Future uncertain for McCarthys’ Ottawa office

OTTAWA - The possible closure of McCarthy Tétrault LLP’s high-profile office in the nation’s capital is unrelated to dire economic circumstances that have hit home for some Canadian law firms, a senior McCarthys partner says.

Consideration of the future of McCarthys’ Ottawa contingent is a “strategic review” based on the firm’s national business plan, and the role played by all of its six locations across Canada, says Barbara Boake, national leader, professionals, at McCarthy Tétrault.

“Yeah, I guess, like any organization we review our business plans on an ongoing basis,” Boake tells Law Times when asked of the Ottawa office closure possibility. She adds the firm wants to meet the needs of its clients, and that each of its offices have a practice and focus which aligns with McCarthys’ overall strategy.

“So it’s in that context that we’re currently reviewing the Ottawa office, but no decision has been made to close it,” she says.
Boake would not divulge further details and said the fate of the office, along with the employment of its seven partners, two associates, and 11 administrative staff, remains undecided.

“It’s really just a question of the fact that we are in discussion with lawyers there as part of an overall strategic review,” she tells Law Times.

“These discussions have been going on for a while and are not related to the economy,” she says. “I would call it a strategic review. Our firm really focuses on integrated practices; we have offices right across the country. We have a very diversified practice geographically and our overall strategy is to integrate those practices and develop client teams on a firm-wide basis.”

Boake, however, confirmed McCarthys has taken “difficult staffing decisions” because of a drop in business due to the economy, letting go less than 20 of its 650 lawyers across the country. She would not give the specific number or other details.

Gowling Lafleur Henderson LLP also confirmed to Law Times the firm released staff last week.
But Gowlings chairman and CEO Scott Jolliffe said the shakeup did not involve partners or associates. Jolliffe says the firm is shifting toward a “pod” model where lawyers and associates share a smaller number of secretaries, but he would not say how many were affected.

The move not only economizes, but also creates a team atmosphere among secretaries that is useful for mentoring and sharing workloads.

Sources in the legal community say McCarthy Tétrault’s Ottawa review may be related to a management
goal the firm established several years ago when it adopted a business model that included an elected board, along with a chairman and chief executive officer to manage McCarthys on a national basis.

Henry Brown, partner at the Ottawa office of Gowlings, says it is his understanding McCarthys may be ready to close its Ottawa branch because the city’s economy, largely dependent on the government, cannot provide the larger clients and billing opportunities that firm seeks.

“The Ottawa market is very difficult to get half-a-million or million-dollar-a-year clients,” Brown tells Law Times. “Most of us work on large numbers of smaller clients and that does not meet the strategic model that McCarthys has chosen for itself.” Boake denies that is the case.

“It is incorrect to say that the review of the Ottawa office is based on revenue,” she tells Law Times. “In fact, neither revenue nor the current economic situation is the driver behind the review of the office.

“Our strategy is based on the types of work and clients we aspire to act for. These clients can come from a range of markets. We are interested in the nature and complexity of the work matter and not simply the size of the client. A simple example of this is that the firm no longer does residential real estate work.”

Tom Conway, a partner at McCarthys in Ottawa, said he and other partners at the office could not comment on the review.

Conway is one of several high-profile lawyers in the office. An active bencher with the Law Society of Upper Canada, he represented former Conservative Alan Riddell in a defamation suit against Prime Minister Stephen Harper and the Conservative party. Harper and Riddell settled the action out of court.

Another high-profile partner at the Ottawa location is Barbara McIsaac, counsel for Elections Canada in a two-year-old Federal Court battle with the Conservative party.

McIsaac, who has been named to a list of special advocates to act for accused people in sensitive national security and anti-terrorism cases, will likely be able to continue her role as counsel for Chief Electoral Officer Marc Mayrand if she moves to a new firm.

McIsaac also served as counsel for the federal government in a judicial inquiry into the U.S. rendition of Canadian citizen Maher Arar to Syria, where he was tortured, and counsel for an inquiry into the 1992 death of a Somali citizen at the hands of a Canadian soldier.

Former Liberal deputy prime minister John Manley is counsel with the firm, but has desks at both the Ottawa and Toronto offices.

An Ottawa lawyer says most of the partners at the McCarthys’ Ottawa office have been “shopping themselves around” as they seek new positions. The lawyer said he expects the office to close by June or the end of 2009 at the latest.

While other firms have also felt the pinch, Blake Cassels & Graydon LLP chairman Brock Gibson says Canadian law firms have not been hit as hard as lawyers in the United States and the United Kingdom.

“The financial crisis that has hit directly New York and London, being financial centres of the world, and the financial institutions based there, has not hit to the same degree in Canada, primarily because of the strength of the financial institutions in Canada,” Gibson, a partner at Blakes, tells Law Times.

He says the firm has experienced layoffs that were the result of routine reviews all law firms go through and unrelated to the economy.

Jolliffe tells Law Times the layoffs in New York were also the result of a highly leveraged practice model where firms employed teams of associates to perform legal work obtained by individual partners. As the financial crisis hit, the work that brought in billings to pay for those teams evaporated.

Jamie Trimble, president of the Ontario Bar Association, tells Law Times the economic climate may nonetheless force firms to shift toward “contractor model” relationships with associates as opposed to “employment model” relationships.

“That gives them more freedom and more economic options than an employment contract,” he says.

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