The premier weekly newspaper for the legal profession in Ontario
Issue link: https://digital.lawtimesnews.com/i/51538
news Muddling through the economic storm Canada avoids U.S. bloodbath BY GAIL J. COHEN The announcement of Hyndman was notable as the former B.C. securities chief had been a detractor of the plan for a single regulator. Then, in July most provinces announced the harmonization of secu- rities laws across Canada. These laws would be in force by the fall of 2009. A key to the harmonization was the implementation of a passport system. This would allow registrants — dealers who trade in securities and advisers who manage investors' money largely on a discretionary basis — to get approval for other provinces through the click of a box on a computer system. Under the old system, applicants would apply to their own provincial commission, after which the other regu- lators had three days to make a decision on registering them elsewhere. But for the most part, they would accept the principal body's decision unless they were aware of bad behaviour leading them to conclude otherwise. The new system streamlines the process. The only holdout on the pass- port system is Ontario. However, the Ontario Securities Commission will operate an interface allowing the province's own dealers and advisers to register elsewhere automatically. The final major decision on a single national securities regulator, prior to the advisory council announcement, was the federal government's decision to seek the Supreme Court's opinion on the constitutionality of its pro- posed new body. In going ahead, federal Justice Minis- ter Rob Nicholson spoke of his belief that Parliament has the authority to enact a comprehensive federal securities act. "In coming to this view, the govern- ment is supported by many of Canada's foremost constitutional experts. How- ever, for greater certainty, we will be asking the Supreme Court for its opin- ion, which is why we are proceeding with this reference." T his time last year, as the bottom fell out of the economy, the legal profes- sion was not left out of the general public's ensuing anxiety attack. Canadian lawyers and law firms, however, managed to weather the storm a lot better than our counterparts to the south. In the United States and even in England, law firms were slashing associ- ates, shedding partners, pushing back associate start dates, and even cutting associate salaries. At least 10 international firms laid off between 120 and 279 (at White & Case LLP) law- yers, according to the fabulous aggregated charts and graphs at lawshucks.com. It may have appeared like a "They're all going to be very quiet about it 'All of a sudden, we came back from the holidays in September, and deals which clients were putting off or which had been moving along but at a slow pace all of a sudden picked up,' said Vanessa Grant. bloodbath, but in many cases, the changes were a necessary adjustment to a system that had become too bloated to sustain itself. In New York, for example, first-year associates without even the benefit of articles were being brought in at salaries of US$165,000 a year. Clients balked at having to support those salaries as their business dried up. As the economy slowly recovers and the number of lawyers in those firms has become more reasonable, obviously the number of lay- offs in the last quarter of 2009 has been lower. Still, Canada's legal landscape was not buf- feted by such harsh winds of change. The first really bad news hit in mid-Janu- ary when Cassels Brock & Blackwell LLP laid off 38 support staff. Over the course of the year, a few other law firms admitted to laying off some support staff as well. No layoffs of lawyers at any Canadian firms were ever publicly linked to the decline of the economy. But in reality, the market did play a role and, particularly early in the year, there were "stealth purges," legal recruiter Adam Lep- ofsky of RainMaker Group told Canadian Lawyer Associates magazine in the spring. He said law firms were laying off associ- ates but under the guise of regular attrition, performance issues, or not fitting in with the firm's team. . . . and that's all about the image and protect- ing it, it's all public relations," said Lepofsky. "They don't want to be seen as the firm or one of the firms that are in bigger trouble than somebody else, that they're not doing as well as someone else." The number of hire-backs of articling stu- dents declined slightly across the board in 2009, but gener- ally law firms made it clear it was not in their best interests to cut the number of students they were looking to bring on board. "You almost have to really focus on where you think the economy will be in a couple of years and not focus too much on the economy right now," Blake Cassels & Graydon LLP's Mary Jackson told Associates. While it is hard to measure the dollar value of lost business due to the faltering economy, managing partners of many firms have admitted their lawyers through most of 2009 were not as busy as in previous years. The hardest-hit areas included mergers and acquisitions, securities law, and many other business-related practice areas. But other areas such as labour and employ- ment, insolvency, and litigation didn't really suffer at all. As the year wore on and the economic news became less bleak, there were already signs of improvements in the legal scene. "All of a sudden, we came back from the holidays in September, and deals which clients were putting off or which had been moving along but at a slow pace all of a sudden picked up," McCarthy Tétrault LLP partner Vanessa Grant told Law Times in late September. But even as the economy improves, law firms will continue to grapple with how to deal with their clients' biggest concern with legal services: cost control. In the recently released Canadian Lawyer annual corporate counsel survey, costs topped the list of issues in-house lawyers want their legal service pro- viders to be most cognizant of. 2009 top news & newsmakers 11