Editor’s Note: This post is authored by a strategic consultant to law firms.
By Jordan Furlong, Principal, Law21
The latest law firm combination in Canada took many market observers by surprise, but perhaps it shouldn’t have. On Monday, Norton Rose Fulbright announced its acquisition (we can’t really call it a merger) of Bull, Housser & Tupper LLP , a 95-lawyer firm that had been the sixth-largest in Vancouver. Bull Housser will become Norton Rose’s sixth Canadian office when the deal officially takes effect on New Year’s Day, 2017.
There are multiple storylines at play in this law firm combination, so let’s take a look at each one.
6: Norton Rose All-In on Canada
Norton Rose has now finished its Canadian expansion, which began six years ago when Ogilvy Renault threw in its lot with the British multinational on June 1, 2011. “Certainly within Canada, we have completed our jigsaw puzzle right now,” Norton Rose’s Canadian head of infrastructure, mining and commodities told theVancouver Sun . And a pretty big puzzle it is: Norton Rose now has a strong presence in Vancouver, Calgary, Toronto, and Montreal, the four cities that really matter for a national law firm in Canada. (Norton Rose also has an office in the national capital of Ottawa, which is kind of the Fifth Beatle of Canadian metropoli, as well as in Quebec City). That’s a larger presence than many homegrown Canadian nationals. Whatever else about Norton Rose’s other global interests, they are all-in on Canada, where they’ve earned one of the country’s top legal brands in a remarkably short period of time.
5: Consolidation Continues
This combination is yet another sign that, as I wrote here earlier this year, consolidation of the Canadian law firm marketplace continues apace. Age and prestige (Bull Housser recently celebrated its 125th anniversary as a firm) are no impediment. And what’s interesting is that little of this recent consolidation has been effected by homegrown nationals such as Blake Cassels, McCarthy Tétrault, or Fasken Martineau: those firms completed most of their national expansion efforts more than a decade ago. The consolidation has been almost entirely by way of three global firms: Dentons, DLA Piper, and Norton Rose, each of which came into the market over the last few years and swept several local and regional firms into their networks. There are, suffice to say, a lot more than three global firms that might have an interest in the Canadian market. We could be seeing just the tip of the iceberg. (And while we’re at it, let’s not forget about the Big 4 accounting firms .)
4: Alberta Suffers One-Two Punch
I think this combination also says something about the impact on Canadian law firm strategy of Alberta’s titanic struggles. As you might know, the massive Alberta oil patch has been powering much of the Canadian economy for decades, especially in the last 10 to 15 years and in the wake of the financial crisis. But Alberta has suffered a devastating one-two punch recently: the collapse of the price of oil and the massive forest fires that shut down oil capital Fort McMurray earlier this year, plunging the province into one of its most severe recessions . The price of oil, of course, very likely will rebound down the road.
But in the interim, if you’re a Canadian law firm with a key office in Calgary (as Norton Rose is, with the former Macleod Dixon), then you probably want to be thinking about diversifying your sources of revenue. That might have played some part in the firm’s Vancouver expansion.
3: Vancouver as Canada’s Second City to Toronto?
But Vancouver is a standalone target for global law firms on its own merits. The city certainly has its challenges, including a runaway housing price crisis probably inflamed by foreign investors buying properties for short-term gain. But it’s also true that, as Bull Housser’s managing partner says, many multinationals consider Vancouver a hub between North America and the Asia-Pacific region. Vancouver-based legal recruiter Warren Smith pointed out to Business in Vancouver magazine that the city was already home to international firms Denton, DLA Piper and Gowlings, while major Canadian firms Osler, Hoskin & Harcourt, Bennett Jones, and Cassels Brock & Blackwell have all opened offices there in the last few years. In the longstanding competition among Vancouver, Calgary, and Montreal to determine who’ll be Canada’s Second City to Toronto, Vancouver might be gaining the upper hand at the moment.
2: Work Spread Throughout Canada
This development is also a reminder that there’s a lot going on in Canada outside Toronto and Calgary. By coincidence, the Potash Corporation of Saskatchewan and Agrium Inc. have just announced plans to merge and create a global agricultural giant worth $36 billion. In the wake of the evident failure of the Keystone XL pipeline into the U.S., two other massive cross-Canada pipelines are now under close consideration: the Energy East pipeline that would travel from Alberta to New Brunswick on the Atlantic coast, and the Trans Mountain pipeline that would flow west from Alberta to British Columbia and the Pacific Ocean (a third proposed pipeline, Northern Gateway , which also would run between Alberta and B.C., was slowed and possibly stopped by a court decision earlier this summer). And perhaps most interestingly, the federal government announced plans earlier this year to invest $125 billion over ten years to upgrade infrastructure across Canada, using money borrowed at rock-bottom interest rates.
1: Energy and Infrastructure
And that last point brings us back to Bull Houser, which, among its other practice area strengths, is known to have robust capacities in infrastructure, projects , and electricity, and had advised on some of the province’s largest infrastructure matters. The firms’ own press release specifically mentions their shared “market-leading capability in energy, mining, infrastructure, financial services, real estate, shipping, ports, life sciences and healthcare, and technology.” “Shipping and ports” are not normally practice areas you hear touted in a merger, but then, not every law firm sits on one of the gateways to the Asia-Pacific region in a country increasingly anxious to find new markets for its natural resources. So what we might also be seeing here is a glimpse of some of the new drivers of Canadian productivity and economic growth in the years to come.
Canada has its challenges, as every country does, but there are also numerous opportunities for long-term, lucrative legal work. Norton Rose certainly is not the only global law firm to have noticed this, and I doubt it will be the last such firm to make an expansionary strike into a rapidly consolidating Canadian law firm market.