Crumbling Law Firm Empires

Empires have their time and then are gone.

The end of an empire is rarely warmly welcomed since it sparks uncertainty. But it also affords opportunity.

The Mongol, Athenian, Roman and British empires would probably be among the most well known, however the list of historic empires is extensive, interwoven and complex. These same characteristics could describe histories of many Canadian law firms for which, like a slew of firms worldwide these days, you need a program to tell the players.

This is how the world works, and upheaval of the legal landscape and law firm empires worldwide is no exception.

A number of Canadian firms have been reinventing themselves since British-based Norton Rose combined with Canada’s Ogilvy Renault LLP in 2011 and Macleod Dixon LLP in 2012, and then with US-based Fulbright & Jaworski LLP in 2013.

This was followed by the 2013 merger of Fraser Milner Casgrain LLP with Europe’s Salans LLP and US firm SNR Denton to form Dentons that expanded further this year through tie-ups with China’s Dacheng Law Offices and another US firm, McKenna Long & Aldridge LLP.

Not to be outdone, global giant DLA Piper combined with Canada’s Davis LLP this past spring.

The latest Canadian firm on the move is Gowling Lafleur Henderson LLP that, in early 2016, will combine with UK-based Wragge Lawrence Graham & Co. to become Gowling WLG with plans for further global expansion.

All this merger madness within a five-year period.

In the meantime, we’ve witnessed a wealth of Canadian-based New Law entrants to the legal market, such as Conduit Law, Axess Law and Avōkka LLP that are growing like weeds while Cognition LLP and Delegatus Legal Services Inc., have been going concerns since 2005.

Then there are legal service providers, such as Clio, Closing Folders, Kira, Law Scout, and ROSS, to name only a handful that are up and flourishing, never mind more Canadian legal services that are incubating and preparing to hatch.

If that weren’t enough, Alternative Business Structures (ABS) dealing with law firm ownership, structures and governance will come to the Canadian market in some way, shape or form just as it has to other legal markets around the world.

An ABS of a different stripe briefly touched down in Canada in 1997 in the form of a multi-disciplinary practice (MDP), Donahue & Partners LLP, an in-house law firm of Ernst & Young LLP. While Donahue failed in this country for a plethora of reasons, it currently operates in 61 jurisdictions outside of Canada and the US. Even though it may have been ahead of its time in Canada, it left a mark and probably planted seeds that will germinate in another form.

This is because professional services firms, such as those that comprise the Big Four have both the clout and capital to underwrite their own legal entities and every one of them is doing so. Ignore them at your peril.

There is a place for them just as there are places for those who range from sole practitioners to global entities. And all have a voice and opinions to lend to the continuing conversation of how best to meet the needs of those who require legal services.

Fierce pressure on traditional large and mid-size law firms is coming from all sides and fronts, including their highly aggressive and hungry competitors. And most importantly, success is defined and measured by clients with permanent buying power.

The legal industry’s transformation will prove to be like any evolution: survival of the fittest. To remain relevant, never mind solvent in this fast-evolving legal market means changing and changing means pivoting.

The degree to which a law firm pivots doesn’t necessarily have to be dramatic to be effective. However, the transition must be glaringly and publicly apparent to help a firm vault the madding crowd and survive long-term.