In a market that some might have described a few years ago as less than vibrant and rather confined within the country’s borders, * the Canadian legal market could now more accurately be described as “red-hot.”
Similar to the recent transformation of the Australian legal market, Canada has recently undergone a wave of mergers involving international law firms that has dramatically changed the upper tier of the country’s legal landscape. The largest firms, ranging from approximately 600 to 800 lawyers, such as Gowlings and McCarthy Tétrault, are now competing against global giants, four to five times their size, with major operations in Canada as well as global networks that can provide a significant competitive advantage.
Marking the beginning of this new wave of mega-mergers, Norton Rose Group combined with Ogilvy Renault and South African law firm Deneys Reitz, in a three-way arrangement in June 2011.
Six months later, in January 2012, Norton Rose added Calgary-based Macleod Dixon to the Group, building additional depth in the firm’s mining and energy practices. The move created a firm with more than 2,900 lawyers around the globe, 700 of which are part of the firm’s Canadian operation known as Norton Rose Canada LLP, and ranking it as one of the largest legal practices in Canada. In addition to Macleod’s lawyers based in Canada, the merger also gave Norton Rose** a significant presence in Latin America (60 lawyers in Venezuela and Colombia), a 13-lawyer office in Almaty (Kazakhstan) and a team of lawyers in Moscow.
The most recent combination shaking up Canada’s legal industry is that among US & UK-based SNR Denton and Canada’s top-ranked Fraser Milner Casgrain (FMC) as well as Paris-based Salans. The three-way SNR Denton/Salans/FMC combination will rank the firm as one of the largest law firms in the world with more than 2,500 lawyers. Rebranded as Dentons, the combination is expected to go live in the first quarter of 2013.
FMC has no lawyers or offices outside of Canada, but has strong energy and mining practices – the firm has over 100 lawyers in its Calgary office. The merger will enable the firm to have a greater global reach that will undoubtedly help FMC’s clients conducting business in major international markets. “It really is an opportunity for transformational change for our firm and we think frankly it’s a transformational step in the evolution of the Canadian legal profession,” Chris Pinnington, FMC’s chief executive officer, said in an interview with The Globe and Mail before the firms’ partners voted to approve the merger.
Canadian Law Firm Mergers Announced from 2008 to YTD 2012
By announcement date; Source: Thomson Reuters’ MergerWatch
Smaller Cross-Border Deals
In a similar but smaller combination, Fasken Martineau, which already had a small outpost in South Africa, announced in October that it was merging next February with Johannesburg-based law firm Bell Dewar. Primarily driven by its work for mining industry clients as they seek investment opportunities throughout the continent, the firm believes that the addition of the 76-lawyer Bell Dewar team gives Fasken Martineau the largest international footprint of any Canadian-based law firm. The firm, which has offices across Canada, will have almost 800 lawyers in total, approximately 170 outside its borders, including a substantial presence in London (the result of its 2007 merger with Stringer Saul) and an office in Paris.
And while work in the mining, infrastructure, energy and project finance sectors may be driving many of these deals, insurance work has also been a factor in some of the smaller cross-border mergers. For example, UK firm DAC Beachcroft, which is well-known for its insurance practice capability, and insurance specialist firm McCague Borlack (Toronto) agreed to a formal association this past May, a precursor to a full merger in 2014.
In 2011, another Canadian insurance firm, Nicholl Paskell-Mede (Montreal), joined forces with Clyde & Co, a UK-based global insurance and reinsurance practice powerhouse.
Domestically, most of the mergers were small to moderate in size over the last five years. The largest merger was the combination last year between McMillan and Lang Michener, combining under the single name, McMillan, and creating a firm with close to 400 lawyers across Canada and with a presence in Hong Kong.
Other examples include Toronto’s Miller Thomson, which merged with Balfour Moss, a 24-lawyer firm in Saskatchewan 2010; Halifax-based McInnes Cooper, which acquired New Brunswick law firm Clark Drummie, also in 2010; and McCarthy Tétrault, which expanded its office in Calgary by absorbing Venn Law, a boutique energy firm, in 2011.
Posted by Marianne Purzycki
* Many of the top Canadian firms have had small offices in key international markets such as London and New York for some time, and more recently in China and the Middle East. Very few international firms have branch offices in Canada – Baker & McKenzie, Shearman & Sterling and Skadden Arps are among the handful.
** In mid-November, Norton Rose announced yet another combination. Confirming long-held rumors, the firm reported that it will combine with Houston-based Fulbright & Jaworski on June 1, 2013 to form 3,800-lawyer Norton Rose Fulbright.