Big Law—the law firms with hundreds of partners that service corporate Canada—is not feeling so big at the moment.
It’s not just that the seventh-largest firm in the country, the 500-lawyers-plus Heenan Blaikie, suddenly imploded in February. Many other firms are quietly shedding staff. McCarthy Tétrault, one of the pillars of Bay Street law, is down from a pre-2008 high of nearly 700 lawyers to 560. Some top-tier firms are finding less expensive offices, or sloughing off a floor or two.
A rarely heard word has gained currency in this moment: de-equitization. It describes the formerly unthinkable process of removing a partner from the ranks of those with ownership shares in the firm.
“Up until a year, a year and a half ago, there were critics, but it seemed nothing would ever change,” says Hudson’s Bay Co.’s general counsel, David Pickwoad, formerly an associate at Stikeman Elliott. “But now, the pace of change in the profession is breathtaking.”
And things are tight where they were never tight before. In recent years, between 12% and 15% of law graduates have been unable to find articling posts in Ontario. Meanwhile, “the market for associates, including senior associates, isn’t nearly what it once was,” says Christopher Sweeney, the CEO of Canada’s leading legal recruitment firm, ZSA. “We’re mainly concentrating these days on partners making lateral moves and in-house hiring [at corporations].”
Up to a point, the industry is having this existential moment for a simple reason: There’s not as much deal-making going on as there used to be. But the slowdown is also exposing archaic practices in a business that is perhaps just a little too steeped in tradition, mystique and notions of prestige. Billing rates as high as $1,000 an hour don’t seem sustainable in light of stark facts like the spectacular collapse of Wall Street firm Dewey & LeBeouf. Technology, outsourcing, modern management methods and a spirit of transparency are finally remaking corporate law, just as they have so many other businesses. At the same time, these tectonic forces are creating opportunities for both lawyers and their clients.
All the upheaval makes me glad I didn’t stay in law myself. I followed my father into the practice, but left in the late ’90s, for the riskier, lower-paid business of journalism. If I’d stayed, I’d be in the thick of the upheaval now—like Rubsun Ho, who was a year behind me at the University of Toronto’s law school in the ’90s. He’s an affable, soft-spoken guy who, after graduating, joined Stikeman. Following that stint, he was hired as in-house counsel at a software company.
And then he became one of the revolutionaries of what is sometimes called New Law: In 2005, Ho and former Osler Hoskin & Harcourt lawyer Joe Milstone founded Cognition.
That sounds like a funny name for a law firm, but it’s not unusual: Big Law firms are named after venerated partners; New Law firms are branded with vaguely positive handles.
And where the offices of Big Law firms are all about the mahogany, New Law is more about particleboard.
Indeed, Cognition’s loft-style offices, west of Toronto’s downtown core, are a little shabby, with dog-eared law texts jumbled on Ikea shelves. An interview with Ho and Milstone is held instead at a small satellite “intake centre” they’ve set up in Toronto’s MaRS Centre.
The old hospital complex where Banting and Best hopefully injected diabetes patients has lately become, in part, an incubator for innovative science- and technology-driven companies. Ho and Milstone’s lawyers offer informal counsel (and free doughnuts) once a week to the incubator’s denizens, hoping to catch a clean-tech or Internet start-up on its way to success.
Seems pretty entrepreneurial for a law firm, doesn’t it? But the fundamentals of New Law go further than a willingness to prospect for business. The principles behind Cognition—and behind the U.S. firm, Axiom, that inspired it—include being tech-savvy, efficiency-conscious, low-overhead and partner-free.
Ho explains that something came to him one day when he was staring out his 53rd-floor window at Stikeman: His work was being billed to clients at $250 an hour, while his take-home worked out to about $40 an hour.
That rang a bell for me. A couple of years ago, I heard a Canadian-born venture capitalist working in Silicon Valley explain why he’d been happy to have a hand in backing Axiom.