to a continental North American market, Canada's trade and economic integration with the United States has increased dramatically. Exports to the US now comprise an astonishing 84 per cent of Canada's international trade. Imports from the US constitute an equally impressive per cent of all imports into Canada. Every Canadian province, with the exception of two in Atlantic Canada, carries on a more extensive trade with the US than with the rest of Canada.
US/CANADIAN CROSS-BORDER LEGAL SERVICES
Given the significant integration of the US and Canadian economies, it is somewhat surprising that few US law firms have offices in Canada. Of those that do, the best known are Baker & McKenzie (Toronto and Calgary), which practises Canadian law, and Shearman & Sterling and Skadden, Arps, Slate, Meagher & Flom, which limit themselves to US law and have offices in Toronto. Other US firms with Canadian offices are Dorsey & Whitney (Toronto and Vancouver) and Hodgson Russ (Toronto), which also limit themselves to US law. Miller, Canfield, Paddock and Stone, principal office Detroit, Michigan, has recently entered the Canadian market by merging with a Windsor, Ontario, firm practising Canadian and US law.
An interesting variant on opening in Canada has been a number of affiliations or strategic alliances. For example, in 2000, New York–based heavyweight Fried, Frank, Harris, Shriver & Jacobson entered a sector specific (cross-border corporate and financing work) strategic alliance with McCarthy Tétrault, one of Canada's most prestigious national law firms.
While a number of top-ranked Canadian-based firms have New York offices (see the law firm league tables following page A-8), there is no question that the most high-profile cross-border firm is Torys, which has offices in Toronto and New York. Torys is the only leading Canadian law firm that, by way of its full-service New York office (70 lawyers), provides seamless cross-border corporate legal services.
The relative absence of US firms in the Canadian market can be best explained by two factors: money, and secondly, the ability to make more money more easily in other markets.
Generally speaking, the profitability of top Canadian firms is comparable to that of what are considered second-tier US majors, especially if one is holding up as benchmarks the likes of New York's Wachtell, Lipton, Rosen & Katz or Sullivan & Cromwell. Fees charged by leading Canadian firms pale in comparison with fees charged by top New York firms. They also pale in comparison to fees charged by top UK firms such as Slaughter and May or Freshfield Bruckhaus Deringer.
The second factor is the size of the Canadian market. It simply makes more business sense for an expansion-minded US firm to enter the European Union (market size approximately that of the US) via London, England, or major US regional markets, some of which, like California, are more or less a compact equivalent of the entire Canadian market. And fees earned are in US dollars. And further, as more than one US managing partner has pointed out, Canada is a mature legal market well served by very able domestic firms. Why would you want to go head-to-head with firmly established players who bill out in Canadian dollars?
However, notwithstanding the absence of any meaningful physical presence, US firms have long-standing suitcase relationships with the Canadian market. Indeed, historically, it has often been surprising the amount of legal work carried out by US firms at US rates in US dollars on the Canadian component of a cross-border transaction, as opposed to the work being done by Canadian firms at Canadian rates in Canadian dollars. For American firms it has been, as Ira Gershwin noted, nice work if you can get it. Or, as one senior US attorney, speaking off the record, recently put it: “…[W]e see [the Canadian component of US-based transactions] as essentially low-hanging fruit.”
The CANADIAN MARKET—LEGAL TALENT
The balance of this article examines where the top legal talent in Canada resides in three areas of particular interest to US in-house counsel, i.e., corporate, intellectual property and technology.
Two points of definition need to be emphasized. First, the bull's-eye charts that follow do not constitute head counts as to what firms were involved in the greatest number of major corporate transactions or financings. What the bull's-eye charts represent is an analysis of the survey work for the 2005 editions of The Canadian Legal LEXPERT® Directory and its sister publication, the 2005 LEXPERT®/American Lawyer 500. This survey work is designed to identify, on the basis of peer review, who the Canadian legal profession itself regards as the top lawyers in various practice areas.
For purposes of the 2006 LEXPERT® Directory, 14,238 detailed questionnaires were sent to lawyers prominent in their respective fields and to in-house counsel and other knowledgeable users of legal services. Of these, 8,000 completed questionnaires were received back, providing a response rate of 56.2 per cent.
Second, the practice areas examined by way of the charts are composites. For example, in determining the corporate ability of firms, we have collated the survey work in eight practice areas: i.e., banking, competition, corporate commercial law, corporate finance, corporate litigation, corporate tax, insolvency and corporate restructuring, and mergers and acquisitions. We have adopted this approach because, in our view, these are the core competencies required by a first-rate corporate practice given current market demands. A similar approach has been taken with the other practice areas addressed by the charts.
All of the bull's-eye charts on the following pages are plotted according to the following formula, based on the survey results for the 2005 publications:
CORPORATE WORK: WHO'S WHO TORONTO
- 1.5 points for each lawyer at a firm who is included in the 2005 LEXPERT®/American Lawyer 500 as a leader in one of the noted practice areas, to a maximum of 4.5 points for any individual;
- 1 point for each additional lawyer whose name appears in any of the noted practice areas in the “Most Frequently Recommended” tier in the 2005 LEXPERT® Directory;
- 0.75 points for each additional lawyer whose name appears in the “Consistently Recommended” tier in the 2005 LEXPERT® Directory;
- 0.5 points for each additional lawyer whose name appears in the “Repeatedly Recommended” or “Up and Coming” tier in the 2005 LEXPERT® Directory; and
- 0.25 points for each additional section, for those lawyers whose names appear in more than one section of the 2005 LEXPERT® Directory.
Toronto is the financial capital of Canada, much the same way New York is the financial capital of the United States. It is home to most key financial institutions and boasts the highest number of corporate head offices. A considerable amount of the legal work in Canada is quarterbacked out of Toronto. It is thus no surprise that many of the most important law firms in Canada are based in this city.
On page A-8 there is a chart listing Canada's 30 largest law firms. It is of limited use. In Canada, as in the US, size alone is of little value in accurately pinpointing who's who. Of the five largest law firms listed on the largest law firm chart, only McCarthy Tétrault is seen by the market as belonging to the top tier. The other four firms, well regarded in their own right, are the new kids on the block who are determined to break into the top tier. These nouveaux nationals—Borden Ladner Gervais LLP (BLG); Gowling Lafleur Henderson LLP; Fraser Milner Casgrain LLP; and Fasken Martineau DuMoulin LLP—were formed during the wave of law firm mergers that swept Canada during 1998–2000.
In Toronto in corporate matters there is a magic circle of firms, sometimes referred to as the Seven Sisters, that are invariably involved in most transactions of importance. These firms, in alphabetical order, are:
Chart 1 Corporate - Toronto (Total Scores)
- Blake, Cassels & Graydon LLP;
- Davies Ward Phillips & Vineberg LLP;
- Goodmans LLP;
- McCarthy Tétrault LLP;
- Osler, Hoskin & Harcourt LLP;
- Stikeman Elliott LLP; and
- Torys LLP.
In Toronto, there are over 14 law firms with first-, second- and significant mid-tier practices. Chart 1 above clearly illustrates the front-rank position of the seven firms noted above. On the basis of acknowledged leading lawyers in the eight practice areas combined to arrive at our corporate bull's-eye charts, these seven firms consistently cluster together at the core of the bull's-eye.
Chart 2 Corporate - Toronto (Scores Relative to Firm Size)
Not surprisingly, a somewhat different rank ordering results when the corporate scores are adjusted relative to firm size, as shown in Chart 2 with Davies at the centre of the bull's-eye. This is probably no different from the New York corporate market where a firm like Wachtell, Lipton punches well above its weight.
In Montreal, in corporate matters, there is a general consensus that the benchmark firms, in alphabetical order, are:
Chart 3 Corporate - Montreal
- Davies Ward Phillips & Vineberg LLP;
- Ogilvy Renault LLP; and
- Stikeman Elliott LLP.
The size and breadth of the practices of these firms place them squarely in the top rank. Each of these firms has multiple senior counsel whose seasoned judgment in difficult legal and business matters is acknowledged. All three firms have great depth in the key practice areas central to the success of major transactions. Of the trio, Ogilvy Renault is often spoken of as primus inter pares. Senior Ogilvy partners include the Right Honorable Brian Mulroney, 18th Prime Minister of Canada, and L. Yves Fortier, former Canadian ambassador to the United Nations.
Chart 4 Corporate - Montreal (Relative to Firm Size)
Of note is the office of McCarthy Tétrault, which has recently strengthened its position in the Montreal market. Warranting special comment is the Montreal office of Toronto-based Osler, Hoskin & Harcourt which, in the short period of five years, has rapidly established itself in the Montreal market as a significant corporate competitor.
In Canadian corporate and financial markets, the Calgary-Toronto corridor is extremely important. As Canada's energy capital and home to the second-largest number of major head offices in the country, Calgary generates the economic power base necessary to sustain heavyweight corporate practices.
Chart 5 Corporate - Calgary
Bennett Jones; Burnet, Duckworth & Palmer; and Macleod Dixon are seen as the premier corporate firms in Calgary, with Bennett Jones generally regarded as primus inter pares.
What is interesting about Calgary, and probably reflective of the national and international dynamism of that marketplace, is the strength of the firms arrayed against the three front-runners. Providing stiff competition on practically every front are Blake, Cassels & Graydon; Borden Ladner Gervais; Fraser Milner Casgrain; and McCarthy Tétrault.
Warranting special comment is Felesky Flynn, which devotes its practice to taxation and has offices in Calgary and Edmonton. Like its counterpart in Vancouver and Toronto, Thorsteinssons, Felesky Flynn enjoys a national reputation for its work in this complex field.
The pre-eminent corporate firms in the Vancouver market, in alphabetical order, are:
Other major-league players in the Vancouver market are Blake, Cassels & Graydon; Bull, Housser & Tupper; Davis & Co.; Fasken Martineau DuMoulin; Fraser Milner Casgrain; and McCarthy Tétrault.
- Borden Ladner Gervais LLP;
- Farris, Vaughan, Wills & Murphy LLP; and
- Lawson Lundell LLP.
Warranting special comment is Thorsteinssons, which devotes its practice to tax and has offices in Vancouver and Toronto.
Chart 6 Corporate - Vancouver
MacPherson Leslie & Tyerman is regarded, certainly in the key Toronto and Calgary markets, as the major-league corporate firm from Saskatchewan.
The corporate practices in Winnipeg most frequently recommended to us, in alphabetical order, are:
With multiple partners in those practice areas central to the success of any major transaction, these four are widely regarded as the premier firms.
- Aikins, MacAulay & Thorvaldson LLP;
- Fillmore Riley LLP;
- Pitblado LLP; and
- Thompson Dorfman Sweatman LLP.
Halifax is the financial and business centre of Atlantic Canada. It is also home base for the three dominant pan–Atlantic Canada law firms, which are:
All three firms have extensive corporate practices. There is, nevertheless, a strong view, particularly among the major Toronto firms that are regularly engaged in Atlantic Canada megaprojects, that Stewart McKelvey Stirling Scales is the premier corporate firm.
- Cox Hanson O'Reilly Matheson;
- McInnes Cooper, and
- Stewart McKelvey Stirling Scales.
Chart 7 High Tech - Toronto
TECHNOLOGY WORK: WHO'S WHO
Technology work in Canada, to a considerable degree, is dominated by a number of well-known Toronto and Ottawa practices, with a select number of Montreal practices included in this exclusive group. This concentration of legal talent reflects the economic strength of the Toronto-Ottawa-Montreal triangle anchored by Toronto, and the singular importance of the technology corridor that runs from southwestern Ontario to the Ottawa Valley and into Montreal.
In technology work, many practitioners are of the view that Toronto and Ottawa are for, practical purposes, one entity. For this reason, we have compiled two charts for Ontario, Chart 7 limited to Toronto scores and Chart 8 combining Toronto and Ottawa scores.
Chart 8 High Tech - Toronto & Ottawa
Chart 9 High Tech - Montreal
INTELLECTUAL PROPERTY: WHO'S WHO
Like technology, intellectual property (IP) work in Canada, to a considerable degree, is dominated by a number of well-known Toronto, Ottawa and Montreal firms. This concentration of legal talent again reflects the economic strength of the Toronto-Ottawa-Montreal triangle as well as the historical importance of the federal patent and trademark administrative and judicial offices being located in Ottawa.
As with technology, many IP practitioners are of the view that Toronto and Ottawa are, for practical purposes, one entity. Again, we have compiled two charts for Ontario, Chart 10 limited to Toronto scores only and Chart 11 combining Toronto and Ottawa scores.
Chart 10 IP - Toronto
It is important to note that many leading IP practitioners have national practices, with their work in no sense being limited to the city where the firm has its principal office. The Toronto, Ottawa, Montreal, Vancouver and Edmonton offices of the IP boutique Smart & Biggar warrant special comment, however, in that it is the only law firm in this practice area with multiple offices and leading lawyers in major centres across Canada.
In Canada there are a surprising number of IP boutique practices that are not only the principal competitors of the major full-service firms in this field, but are thought by many to be the market benchmark, i.e., Bereskin & Parr in Toronto and Léger Robic Richard in Montreal. While no one questions the sterling reputation in IP of a major full-service firm such as Gowlings, which for many national and international clients is the first port of call, there are a number of aggressive new entrants to the market, such as the boutique practices of Deeth Williams Wall and Dimock Stratton, both in Toronto, which are giving the major full-service firms a run for their money.
Chart 11 IP - Ottawa/Toronto
Chart 12 IP - Montreal
By definition, this executive summary provides a very broad overview as to who's who in Canadian law firms. For the most part, the focus has been corporate work. The LEXPERT® Directory may be accessed on our website at www.lexpert.ca.