Law Times

Page 10 November 28, 2016 • Law Times www.lawtimesnews.com Law firm mergers heat up again BY JIM MIDDLEMISS For Law Times A recent spate of con- solidations in the legal community has once again put mergers on the radar screen of Canada's in- dependent law firms. In the past few months, Van- couver's Bull Housser & Tup- per LLP merged with Norton Rose Fulbright LLP, while IP boutique Dimock Stratton LLP joined DLA Piper (Canada) LLP, which swallowed Davis LLP last year. In September, MacPherson Leslie & Tyerman LLP and Ai- kins MacAulay & Thorvaldson LLP hooked up to form a re- gional, Western-based power- house. These mergers show that in- dependent law firms continue to fall prey to global and regional mergers. University of Calgary Fac- ulty of Law dean Ian Holloway says we are in a new phase of mergers. The first in the 1990s built out the national law firms. The current wave is building out the international law firms or larger regional firms. He says law firm leadership needs to critically examine the benefits. He's worried some of the mergers he's seen in the past few years lack strategy and some are more like a couple "having a kid to save the marriage." So, what is the path ahead for independent law firms? Can they still stand alone in a merging world or should they throw their lot in with bigger entities? What's the advantage in doing so? Maria Scarfo, managing partner at Toronto law firm Blaney McMurtry LLP, says her 125-lawyer firm has tired- kicked merger offers over the years. So far, she says, "We don't see any advantage to it." Those inquiries have come from a variety of firms, she said, including an international firm. "It wasn't attractive at all," she says, adding that one set of discussions "made me run away very quickly." Part of the issue is that Blaney McMurty LLP has little history of growing through mergers. Its growth has been organic. So a merger would be a major shift, notes Jim Edney, a partner at Blaney who has participated in such discussions. Mergers have "not been part of our strategy," he says. Edney adds that Ontario is a "lucrative" market, and when his firm has had discussions with others "we couldn't see what they were going to give us." Contrast that approach with the former Fraser Milner Casgrain LLP, which merged with an international firm in 2013 and is now part of the fast- growing Dentons LLP. Chris Pinnington, chief exec- utive officer of Dentons Canada LLP, says his firm has experi- enced a number of positive out- comes from taking the plunge into the waters of an inter- national firm. For example, he says, from a recruitment standpoint, the merger has proved beneficial and provided a "competitive ad- vantage," critical in a business that relies on people. When Heenan Blaikie LLP blew apart, a sizeable chunk of the practice moved to Dentons. Pinnington attributes that to the platform it was able to offer. "It has expanded our opportun- ity to recruit top talent across Canada." The size and scale of the firm has given it the heft to build out its brand, he adds, pointing to the Acritas Global Elite Brand Survey, where Dentons is now in the top 10. "It has enhanced our stand- ing in Canada," he says. It's also helped the firm gen- erate business domestically and globally. For example, it now has access to requests for proposal in which it might not otherwise have been asked to participate. Elliott Portnoy, Dentons' global CEO, says a law firm is not truly international unless it has a Canadian arm. "If you are not in Canada, you are missing an important piece of the legal marketplace," he says, so the merger has added to Den- ton's overall bench strength and its ability to service clients and land work abroad. Portnoy questions the path forward for small and mid-sized firms. "Right now, our profession is characterized by stagnant client demand and competition from new market entrants. "If you are a new lawyer com- ing into the profession, the last place I would want to be is a small or mid-sized law firm," he says. Edney, however, points out that not every client needs an international law firm. He says 80 per cent of his firm's top 100 clients fall within 25 kilometres of Blaney's office. "We can service their needs," he says. U.S. law firm consultant Altman Weil, Inc. has tracked 68 U.S. law firm mergers so far in 2016, the majority of which involved less than 100 lawyers. Mergers are on pace for a record year. Thomas Clay, a consultant at Altman Weil, says the key to survival for independent and mid-sized firms in a consolidat- ing market is differentiation. What is it that sets a firm apart from the pack? "The change curve has gotten so much steeper," Clay says of the evolving market for legal servi- ces. "Clients look at things that differentiate service providers from each other." That could be through "tech- nical expertise," "service meth- odology" and delivery or even geography. It's "being the trusted ad- visor," he says, where mid-tier firms can excel. "It always goes back to mak- ing sure you know what you are trying to do and have a plan," Clay says. One of those plans, of course, is succession, particularly with the greying of the bar. That was one factor of many that drove Dimock Stratton LLP to look for a merger part- ner and become a significant Canadian IP arm of DLA Piper (Canada). Ron Dimock, who spent 29 years at Sim Hughes Dimock LLP and another 22 at Dimock Stratton, says "consideration was given to the evolution of the firm" and long-term plans. He is 67 years old now and plans to practise for "several more years," but the question was where would be the best place for that to take place to benefit all the partners going forward, given an evolving legal market, particularly when it comes to the firm's specialty, in- tellectual property? Dimock notes that pharma- ceutical litigation, which has driven patent law for the last two decades, is expected to drop off due to legislative changes. The pharma manufacturers, he says, "are not as litigious as they were." As well, IP law has become very international in scope. While the firm had discussions with many others, it landed on DLA Piper (Canada), which he says was made more attractive by the acquisition of Davis LLP by DLA Piper LLP (US). It was also a chance for the group to become a key part of the IP needs for the entire firm, and DLA Piper (Canada) was willing to take in the whole group, though a few lawyers were expected to remain on their own. "We really like what we do and we like doing it together," Dimock says. LT FOCUS Maria Scarfo says her firm has considered merger offers over the years, but it didn't proceed with them. ORDER YOUR COPY TODAY! Visit carswell.com or call 1.800.387.5164 for a 30-day no-risk evaluation THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES AND COURTS Ontario Lawyer's Phone Book is your best connection to legal services in Ontario with more than 1,400 pages of essential legal references. You can depend on the accuracy of this trusted directory that includes the most up-to-date names, phone numbers, mailing addresses and emails so you don't have to search anywhere else. 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