Biglaw, Canada

The View From Up North: Another Look At The Seven Sisters vs. The Internationals

How are international firms doing in comparison with the Seven Sisters when it comes to handling major transactions?

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There is no single indicator of a law firm’s esteem in the business community. Indeed, firms take different strategies, chase different clients (or the same clients for different reasons), and seek every opportunity to differentiate themselves from their peers.

Still, what would you rather be known as, the employment law firm who advises Blue Chip companies about their HR policies, or the corporate firm that helps Blue Chippers raise money from the public?

In my mind, it’s no contest. The “best” firms are the ones advising on juice-dripping-from-the-bone debt and equity raises. Don’t get me wrong, employment lawyers — I love you. You tell great stories. There is an incredible amount of depravity that goes on in the workplace, it seems.

But the big girls and boys help the Blue Chippers buy and sell companies, raise capital and protect them in bet-the-company litigation. That’s the sexy stuff.

As always, I’m interested in the battle for supremacy in the Canadian legal landscape. For years, the Great White North has been dominated by the Seven Sisters. Recently, however, as I’m sure you know, some carpetbaggers have dropped by. Most specifically, Norton Rose, Dentons and DLA Piper have all gobbled up Canadian firms. Gowlings is also slated to merge with an international firm Wragge Lawrence (to carry forward as Gowling WLG) in the New Year.

The question, as always—do these international mergers matter?

Our friends at the National Post compile some terrific data on Canadian debt and equity raises. I’ve written on this data before, but I looked at the latest tables and thought it would be interesting to see how the international firms are doing in comparison with the Seven Sisters in this high-value, sexy area. Note that I Ieft Baker & McKenzie out. I don’t think B&M Canada has ever made it part of its strategy to chase capital market transactions. Plus, I don’t consider B&M a carpetbagger. They’ve been around for a long time and have carved out their own niche in the Canadian market.

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The first table below represents Seven Sisters and International law firms who advised on debt and equity issues through Q3 of 2015. The National Post provided two tables—one for law firms advising issuers and one for firms advising underwriters. I combined the two; thus the “Number of Deals” column represents the total number of issuer and underwriter deals for each firm.

Let’s take a look:

Debt and Equity Raises 2015 through Q3

Firm Number of Deals Total Value (in millions)
Osler 56 28397.79
Norton Rose 38 22722.18
McCarthys 67 21485.41
Stikes 81 20356.47
Blakes 69 18917.31
Torys 43 14388.9
Goodmans 19 5035.16
Dentons 9 2665.73
Davies 11 1902.11
Gowlings 6 143.2
DLA/Davis 5 4.3

This next table represents the same data for all of 2014:

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Debt and Equity Raises 2014

Firm Number of Deals Total Value (in millions)
McCarthys 106 38796.33
Blakes 106 28669.38
Osler 66 24019.43
Stikes 103 23316.34
Norton Rose 48 22224.25
Torys 59 16298.51
Dentons 32 7928.07
Goodmans 33 7415.71
Davies 19 6314.58
DLA/Davis 12 683.51
Gowlings 9 315.51

Random Thoughts

As expected, the Seven Sisters are blowing the Internationals out of the water. Still, Norton Rose seems to be doing quite well. In 2015, it’s second in total deal value, meaning it’s been advising on a lot of huge capital raises. It is sixth in terms of deal volume with 38. Last year, Norton Rose was fifth in total deal value and sixth in number of deals. Thus, in terms of deal value, NR has moved up the ladder this year compared to last. In terms of deal volume, the Seven Sisters must be giving some kind of three-for-the-price-of-two volume discount because all of them (with the exception of Davies and Goodmans) do more deals than Norton Rose.

On that note, what’s up with Davies? It’s certainly a pre-eminent business law firm. Yet, it is not keeping up with its fellow Sisters (and Norton Rose) when it comes to the capital markets. I know Davies is a smaller firm compared to Blakes, Osler, etc., but so is Goodmans, which has done nearly twice the deals in 2015. At some point I need to investigate whether this is part of the Davies strategy or it’s simply getting squeezed out by a very competitive market.

The other thing I want to highlight is the duo of Gowlings and DLA/Davis. As mentioned, Gowlings will consummate its marriage to Wragge in January. DLA Piper just arrived this year; thus it’s too early to determine whether the DLA brand will have any impact in Canada. Still, those two firms are at the bottom of the table when it comes to advising on capital raises. It will be interesting to see over the next couple of years whether either firm can steal a significant piece of the sexy capital markets work from the dominant Seven Sisters. With respect to DLA, I can’t imagine it will be content to sit at the bottom of the pack. I expect it to be aggressive going after capital markets work. In my opinion, the name alone isn’t going to get it done. DLA needs to entice big-time talent. Let’s see if it’s prepared to open up its wallet to attract the type of rainmakers that can haul in the biggest financings.

Let’s get philosophical for a moment: Money is to the lawyer, as light is to the moth.

Meditate on that statement for a moment. If you have any doubt in its truth, allow that doubt to be washed away by the gentle rain called, “reality”.

I guarantee there are talented partners sitting at Stikes and Blakes and Osler who think they’re grossly underpaid and would gladly fly into DLA’s embracing arms for a sizable raise (and a multi-year guarantee, of course).

Anytime you put guaranteed money on the table it’s a risk for the firm. From my travels, it doesn’t happen too often in Canada. But, from my viewpoint, simply changing the name from Davis LLP to DLA Piper (Canada) can’t possibly be enough to entice the most prestigious clients to use the former Davis lawyers they weren’t using before. There is certainly an opportunity for DLA Piper to grab a piece of this lucrative capital market pie, but in knowing words of the amazing George Harrison:

…it’s gonna take money

A whole lotta spending money

It’s gonna take plenty of money

To do it right, child

Will you shine the light, DLA?

That’s the View From Up North. Have a great week.

Steve Dykstra is a Canadian-trained lawyer and legal recruiter. He is the President of Steven Dykstra Law Professional Corporation, a boutique corporate/commercial law firm located in the greater Toronto area. You can contact Steve at steve@stevendykstralaw.ca. You can also read his blog at stevendykstra.wordpress.com, follow him on Twitter (@Law_Think), or connect on LinkedIn (ca.linkedin.com/in/stevedykstra/).

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