First you call your broker. Then your lawyer. With financial and political storms pounding the business landscape, the Law Page turned to some of the country's most seasoned corporate lawyers to ask them what lies ahead. They don't paint a pretty picture. Each agreed this is the worst financial crisis since the Depression. They are girding clients and partners for a potentially prolonged recession, wicked credit conditions, corporate failures and even consolidation in the legal profession. But it isn't all bad news. Yes, the new transaction boom will involve wrenching corporate restructurings. And yes, there will be more lawsuits. But there are also opportunities out there for sound companies that had the wisdom to conserve cash and wait for the emergence of a deeply discounted market where cash rich buyers will rule.
MITCH GROPPER, FARRIS VAUGHAN WILLS & MURPHY LLP, VANCOUVER.
How bad is it? Nobody has been through anything like this, other than my mother, who lived through the Depression.
Best advice? My advice to clients is that we are going to go back to more traditional and very conservative lending parameters. In this environment our clients have to make sure they are onside with their lending terms and deliverables. There is no more latitude in the system. People are going to have to be much more careful.
Silver lining? Litigation and distressed mergers and acquisitions. Loans on the highly levered deals are soon going to have to be renewed and there isn't going to be any place to renew them. In this tough environment, companies tighten their belts and look for ways to protect their legal rights through lawsuits.
BRIAN LEVITT, CO-CHAIR, OSLER HOSKIN & HARCOURT LLP,
How bad is it? This is the worst I have seen. There is not much doubt in my mind that we are going to have a recession. We are just starting to get calls from non-financial players saying, "I have a bit of a credit problem, I may have to sell something, I may have to restructure." There's a lot of pessimism, but what I'm telling our partners is that we will get through this and we have to think about how we are going to position ourselves when we do.
Best advice? The real business challenge is for people to be realistic about their plans in a world where you cannot rely on credit. Look what John Thain did for Merrill Lynch by moving so quickly to sell. It's better to leave the party an hour early than a minute late.
Silver lining? In the fat years people don't care about legal expenses. I can tell you they are very focused on them now. They are open to ideas about making changes to save money and that is an opportunity. The future will be about the magnitude of savings that can be made available.
PAT KOVAL, PARTNER, TORYS LLP, TORONTO
How bad is it? My father was a bomber pilot in the Second World War and he always talked about firestorms in Dresden and Hamburg. For me, this is the equivalent in the financial world of the firestorms my father saw years ago.
Best advice? I'm telling my clients about the degree to which the banks have retrenched. Never mind the banking terms, there just isn't going to be any supply of money for the foreseeable future.
Silver lining? We're going to see lots of restructurings and lots of asset sales and purchases. For my clients who have been hunkering down and conserving cash, there are some great buying opportunities.
JON LEVIN, PARTNER, FASKEN MARTINEAU DUMOULIN LLP,
How bad is it? This is clearly the worst financial storm I have ever witnessed. So far, Canada has been relatively sheltered, but I doubt we will be sheltered much longer.
Best advice? Put yourself into the shoes of your banker and understand the extraordinary pressure they are under. You have to do whatever is necessary to ensure that your loan and bank relations are in very good stead. You don't want to be the next Lehman Brothers, hoping and hoping and waiting for things to get better and it doesn't.
Silver Lining? We have too many law firms in Canada. We're absolutely going to see a consolidation and a very strong and healthy analysis within the firms about individual lawyers' performance.
NORMAN STEINBERG, CO-CHAIR, OGLIVY RENAULT LLP,
How bad is it? I remember standing in the offices of Domtar on Black Monday in 1987. Domtar was preparing a $100-million share issue and that day they were one of two companies that decided to cancel their share deals. I couldn't believe what had happened and I remember walking away and thinking it was the end of the world. Today we have lost faith in some of the greatest financial institutions of the world. It is shocking, but it is not the end of the world.
Best advice: The greatest hindrance now is the lack of trust between financial institutions. Because they don't trust each other, they are not prepared to lend money to other institutions. It is going to take a couple of quarters of calm, where there are no shocks and surprises, before the banks start lending to each other and make more money available for borrowers.
Silver Lining? This is a great buying opportunity for Canadian banks and investment banks who were more conservative about risk than their foreign competitors. They are going to be able to do the kind of business deals and acquisitions that they could only dream about before.