If a massive company goes under and begins tortuous multibillion-dollar restructuring talks with banks and other creditors, it’s likely that lawyer Derrick Tay – best known for his work on the prolonged windup of Nortel Networks Corp. – is in the middle of the action.
While the end of his work on Nortel could still be years away, Mr. Tay, 58, is making a surprise career move, leaving Norton Rose’s Canadian arm for Gowling Lafleur Henderson. Jennifer Stam, another Norton Rose partner and his key lieutenant on the Nortel file, is also making the jump, effective Jan. 1.
The switch comes as Gowlings seeks to boost its strength in an area where insiders say the firm has a large, but mostly mid-market, presence. The firm sees the economic clouds on the horizon as a sign that more Nortel-style mega-collapses are coming. And luring Mr. Tay, legal industry insiders say, now puts one of just a handful of true heavy hitters in Canada’s bankruptcy law world into the Gowlings batting order.
The move follows the transformation of the former Ogilvy Renault LLP into an arm of London-based global legal giant Norton Rose earlier this year. The merger, followed by another tie-up with Calgary-based Macleod Dixon announced this fall, was promoted by Norton Rose as a major move for the firm onto the global stage. But Mr. Tay says the merger is behind his departure.
He stresses that he supports the merger as the best move for Ogilvy as a whole. But Mr. Tay explained in an interview that, for his practice, being part of global mega-firm was problematic.
To get in on many massive, border-straddling restructurings proceedings, he relies on referrals from British and American law firms. Now, British referrals have dried up, as firms there are reluctant to hand work to a competitor. And he expects the same thing to occur when Norton Rose moves into the U.S. market.
“I’ve been too busy doing Nortel for the last three years to even think about all of these things,” Mr. Tay said, noting that the Nortel restructuring, which began in 2009, came on the heels of his work on another sprawling file, the restructuring of Quebecor World. “The last five years, frankly, have been a blur for me.”
After he came to the conclusion that he would have to move, he said Gowlings chairman and chief executive officer Scott Jolliffe approached him with an offer. The new firm, he said, gives him a national platform – with a presence in Calgary, Vancouver, Montreal and Toronto – a capable team, and a commitment to building a high-end restructuring practice.
“The funny thing about the kind of stuff that I do, the large restructurings, is that it tends to be a very small club,” Mr. Tay said. “Because it’s one of these things where people always go to the guy who has the experience. So if you don’t have the experience, no matter how capable you are, you don’t get to play.”
Mr. Jolliffe said the firm wanted to attract a star like Mr. Tay as it aims for more retainers on big restructurings and collapses, something Mr. Jolliffe sees as likely given the shakiness of the global economy.
“There’s a lot of uncertainty in the market now and our view is that over the next year to three years, there will be much more distressed M&A [mergers and acquisitions], a need for more restructuring, and bankruptcy even,” Mr. Jolliffe said.
Mr. Tay certainly shares his new boss’s pessimism.
“If you look at the world, I mean, what other conclusion can you come to, when you look at the contagion in Europe, you look at the problems in the U.S., and the governments and the banks have tried everything that you can do, they’ve used every weapon that they have, and they are not able to fix it?” Mr. Tay said.
“And I think we are fooling ourselves if we think we are somehow isolated from these problems because Canada is well-run.”
Others in the bankruptcy law world who have been across a negotiating table with him say he is clearly at the top of his game in Canada.
“He’s certainly one of the elite practitioners in our field,” said Kevin McElcheran of McCarthy Tétrault LLP in Toronto, who describes Mr. Tay as taking a common-sense approach to his sprawling files. “It gives Gowlings a much stronger case for a key role in blockbuster cases.”
John West, the Toronto managing partner of Norton Rose, said the firm was sad to see Mr. Tay and Ms. Stam go: “There’s no doubt Derrick is a star practitioner in this area and Jennifer is a very up-and-coming partner who we think has a great future.”
He said Norton Rose still has a high-powered restructuring practice, both in Canada and as part of a group of 80 insolvency lawyers worldwide. But Mr. West also said he wasn’t sure doomsaying predictions that mega-bankruptcies would be a moneymaker in the coming years were right.
“It could be,” he said. “But you have to take note, even with all the uncertainty that we’ve been facing over last year, whether it’s the euro zone or what’s happening in the U.S., we haven’t seen a whole bunch of domestic corporate failures … since Nortel.”
Meanwhile, with Nortel’s selloff of assets and intellectual property mostly complete and raking in $8-billion, attention is turning to the squabble over that money among the company’s successor entities in Canada, the U.S. and elsewhere – money that one day will be handed over to creditors.
If an agreement on how to divide it up comes quickly, the bulk of the work, which Mr. Tay intends to carry on in conjunction with former Norton Rose colleagues, could be over by the end of 2012. But that might not happen, Mr. Tay warns.
“When you’re fighting over such large amounts of money, it is not that easy to get a consensual resolution,” he said. “So then how long does it go? Who knows?”