Before the stampede

When Norton Rose announced its merger with Canadian practice Ogilvy Renault in November 2010, international law firms woke up. Canada – with its strong Canadian dollar, vibrant energy market and considerable natural resources – was finally in fashion.

“It’s just like everywhere else – when the game of musical chairs starts, you need to find a seat,” DLA Piper co-chair Frank Burch told The Lawyer last year, making it clear that the global giant was a likely candidate to expand into the Canadian market. “We’ve talked to six or seven [Canadian] firms and continue to talk to three or four of the top 10.”

Laters

But we’re yet to see the stampede. Since that interview, DLA Piper has remained tight-lipped about opening in the North American country, while in contrast City firm Clyde & Co has swept in, merging with Canadian insurance specialist Nicholl Paskell-Mede in September 2011.

“DLA Piper are most often mentioned with regard to interest in Canada,” confirms one source at a well-known Canadian firm. “I believe they were in exploratory discussions with a number of firms, but I’m not sure if any had gotten to the formal stage.”

Many agree that the merger talks between global giants and Canadian firms have stalled, but only temporarily.

“Some of the global momentum has slowed down given the ‘Dewey & LeBoeuf effect’, after its collapse,” says Gregory Turnbull, partner at Calgary-based firm McCarthy Tetrault – a practice pegged as a likely dancing partner for foreign firms. “For now, the Canadian market is watching the Norton Rose experiment with mixed feelings. Their lack of a strong US platform is a big negative, given the strength of Canadian-US trade relations, but we hear they’re trying to address this issue.”

US links

The latest round of merger gossip suggests firms are already taking note. At the time of writing, the word on the street was that western Canada’s largest firm Fraser Milner Casgrain (FMC) is looking to build a presence in the US by merging with Fulbright & Jaworski of Houston. When asked about the rumour FMC responded with a blanket statement.

“FMC continues to be invited to participate in discussions with global firms,” read the reply. “We look at these discussions regarding potential opportunities as a way to anticipate and capitalise on changes in today’s dynamic and competitive global environment.”

Similar rumours (and similar answers) surround Calgary-based Fasken Martineau and a potential pairing with a South African firm.

“The Canada-South Africa relationship is no recent phenomenon,” says Fasken managing partner David Corbett – the firm already has an office in Johannesburg – adding that he will not comment on a potential tie-up in the country. “Canadian mining investment in Africa is second only to South Africa’s. The interest has grown in the past 10 years and we’re simply following our clients.”

So when?

The question, then, doesn’t seem to be if foreign firms will merge with Canadian practices, but when.

“Many Canadian firms are inherently cautious about global growth, but every firm is at least thinking about global expansion – organic or via a combination,” says Baker & McKenzie’s former Toronto head and now global executive committee member Jim Holloway. “Not every Canadian firm will choose globalisation and/or find the right suitor, but many are looking to grow practices that are aligned with the increasing needs of the emerging markets.”

While criticised for lacking a strong US platform, Norton Rose’s strategy might urge firms to throw caution to the wind. The firm is launching an Arctic group in the near future, weeks from taking on a six-lawyer Toronto team from Canada’s Gowling Lafleur Henderson.

“The reason Norton Rose and Ogilvy Renault merged was simple – we looked at what was attractive for clients and they wanted greater international reach through one firm,” adds Norm Steinberg, Norton Rose’s first Canada-group chairman. “The new Arctic group will help clients capitalise on the tremendous potential of Canada’s far north, potentially driving other practice areas of law from transportation to employment and labour, that will need to service it. Changing climate patterns could also create opportunities in unrelated areas like tourism.”

Due North

Of course, Calgary (see box), Vancouver and Toronto are well-known hotspots for firms opening offices in the country, but recent investments suggest the future is in heading north. There are three remote northern areas that governments and mining companies are planning to develop, Steinberg adds, pointing to the Arctic – which is becoming more accessible for development and infrastructure – northern Quebec and northern Ontario. The latter is home to a $3.3bn (£2.13bn) plan to build North America’s first major chromite mine – a key ingredient in a growing urbanised world as it is used to make stainless steel for skyscrapers, with China a major consumer.

Northern Quebec is home to even bigger investments. The government has supported a 25-year project called Plan Nord that will pump more than $80bn in economic, social and environmental projects and create 20,000 jobs a year. Both investments are expected to have a positive long-term impact on firms that focus their expertise on mining, product development and infrastructure.

“This development will open up massive new areas of mineral deposits for Canadian and global mining companies, and completely transform the economies of these regions,” closes Steinberg, making no secret of where the firm might be looking to invest next.