The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/50842
"China has had an effect on Canadian business for some time . . . the Canadian economy has made adjustments for that already, but the U.S. economy will weaken demand for some of our products." — JUSTIN FOGARTY, BENNETT JONES LLP dried up, so it's been more difficult for them to participate. "You're seeing other investors such as the pension funds and the pension plans and the insurance companies having an opportunity to acquire as- sets on terms that make sense to them," says Howard. "There will always be a large appetite for the high-quality as- sets. The composition of the bidders, or the buyers, is likely to change, because the investors that have been depen- dant upon high levels of debt at very accretive rates will not be able to bid in the manner they have in the past." Instead, he says, "You're more likely to see the players that have internal funds stepping up and winning the bids for those types of high-quality assets." As a result, lawyers with clients primarily in the private equity space who relied on debt will likely see their practice slow. For those who focus more on institu- tional players, business is still extremely active. "If your client base is well-funded pension funds and other institutional investors, then the activity level could increase or at least remain steady," says Howard. Lawyers are also seeing continued de- mand from these investors for foreign real estate. "Certainly in our practice, many of our clients have focused in- ternationally as opposed to domesti- cally, because the opportunities there have just been much more attractive," and the firm has been involved in a lot of offshore investments. A significant amount of development activity is also underway, notes Howard, and that will continue. While it is difficult to predict whether there will be an economic slowdown or not, says David Little, leader of the B.C. region's construction and procurement practice at Fasken Martineau DuMoulin LLP in Vancouver, the firm is remaining busy with major infrastructure proj- ects. This includes roads and hospitals, as government timelines are longer and don't run with a particular economic cy- cle, he says. Not to mention the upcom- ing winter Olympics in 2010. The Alberta oil sands are also a huge area of growth, and front-end construc- tion lawyers are busy with those types of projects. In British Columbia, the hous- ing development market is still relatively strong. "What's hard to predict is wheth- er that trend continues, but so far we are still seeing that that's busy," says Little. "It's kind of unpredictable. It's not the great, 100-per-cent sure thing that we had two years ago, but nothing has hap- pened yet that makes it seem like there's a massive slowdown." On the litigation side, an economic slowdown could make contractors more at risk for insolvency issues, which could lead to defaults and sureties being called in on bonds. "It's a big unpredictable. I don't think we've particularly seen any increases; I think the general sense is that there's still good solvency in the market," he says. If things do go bad, Little says con- struction lawyers focused entirely on the business side of things may have to find something else to do, while on the litigation side, there may be a short- age of litigators to focus on claims that arise. He does say there are many types of construction lawyers, includ- ing those who are busy because of what their clients are doing but who are not necessarily in it for the long haul, and if the market changes they may not pur- sue it. There is another core group that has been through different cycles, and would continue to find sufficient work, stay focused and adapt. "From my point of view on the business side of things, what is most difficult is uncer- tainty. What I've noticed is when things are predictably going up or predictably going down, then there tend to be a regular flow of transactions," he says. "Unpredictability means people don't quite know what to do and they tend to delay things," he says. "If your client base is well-funded pension funds and other institutional investors, then the activity level could increase or at least remain steady." — GREG HOWARD, DAVIES WARD PHILLIPS & VINEBERG LLP. www. C ANADIAN mag.com APRIL 2008 43