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More global firms to set up here: Baker & McKenzie

|Written By Julius Melnitzer

On June 1, Ogilvy Renault LLP will be the first Canadian law firm to go global by joining the international legal practice known as Norton Rose Group.

Interestingly, the group is structured on the Swiss Verein model, which means there’s no financial integration between its components; local partners are subject to regulation only in their own jurisdiction; and liability does not cross jurisdictional borders.

It’s no surprise, then, that the initial reaction of many observers turned to Baker & McKenzie LLP, the Chicago-based law firm that was the first to create an international network using the Verein model.

“Baker & McKenzie were certainly trendsetters for the profession,” says Norm Steinberg, Ogilvys’ Montreal-based chairman. “They conceived the global firm when the world wasn’t global, when there was no Internet, and at a time when jets were not landing everywhere every few seconds.”

Today, Baker & McKenzie boasts 3,750 lawyers in 68 offices around the world. The firm’s revenues exceed US$2 billion, and its lawyers serve more than half of the Forbes Global 2000 companies and virtually all of the Forbes Global 100.

Baker & McKenzie was also the first foreign firm to set up in Canada by establishing a Toronto office in 1962. It would be a serious understatement to say that the move didn’t herald a trend.

Before a recent growth spurt, Baker & McKenzie’s crop of lawyers here went about their business under the radar for the most part.

Almost 50 years after Baker & McKenzie came to Canada, the only other global firms with a domestic presence were Shearman & Sterling LLP and Skadden Arps Slate Meagher & Flom LLP, both with tiny representative offices in Toronto.

Still, apart from the Verein structure, it would be folly to base any predictions about Ogilvys’ future on the history of Baker & McKenzie’s Toronto experience.

There are at least three key differences: Baker & McKenzie was an international firm establishing a greenfield office in Canada, whereas Ogilvys is an established national firm joining an international enterprise; the 1962 marketplace wasn’t a very global economy compared to today; and Canada’s legal landscape in 1962 still featured  a host of regional firms with prospects for national growth, whereas today’s market comprises numerous large entities with limited prospects for further domestic growth.

Perhaps most importantly, however, Baker & McKenzie and Ogilvys have approached their international connections with very different strategies.

“Rightly or wrongly, our strategy was never dramatic local growth or a high local profile, and when we opened in Toronto, we focused primarily on discharging inbound work from global firm clients,” says Jim Holloway, Baker & McKenzie’s managing partner in Toronto.

“If we measured our success by that strategy, I would say we were wildly successful.”

But in the last six or seven years, the strategy changed.

“Canada was never irrelevant in the global legal marketplace,” Holloway says. “But until recently, it was never very important.”

However, Canada is currently the 10th most significant economy in the world while Toronto has been ranked 11th among world centres as a place to do business.

“When you get past the obvious, which is London, New York, Hong Kong, and Tokyo, and past the BRIC [Brazil, Russia, India, and China] countries, Canada makes it onto the A list as an attractive and even a necessary place for global law firms,” Holloway says.

“For that, you can thank our strong energy and mining sector, our strong financial institutions, the modest effect of the economic crisis, a lot of inbound investment, and a strong dollar.”

In this environment, Baker & McKenzie developed a consensus that the firm could achieve more in Canada.

“We looked at the success of offices in places that were similar to Canada, like Australia where we are very prominent, and decided to take a more ambitious approach to local growth,” Holloway says. “The days of hiding our light under a bushel are over.”

The Toronto office, which has grown about 50 per cent in the last five years and about 30 per cent in the last three, now has about 70 lawyers.

“I believe we can replicate that growth pattern in the next five years,” Holloway says, noting he’s in talks about lateral moves with 17 partners from significant firms in downtown Toronto.

The firm is prioritizing lawyers with transactional practices featuring post-acquisition integration capabilities, tax practitioners, intellectual property counsel, and international trade specialists.

“For the past two years, there has been an unprecedented surge of interest in joining global firms,” Holloway says. “I believe that we could get half of those lawyers if they turned out to be a good fit for us.”

This month, the firm announced that intellectual property star Bill Richardson had left McCarthy Tétrault LLP to join Baker & McKenzie.

Other recent high-profile hires include Jim Rossiter, a mergers-and-acquisitions lawyer, and Chris Besant, an insolvency practitioner. Both were formerly at Cassels Brock & Blackwell LLP.

The upshot, then, is that Baker & McKenzie, with a solid inbound practice in place, is attempting to build a local focus that will feed into its established international operations.

By contrast, Ogilvys, with a solid domestic practice in place, aims to grow both its inbound business and feed its local clientele into an evolving international presence.

But whatever the model, Holloway is certain Canada hasn’t seen the last of the global firm.

“In the fullness of time, and not too much time, we’ll be seeing many more international firms kicking the tires in this country,” he says. “It’s happened everywhere else, so why shouldn’t it happen here?”

For more on law firm mergers, see "Integration a challenge for McMillan merger," "Ogilvys hopes global deal will be magnet for other firms' partners," and "A big year for Bay Street consolidation."

  • Is this news?

    Given that other than BakerMcKenzie, which is a global firm but not really a player in Ontario and a sprinkling of very small offices of US mega-firms, there are no other global law firms currently in Ontario, I'm not sure this is news.

    News would be: "Less global firms to set up here".
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