Law Times - Newsmakers

10 December 2015 top stories Law firm mergers heat up once again But don't expect similar activity in 2016, consultant suggests THE PAST YEAR saw several mergers between large international and Canadian law firms, but don't expect that trend to continue in a big way in 2016, says an industry consultant. "I do see some [merger] activity con- tinuing in 2016 but I suspect that that will generally not involve the largest Cana- dian firms," says Tony Williams of Jomati Consultants LLP in London, England. "Although Canada is an important economy, the leading firms have good relationships with a range of interna- tional firms and, as a result, the top-level international firms don't see a pressing need to develop their own Canadian practice." Williams says the slowdown in the Canadian economy and the weakness of the Canadian dollar would make any such combinations more challenging unless they used a Swiss Verein type of structure. The comments come as merger activ- ity continued on the international front last month. On Nov. 2, Reuters reported that Dentons had reached a deal to merge with 500-lawyer Australian firm Gadens and 200-lawyer Singaporean firm Rodyk & Davidson LLP. If the merg- ers are approved, integration will likely take place early next year, according to Reuters. In June, Dentons signed non-disclosure agreements with 21 firms in Europe, Asia, and Latin America. The move followed Dentons' agreement to combine with Chinese firm Dacheng earlier in the year. On the Canadian front, Gowling Laf- leur Henderson LLP announced a plan in July to merge with Britain-based Wragge Lawrence Graham & Co. to create a new international firm with more than 1,400 lawyers. The new firm, Gowling WLG Inter- national Ltd., officially launches in January 2016 and will have offices in 18 cities across Canada, Britain, Asia, the Middle East, and Europe. Gowlings is currently one of the five largest law firms in Canada with more than 750 lawyers. Unlike Dentons, Gowling WLG won't follow the Swiss Verein model. Gowling WLG will operate as a com- pany limited by guarantee, a scheme that creates an umbrella organization of which WLG and Gowlings will be members. An international board compris- ing each of the founding firms' chief executive officers and two additional representatives from each of them will govern the new entity. Prior to the Dentons and Gowlings deals, Davis LLP became DLA Piper (Canada) LLP after merging in March with DLA Piper LLP, a firm with 4,200 lawyers around the world. DLA Piper, which had been seeking a Canadian pres- ence for some time, initially approached the Canadian firm, said Robert Seidel, Davis' managing partner. "The Canadian marketplace is only so big," he said, suggesting Canada, with the arrival of the Norton Rose Fulbright and Dentons brands in recent years, is "catch- ing up to the phenomenon" of the global law firm. DLA Piper will operate on the Swiss Verein model with the firms retaining their own profit centres. Davis had ranked as the 14th-largest law firm in Canada with 251 lawyers. With the new arrangement with DLA Piper, Seidel said he expected the firm's growth to accelerate. This past year also saw Littler Men- delson PC snapping up almost all of the lawyers from a well-established Toronto boutique practice. Claiming to be the world's largest labour and employment firm representing management, Littler Mendelson opened an office in Toronto in August with seven lawyers. All but one of the seven, office managing shareholder Sari Springer, are from Kuretzky Vassos Henderson LLP. It's the latest move in a series of expansions Littler Mendelson has been undertaking recently, especially in North, Central, and South America, the firm said. It now has more than 1,000 lawyers in 67 offices. "As law firms come to terms with rela- tively limited growth in their domestic market, there will probably be a range of discussions between international firms," says Williams. "It's quite clear that many law firms are now much more cautious about opening their own greenfield operations interna- tionally as they are seen as very expensive and producing mixed results. Accordingly, combinations involving leading firms or teams from leading firms are more likely. "That being said . . . I still think it unlikely that a major Canadian firm will formally combine with a leading U.S.- or U.K.-based firm during the course of 2016." Tony Williams doesn't expect much Canadian activity on the international law firm merger front next year. BY PATRICIA CANCILLA

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