Canadian Law Firms Sturdier Than US Firms During Recession
Posted Jul 5, 2011 12:54 PM CST
By Molly McDonough
Law firms in Canada appear to have weathered the Great Recession without suffering the damage experienced by their counterparts in the United States.
Canadian firms may have felt some pain, but the threat of collapse didn't enter the equation, Lawyers Weekly reports in part two of a series on the history of BigLaw in Canada.
The legal publication notes that big Canadian firms were spared having to lay off lawyers in large numbers.
One explanation is that Canadian firms don't tend to focus on single practice areas. Sean Weir, national managing partner of Borden Ladner Gervais, noted that mortgage-backed securities were a huge market for deals in the U.S. and just stopped in 2008 when Lehman Brothers Holdings collapsed.
Those U.S. firms specializing in a once very profitable area found themselves with zero work.
"Since no major Canadian firm is as focused, with as many lawyers invested in a specific practice area, there was no comparable fallout here. South of the border, it was pretty severe," Lawyers Weekly reports.
That's not to say Canadian firms aren't having to adjust to life after the recession.
Consultant Jordan Furlong of Edge International says that to stay competitive, Canadian firms will need to lower prices, and, more importantly, make prices more predictable.
"Many general counsel’s outside legal-spend budgets have been cut, sometimes severely, and they simply can’t afford surprises from external counsel. It’s the runaway legal costs that are really killing them," Furlong says.