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Invasion of the giant law firms Add to ...

One globe-straddling law firm, British-based Norton Rose, is poised to enter Canada after swallowing Ogilvy Renault LLP. Another, Baltimore-based DLA Piper LLP, says it is in talks with a handful of Canadian firms about a similar move. Bay Street is buzzing with talk of mergers, and how to adapt if the Wal-Marts of the legal world come knocking.

But it's surprising how little one name comes up in all the chatter: Chicago-based U.S. legal giant Baker & McKenzie LLP. The firm was slightly ahead of its global rivals, having set up a Toronto outpost in 1962.

But in the half-century since, Baker & McKenzie - a legal colossus internationally - has largely gone unnoticed in the Canadian legal market, keeping to its knitting and serving the Canadian needs of its U.S. and overseas clients.

Now, explains Jim Holloway, Baker & McKenzie's local managing partner, that is changing. Just as other large, global, full-service law firms, and their multinational clients, are becoming increasingly interested in Canada for its natural resources and stable economy, his firm is mounting a Canadian offensive. And those new global legal competitors, he says, present an opportunity, not a threat.

"It's a bit of a wakeup call," Mr. Holloway said in an interview. "But I also think it's an opportunity."

Long before the news of either Norton Rose's arrival or DLA Piper's renewed interest in Canada, expansion has been in the air for Baker & McKenzie's Toronto office - literally. Amid extensive renovations that have dragged on for several months, the firm's sleek, modern 21st-floor Bay Street home has that "new house" smell. Now, the firm is looking at acquiring even more square feet.

Baker & McKenzie has 74 lawyers in Toronto, having grown by 25 per cent in the past three years, Mr. Holloway said. It has recently poached partners from homegrown rivals Cassels Brock & Blackwell LLP and McCarthy Tétrault LLP, as it looks to expand its Canadian merger-and-acquisition practice, which Mr. Holloway acknowledged is nowhere near that of its rivals on Bay Street.

(Other U.S. firms here are even lower profile. Some major American outfits do maintain small representative offices here, including Shearman & Sterling LLP and Skadden Arps Meaher & Flom LLP, neither of which practise Canadian law.)

In a boardroom where wires are still poking out of a shoebox-sized hole in the wall beneath a new flat-screen TV, Mr. Holloway said the company is trying to lure lawyers from other Toronto firms, and is talking to its landlord about even more office space. The days of "ignoring the local market" are over, he said.

"I think we had a niche in the market that we were quite content to stay in," said Mr. Holloway, who joined Baker & McKenzie in 1991.

"There was probably a level of complacency coupled with a level of success that meant that we sort of stayed off the radar screen, and happily so," Mr. Holloway said. " ... The partners did quite well there, and they really didn't have the desire to play on Bay Street. And I think that's changed."

For a long time, Canada was not a priority to Baker & McKenzie, the global firm, or to its clients, he said. But with the comparatively resilient economy, the strong dollar, and the global race to invest in Canada's natural resources, he said his firm's international leadership has undergone a "paradigm shift" on Canada, just as its giant international rivals have.

The firm's local partners see a lot of potential in what the firm could become in Canada, he said, and they have made their case to their international masters: "If you talk to the leadership of the global firm now, they would put Canada high on the list of places where they want to spend money and invest and grow."

He's not surprised that firms such as Norton Rose and DLA Piper, both created in recent waves of international law-firm mergers, have their sights set on Canada, as they continue to increase in size: "Those firms are moving down their list of places they need to be, and they are reaching Canada."

The move of global rivals into Canada will boost the profile generally of international law firms here, which he thinks will be good for his firm. And local Bay Street firms needn't fear the impending invasion, he added.

"There will always be strong domestic law firms, and there always should be. They're everywhere, in every market," Mr. Holloway said. "But I think an emerging familiarity with global law firms and what they do and the value they have can only benefit us."

Still, Mr. Holloway is after his domestic rivals' Canadian clients, especially for work that has a cross-border dimension. He is also looking to lure away Canadian talent. And he acknowledged that Baker & McKenzie's experience in Australia, where it has more than 200 lawyers and a very strong presence in the local legal market, could be a model for its potential in Canada.

Meanwhile, he said, no one should be surprised if the next five years sees several more international law firms look to establish a Canadian presence.

"We probably suffer to some extent from that stereotypical Canadian inferiority complex where people think, you know, why would anyone come here? But I think if you look at it objectively … we have a lot to offer."

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