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Merging into Canada: The Risks, Rewards and Reaction of Law Firm Expansion

Posted in Cross Borders

As pressure mounts on law firms everywhere to stake claim in the global marketplace, Canadian firms continue to merge with large, internationally esteemed counterparts. This poses challenges and opportunities for in-house counsel, who are contemplating the residual impact of such acquisitions and their effect on long-lasting relationships with their outside counsel.

Canadian Lawyer Magazine reports that in a five-week span during fall of 2010, four of Canada’s top 20 national law firms took part in a merger. Since then, Canadian law firms, Macleod Dixon and Fraser Miner Casgrain have engaged in mergers with global powerhouse firms Norton Rose and SNR Denton. Establishing a global presence however, is a charged business goal that transcends the legal profession. In a recent Bloomberg Businessweek article, law-firm consultant Jordan Furlong notes that the strongest driving factor for expansion is “a desire for a global platform.” Global Chief Executive of Norton Rose, Peter Martyr told The Lawyer that the merger “constitutes a significant step towards realizing our ambition of becoming one of the world’s leading providers of legal services.” Some of the challenges to newly merged firms involve potential layoffs and integrating employees.

What does this mean for in-house counsel?

As law firms navigate the internal dealings of international expansion, in-house counsel discuss its consequences on their outside counsel relationships. When asked in a recent online poll, how they feel about Canadian firms merging with larger global firms, more than half of the poll participants responded that they would prefer to use a local firm. The poll, featured on the ACC Canada Chapter website, also notes that in-house counsel are not confident that a global organization can understand their needs. Participants also shared concern that conflict may be a potential problem for large global law firms.

The inclination of law firms to expand internationally, and specifically into Canada, comes with great risks, rewards and various factors to consider. As law firms seek to grow their businesses and secure a share in the global marketplace, in-house counsel wait to analyze the impact of this change.