Canadian Lawyer

OPINION BaCk page By JiM MiddleMiSS Global consolidation marches on 46 F e b r uary 2013 www.CANADIAN L a w ye r m a g . c o m such as DLA Piper and Baker & McKenzie use the model, as does professional services firm KPMG. Dentons has a global board and operates without a head office. Chris Pinnington, FMC's managing partner, sits on the board and is Canadian CEO. Pinnington says the merger "is a way forward for us to embrace the globalizing economy and opportunities and we believe we play with the competitive strengths and advantages in key sectors of strength in the Canadian economy," including energy, financial services, and natural resources. Dariusz Oleszczuk, CEO for Europe, came out of the Salans firm and said having a Canadian firm be part of the structure was important given the "strong Canadian economy. We are keen to expand our reputation in energy." Joe Andrew, who chairs Dentons and was part of SNR Denton, said they are building a "polycentric" law firm that has no dominant national culture. "We don't need a command-and-control model," he says, adding the head office is wherever management is when they are on the phone. Andrew noted there is a "first mover advantage" to Canadian law firms that get in on the ground floor of the global consolidation, which he predicts will continue. "Law firms will get bigger simply because it better serves the clients." Interestingly, he doesn't think it will be Canada's M&A-heavy law firms that will lead the way, simply because their referral networks won't let them. They depend on the eco-system they have built with other M&A firms and one of the big concerns about merging with another law firm is the impact it has on referrals. However, in a consolidating global market, that strategy is quickly upended if referral partners start to fall by the wayside. A look at regional tables from Mergermarket for global M&A in the first three quarters of 2012 show law firms building global brands and offices lead the lists. How long Seven Sister firms can continue to go it alone remains to be seen. When you look at the U.S. M&A giants, most are building out an international base of offices; that's not really the case for Canadian M&A firms. With a strong resource economy, stable currency and companies, and pension funds that are investing globally, Canada is attractive. Will 2013 be the year that a Seven Sister firm succumbs to global consolidation, or will they be upstaged by other Canadian law firms taking advantage of the first-mover advantage? Stay tuned. Jim Middlemiss blogs about the legal profession at WebNewsManagement.com. You can follow him on Twitter  @ JimMiddlemiss and he can be reached at jmiddlemiss@ webnewsmanagement.com. scOtt Page T hree down. How many more to go? The November announcement that Fraser Milner Casgrain was entering into a three-way merger with Salans and SNR Denton means three of Canada's top 20 law firms by size have joined the international merger fray (the other two are Ogilvy Renault and Macleod Dixon, which are part of Norton Rose, a firm that will add the Fulbright name in June after its merger with U.S. firm Fulbright Jaworski is completed). So, which Canadian firm is next to throw its chips into a global merger? There's no shortage of candidates. With the exception of Blake Cassels & Graydon LLP, none of the socalled Seven Sister firms — a tagline quickly appearing outdated, if not surpassed by global mergers — has built much of a physical international presence outside of New York or London, unlike their U.S. or U.K. counterparts. Then there are Canada's top three law firms in terms of size: Gowling Lafleur Henderson LLP, Borden Ladner Gervais LLP, and Fasken Martineau Dumoulin LLP. While Gowlings (Beijing, Moscow, London) and Faskens (Johannesburg, Paris, London) have made efforts to grow their physical presence internationally, BLG remains firmly rooted in Canadian soil. Meanwhile, the globalization trend continues. According to The American Lawyer's Global 100, the top 10 biggest law firms exceed 2,000 lawyers and operate in 17 to 44 countries. U.S. and U.K. firms dominate the list and a typical global legal giant averages 1,100 lawyers. Only two Canadian firms made the list: Faskens and BLG; compare that with Australia, where five firms made the cut. FMC's merger with Salans and SNR Denton will create Dentons, an international law firm with more than 2,500 lawyers in 52 countries. The merger is expected to close in the first quarter of 2013. FMC has offices in Canada's major cities and traces its roots back to 1839. The firm grew through mergers following the 1989 Supreme Court of Canada ruling allowing law firms to operate across provincial boundaries. Salans grew out of Paris, opening offices throughout Europe and had 20 offices in 17 locations at the time of the threeway merger. SNR Denton operates in 60 locations and was formed in 2010 following the merger of Sonnenschein Nath & Rosenthal LLP and Denton Wilde Sapte LLP. Dentons is structured as a Swiss Verein, the popular method law firms are using to create global structures. It allows firms to maintain their individual legal status and limit liability. Law firms

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