Photo by Scott Eells/Bloomberg
Photo by Scott Eells/Bloomberg

Littler and the Globalization of Canada’s Legal Market

Editor’s Note: This post is authored by a strategic consultant to law firms.

By Jordan Furlong, Principal, Edge International 

It’s been a busy month for cross-border activity in Toronto. First came the Pan Am and Parapan Games, followed by heated debate over Canada‘s role in the Trans-Pacific Partnership talks, and then a stunning series of deals engineered by Toronto Blue Jays GM Alex Anthopoulos as his team pursues its first playoff appearance in more than two decades.

Now the legal sector has joined in, as word comes that San Francisco-based labor and employment firm Littler Mendelson has opened its first Canadian office. Taking six lawyers from respected employment law boutique Kuretzky Vassos Henderson (including the first two name partners) and a seventh from large Toronto firm Cassels Brock as office managing partner, Littler will occupy Kuretzky’s existing premises while reportedly seeking larger space to accommodate planned future expansion.

Canada, of course, has experienced a slow-rising wave of global firms entering this market over the past few years, starting with Norton Rose’s acquisition of Montreal-based Ogilvy Renault in 2011. Norton Rose has been followed by Clyde & Co. (via Nicholl Paskell-Mede), Dentons (via Fraser Milner Casgrain), and most recently, DLA Piper (via Davis LLP). Norton Rose later added Calgary-based energy boutique Macleod Dixon and, of course, US giant Fulbright & Jaworski to its lineup.

On the surface, Littler’s expansion into Toronto, along with the firm’s reported interest in Montreal, Vancouver and Calgary down the road, seems to be just the latest Big Law behemoth dropping by for a double-double at Tim’s. But there are several interesting aspects of this development that deserve a closer look.

For one thing, Littler appears to be the first modern US-based Big Law firm to open a Canadian office that practices Canadian law. Other US firms have been here for a while, including White & Case, Shearman & Sterling, and Dorsey & Whitney, but they operate representative offices that serve Canadian clients with American lawyers. The only notable merger that ever took place across the 49th parallel was Torys’ hookup with New York’s Haythe Curley back in the 1990s, which was not precedent-setting. Canadian firms historically have received too much referral work from US lawyers to seriously consider straight-up mergers.

Littler’s new office, however, will be fully engaged in the local market, and that’s something new.

DLA and Dentons present more as global firms than American firms: They have strong British presences and a widespread international reach. Littler, notwithstanding its recent forays into Latin America, is still first and foremost a US firm, so the expansion of its brand and platform into Canada to practice Canadian law is something we haven’t seen since Baker & MacKenzie set up shop here back in 1962.

Littler’s arrival is also interesting because of the firm’s own unique features. It specializes, of course, in labor and employment law, a mature market in Canada with many highly competent firms. But all those firms are local or regional — there’s no nationwide L&E firm that can take advantage of economies of scale and a strong marketing platform.

Within two years of its arrival, Norton Rose owned the best-known law firm brand in Canada, a testament to the power of intensive marketing. Could Littler achieve the same in L&E law? If you’re a mid-sized employment law boutique in a major Canadian center, you have to be asking yourself that question today.

Labor and employment law, of course, is also a rapidly commoditizing area of practice, one in which margins keep tightening and corporate clients feel they have increasing leverage over their outside counsel. This brings up the other interesting aspect of Littler’s arrival: this is a firm that takes project management, operational efficiency, and emerging technology quite seriously.

Littler is perhaps best known among legal innovators for its groundbreaking CaseSmart model: “More than a case management system, it provides unique, attorney-privileged data analytics that gives a comprehensive view of [clients’] charges and litigation portfolio.”

Littler was also one of the first Big Law customers of expert application provider Neota Logic with its Compliance HR system. Littler is active in other client-focused system  improvements as well.

It’s not really an overstatement to say that the Canadian legal market has seen almost nothing like this before. The only real Canadian rival to Littler’s advances in this respect is the remarkable Gowlings Practical, a pioneering project management, pricing, and workflow engine developed by national firm Gowlings. It might not be a coincidence that Gowling WLG, as it will be called following a merger with UK-based Wragge Lawrence Graham, is the only Canadian firm that has undertaken a major overseas merger and retained its own brand while doing so. Process improvement plus foreign expansion is an intriguing and enticing combination in the global market.

Finally, it’s worth noting that Littler entered Canada by essentially taking over an existing small firm well-positioned in its market. This is an interesting expansion model previously used in Canada when Clyde & Co. entered the country through a firm (Nicholl Paskell-Mede) with relatively small offices in Montreal and Toronto. Magic Circle expansion into Australia often followed a similar route.

And unlike almost all the other international firms that have crossed the border into Canada, Littler has chosen Toronto as its starting location. Ogilvy Renault and Nicholl were headquartered in Montreal, Macleod Dixon in Calgary, and Davis LLP in Vancouver; only Fraser Milner, Dentons’ acquisition target, was based in The Big Smoke. This move might conceivably help crack open the Toronto legal market a little wider.

The globalization of the Canadian legal market continues apace. Littler’s entry, following on the heels of Gowlings’ overseas expansion, adds new dimensions of efficiency and technology to a transformative process that is certainly nowhere near complete.

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