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already, but the U.S. economy will weak- en demand for some of our products," he says. While the industry is not expected to see the same number of large, leveraged deals as last year, there is still lots of de- mand for the services of banking and finance lawyers, because there are still acquisitions going on in the mid-mar- ads-flyers6.0 3/6/08 9:23 AM Page 1 ket, says Jean Anderson, a partner with Goodmans LLP in Toronto. The terms on which lenders are prepared to lend have changed dramatically in the last year, as "the pricing has increased; the amount of leverage that a lender will tolerate has decreased; the covenants . . . have tightened up considerably. It's just a much tighter market for credit," she says. While lenders are still prepared to lend, across the board they are more cautious about the terms on which they are prepared to do so, says Anderson. For lawyers in this area, there is now more negotiation as to the terms of the credit facility, as the leverage ratios and pricing that borrowers would have re- ceived up to early summer last year may not be relevant anymore. "Practising in the area, you have to be mindful of the fact that the credit market has changed and the resulting impact on the terms of a credit facility," she says. Canadian withholding tax on inter- est paid to foreign-based lenders was removed on Jan. 1, eliminating an entry barrier to U.S.-based lenders lending into Canada. Anderson says the poten- tial impact on Canadian lawyers and the Canadian market is hard to assess. The question is, are U.S.-based lenders so preoccupied with their subprime losses that they haven't turned their attention to lending in Canada? And will they be interested in coming to Canada? This should be an interesting development over the coming year. "If the U.S. banks take an aggressive approach in terms of lending into Cana- da, what typically happens where the U.S. lender's the lead lender, most of the legal work gets done in the States, so it will be interesting to see what effect that has on people practising in this area," she says. Similar to the M&A space, a change is happening with the main players in commercial real estate. For Canadian lawyers in this area, how the year unfolds will depend a lot on the composition of their client base and the focus of their practice, says Greg Howard, a partner in the Toronto office of Davies Ward Phil- lips & Vineberg LLP. Having been a buoyant market for the a last few years, there is currently more uncertainty in the Canadian commercial real estate market than has been seen in quite some time, but Howard adds that they are definitely still seeing a lot of activity. In the past, a lot of the buying in commercial real estate was done by private equity or public entities listed on the stock market, such as REITs. Re- cently, their share prices have come off significantly, and the credit market has 42 APRIL 2008 www. C ANADIAN mag.com