Ever since Hugh MacKinnon moved to Toronto in 1999, he has worn two big hats as the managing partner of Calgary's most prominent law firm, Bennett Jones LLP.
Under one hat, he is the senior partner overseeing the often fractious demands of 280 lawyers and a sprawling cast of clients in the country's fastest-growing provincial economy. Under the other, he is orchestrating the firm's high-speed expansion in Bay Street's crowded corporate and securities legal market.
The perils of navigating a law firm through two such high-maintenance and diverse markets were cast in stark relief last week when one of Bennett Jones's top-ranked commercial energy lawyers, Robert Desbarats, 55, walked out the door and into the Calgary offices of Osler Hoskin & Harcourt LLP. Although Osler is a relative newcomer to the city, it has lured 11 Bennett Jones partners and four associates in the past two years.
The exodus raises questions about Bennett Jones's strategy to expand in Toronto at a time when its home turf is under assault. It also highlights the challenges regional giants face when national players invade their home base.
"The whole world is descending on Calgary and we are the place that people look to for talent," Mr. MacKinnon said in a recent interview. Although he is "disappointed" to lose so many partners, especially a "marquee" lawyer such as Mr. Desbarats, he is satisfied that the firm's dual Toronto and Calgary strategy is the right course. Bennett Jones had to diversify, he said, because the firm had grown so large in the oil patch that "we had run out of room to grow."
In Toronto, the firm has assembled about 90 lawyers who specialize in such niches as debt restructurings, corporate and securities litigation and public infrastructure financings, a strategy that Mr. MacKinnon said delivered "record profits" last year.
"We cannot get distracted from our own strategic and tactical plans. We have our game plan and we are going to stick with it," he said.
Mr. Desbarats declined to discuss his reasons for leaving Bennett Jones. People close to the veteran lawyer said Osler's top corporate Calgary hand, Jack Thrasher, has been wooing Mr. Desbarats for months, but he was reluctant to turn his back on a firm that has been his home for three decades.
In the end, sources said, Mr. Desbarats elected to move because so many members of his Bennett Jones commercial energy team, which specializes in assembling and financing large energy projects, had jumped to Osler.
"Bob agonized about leaving, but he is a team player and he wanted to be with his team," said one person close to the lawyer.
While Bennett Jones senior partners have quietly dismissed the departing lawyers in recent months as minor players, the loss of a partner with Mr. Desbarats' stature is wrenching.
When Mr. MacKinnon fielded dozens of calls from shocked lawyers inside and outside the firm last week, he recalled candidly: "One of my callers told me that Osler had just bitten a sleeping dog in the ass."
Bennett Jones has been something of a sleeping dog for a long time for the simple reason that it has pretty much ruled the Calgary legal scene since 1897 when future prime minister R.B. Bennett hooked up with wealthy Calgary lawyer and senator James Alexander Lougheed to launch one of the area's first law firms.
Today, Bennett Jones is a veritable one-stop legal shopping centre for a diverse clientele that includes such far-flung clients as Atco Ltd., Encana Corp., ConocoPhillips Canada, Shell Canada Ltd., Air Canada and Canadian Pacific Ltd.
With its hooks into so many major businesses in Alberta's booming economy, the firm could almost take for granted that the province's top businesses would seek its advice on everything from lawsuits to corporate finance and mergers and acquisitions.
Now, Mr. MacKinnon concedes, "the sleeping dog realizes that there is a new world order in Calgary."
The new order, he said, calls for Bennett Jones to shake off its traditional aversion to publicity and do a more effective job of promoting its work and its lawyers.
For example, Bennett Jones is one of the few major law firms in Canada that does not submit its corporate advisory work to agencies that rank law firms in so-called league tables.
As a result, Bennett Jones is one of the only major Canadian law firms that is not ranked in quarterly tables that list top legal M&A or corporate finance advisers. "That," Mr. MacKinnon said, "has to change. We have to be a little bit more aggressive about promoting ourselves."
The firm also has to adjust, he said, to increased lawyer mobility in a town "that used to be pretty genteel and you didn't see hardly any movement between firms."
Will these changes be enough to protect Bennett Jones's historical dominance? Probably not. The firm has seen its tight grip on the legal market slip since the late 1990s largely because the province's economy has grown so rapidly that it is no longer possible for one major firm to control so much local business. Whereas Bennett Jones and local competitor Macleod Dixon LLP had a virtual lock on the bulk of Calgary's blue-chip corporate legal work, in the past five years other firms have eroded their share of the market.
"A fundamental realignment has occurred here," said Douglas Black, the Calgary-based vice-chairman of Fraser Milner Casgrain LLP.
"The reality is that the marketplace has gone from two dominant players to four significant players and many other important new arrivals."
Joining Bennett Jones and Macleod Dixon in the top four are Calgary's Burnet Duckworth & Palmer LLP, which dominates the junior oil and gas sector, and Fraser Milner, which, following its 1998 merger with Alberta's Milner Fenerty, employs close to 200 lawyers in the province.
Nipping at the big firm's heels are Blakes Cassels & Graydon LLP, McCarthy Tétrault LLP and Oslers, which have collectively hired more than 140 lawyers in Calgary in the past decade.
The growth has been so significant that Oslers, which just doubled its local office space by moving to the TransCanada building, is running out of room for its growing team of nearly 50 lawyers. "Were already looking for more space," said Tristram Mallett, the firm's Calgary managing partner.
© The Globe and Mail
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