Canadian Lawyer

sparked an exodus of equity partners at Goodman and Carr, and the firm's management decided clo- sure was the only option. Parmar says he helps Canadian firms evaluate A string of missed budgets and a failed merger the risk of bringing on new partners laterally, and he finds that most are thinking longer term since the demise of Goodman and Carr. "We help them work out whether they're bringing real value or if it's more smoke and mirrors," he says. At Lerners, Dantzer says his firm won't break the bank to land a star performer. "We're very cau- tious about lateral hires. We won't do it just for the sake of bringing someone on. Any merger is very difficult. I think it's very divisive if you give special treatment to someone new. Unless a significant group recognizes the long-term importance of that practice or person, you're just creating problems for yourself, resentment, and maybe desertions, so you sort of work against yourself. to go after star-free agents, and focus instead on its own prospects. "I think more and more we are becoming convinced we have to build from within and develop a sense of loyalty. It takes much lon- ger to do, but it's much more stable and profitable long term," he says. "The idea of going out like the Toronto Maple Leafs and buying a few stars sounds good in theory, but it doesn't deal with chemistry, long-term cost, and the chance that they could move on again." But Sweeney says that approach may not work Dantzer says Lerners will resist the temptation " 70-per-cent increases, which would be a game- changer, with the existing major players." The last time something similar happened in " says Sweeney. "It's not going to happen for all Canadian firms if the market sees further incursions from abroad. Norton Rose Group landed in Canada with the wholesale takeover of Ogilvy Renault LLP, before adding Macleod Dixon LLP. Another global giant, Allen & Overy, which has been linked in the past with Canadian law firms, elected for a more organic growth strategy when it entered the Australian market, by poaching leading partners from top firm Clayton Utz to establish a presence in the coun- try. A similar move in Canada could force large Canadian firms to shell out extra cash for their star performers in order to hold on to them and the clients they bring with them. "If a big interna- tional firm came in and started building up with just the cream of the crop, that could mean 60- or Canada, says Sweeney, was when Osler Hoskin & Harcourt LLP opened its Montreal office in 2001, recruiting partners by offering them considerably more money. To cover the increased cost of hold- ing on to their stars, firms city-wide bumped rates by around $100 per hour. "There was some flex- ibility because Montreal was underpriced at the time, so it was able to absorb that shock," he says. Increased rates are not an option this time around, with corporate clients looking to save, and that means Canadian law firms will have to absorb the shock themselves. "There's always a marketplace for stars, and I foresee their value to law firms climbing. We're almost bordering on free market agency for the top talent in law. These lawyers will spend three to five years at a firm, and if the firm isn't able to increase what they're earning, they'll see what kind of bids are coming in from another team," he says. "Using the one- per-cent analogy from Occupy Wall Street, even in law firms, there will be those rewarded on a different scale from everyone else. That's going to cause internal problems from people, and firms have to deal with that. It's just part of running a law firm in the modern era." www.CANADIAN Lawyermag.com JULY 2012 33 " " COULD MOVE ON AGAIN. IAN DANTZER THE IDEA OF GOING OUT LIKE THE TORONTO MAPLE LEAFS AND BUYING A FEW STARS SOUNDS GOOD IN THEORY, BUT IT DOESN'T DEAL WITH CHEMISTRY, LONG-TERM COST, AND THE CHANCE THAT THEY

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