Canadian lawyers in financial freeze

Growing numbers of Canadian lawyers in Ontario are only earning what they generate for their firms, as part of a tough approach to partnerships designed to weather lean economic times.

Harvin Pitch, of Toronto firm Teplitsky Colson, said there was a growing trend in the state towards firms operating as “profit centres”, despite obvious ramifications for practice morale.

“A good 50 per cent of firms are now gravitating towards this type of operation,” he said.

“Central Canada has been hardest hit and it will not get better until the turn of the century – we're in the deep freeze for a good five years.”

Within a profit centre lawyers pay their own expenses, including rental space and support staff.

“You share costs proportionally and the revenue allocation is according to whatever you're able to generate yourself,” said Colson.

Colson added that Teplitsky Colson had the most formal profit centre structure in place. The firm remains a legal partnership but has undergone a total restructuring of internal revenue.

He added that the structure had been operating for over 18 months.

“It works best with medium and smaller firms, where there's more independence for individual partners and you have your own client bases,” said Colson.

Pitch said profit centres were bad for morale and would not continue once the economic climate improved.

“I'm convinced that when times get better, this will be abandoned,” he explained.

“It's too harsh and you lose the sense of unity and camaraderie.”

He added: “Everyone is out for themselves.”