“On par with Napoleon’s decision to invade Russia.” In 1996, this is how one senior corporate lawyer in Calgary described Ogilvy Renault’s entry, in that year, to the Toronto market. An unkind, churlish cut? Not really.
The lawyer in question, who subsequently requested anonymity, is a great admirer of Ogilvy Renault calling them the pre-eminent Quebec-based law firm. But, at the time, he had a point. His argument went like this. Look at the facts, he said. The only regionally-based major that has cracked the top-tier corporate market in Toronto is Stikeman Elliott. But that was in the 1970s. The situation was different then. The market was going transactional and this provided an opening. But more importantly, in the late 1970s and early 1980s, the Toronto majors were preoccupied with the massive restructurings taking place. Their eye was off the ball. That’s not the case now. Assuming Ogilvy is targeting top-tier corporate work, this means going head-to-head with heavyweights like Oslers, McCarthys, Torys, Blakes, Stikes, and Davies, Ward & Beck; all of whom, when rubbed the wrong way, make barbed wire a comforting experience. They are going to get badly bruised.
Four years later, when asked whether he stood by his earlier assessment, there was an embarrassing silence, followed by a rueful comment about an insatiable appetite for crow. “No,” he finally said. “I still maintain that they took an enormous risk, but there’s no question that they’re an important player in the Toronto market. The threshold event was when they acted for the Royal Bank on the failed London Life and Bank of Montreal mergers. The fact that the mergers didn’t go ahead is irrelevant. The retaining of their Toronto office by Royal changed the landscape. And they have followed-up with other important work. The question is where they will fit in. They’ve done a remarkable job, but they’re not Stikes.”
So who is Ogilvy Renault? And why are they different?
Trompe l’œil is an ingenious and elegant French expression which has no real counterpart in English. It means that which deceives the eye. It is generally used in an artistic sense, but can have other uses as well. It is an apt descriptor for Ogilvy Renault, a law firm that for almost 125 years has been closely associated with the boardrooms and backrooms of power in Quebec. When Ogilvys made its greenfield entry into the Toronto market in 1996, the major Toronto firms knew perfectly well who they were and understood exactly the significance, and the risk, of the step being taken. Ogilvy Renault is no stranger to the Corridors of Power.
Apart from the Royal Bank of Canada, who Managing Partner Raymond Crevier, Q.C., calls “our number one client,” the firm’s clients in the financial services sector alone include the Bank of Montreal, the Canadian Imperial Bank of Commerce, Credit Suisse First Boston Canada, Goldman, Sachs & Co., Gordon Capital Corporation, the National Bank of Canada and Scotia Capital. Other representative clients include Quebecor, Inc., Alcan Aluminum Limited, Nortel Networks Limited, the Bombardier Group, Power Corporation, Domtar Inc., Hydro-Quebec, the Weston Group and 724 Solutions, Inc., as well as a host of international drug manufacturers, large insurance companies, and national retailers.
Central to the firm’s success, and underpinning much of the strategy in entering the Toronto market, is a client loyalty that eludes many other firms. One of Ogilvys’ strengths is its fixation on client relationships. A key component of the strategic calculus is that clients will follow the firm.
According to Clive Allen, now retired after a 25-year career with Nortel culminating in his position as Executive Vice-President, Law, the firm has earned its client loyalty with a combination of high quality work, continuity, and dedication. “Ogilvy Renault is one of those firms committed to serving clients very well, no matter at what sacrifice,” Allen says. “I have used them for a variety of very important matters. They are a good firm to work with, have very high standards, and have always done an excellent job.” Allen goes on to note that: “They could be a role model for a lot of other firms.” Ogilvy Renault’s Chairman L. Yves Fortier, Q.C., attaches great importance to a distinction he draws between two very different professional service models. “Much as we love important transactions, we are very loyal to our clients, and much more client driven than transaction driven.”
The firm’s preoccupation with client relationships has been recognized and rewarded. Ogilvy Renault partners sit on the boards of at least 75 national and international business enterprises, including the Royal Bank, Quebecor, Petro-Canada, Nortel, Bombardier, Domtar, Barrick Gold Corporation, Chanel Inc., the Chase Manhattan Corporation, Dupont Canada Inc., the Hudson’s Bay Company, Noranda Inc., Nortel, Southam Inc., Sun Media Corporation, TrizecHahn Corporation, and Volvo Canada Ltd. Arguably, pound for pound, the firm has one of the strongest board representations, on a per lawyer ratio, of any law firm in the country.
With 288 lawyers in offices in Montreal (163), Toronto (53), Quebec City (30), Ottawa (26), and Vancouver (14), Ogilvy Renault is the ninth largest law firm in Canada, significantly smaller than McCarthy Tétrault (677), Borden Ladner Gervais LLP (573) and Fasken Martineau DuMoulin LLP (518). Yet it enjoys an international stature disproportionate to both its size and Canada’s position in the global economic order.
Yves Fortier, a former Canadian Ambassador to the United Nations, is a member of the Permanent Court of Arbitration in the Hague as well as President of the London Court of International Arbitration. He is a Director of many corporations, including the Royal Bank of Canada. Christopher Portner, a senior corporate partner at Osler, Hoskin & Harcourt LLP in Toronto, calls Fortier “among the two or three leading lawyers in Canada.”
Joining Fortier on the international front is The Rt. Hon. Brian Mulroney, who rejoined the firm after a twenty-year absence during which he was President of the Iron Ore Company of Canada and then Canada’s eighteenth Prime Minister. The former Prime Minister’s international connections, and his famous rolodex, are legendary. Together, Fortier and Mulroney constitute a national and international team of business envoys that no other law firm in Canada can match. It is a team that is particularly effective when placed in the context of Ogilvy Renault’s historical international connections. “Mulroney is a huge factor in our firm’s growth, both nationally and internationally,” says Raymond Crevier. “He’s a great salesman, frequently telling potential clients that if they want him on their board, it better not be with the intention of making Stikeman Elliott (Ogilvys’ historical Montreal arch-rival) richer.”
Founded in 1879, Ogilvy Renault’s fabled political connections are deeply rooted. The Hon. Sir Joseph-Adolphe Chapleau, Q.C., who co-founded Carter, Church & Chapleau, the first of a long line of predecessor firms, was an early Premier of Quebec. John S. Hall, Jr., Q.C., Quebec’s Treasurer, joined the firm in 1881. Paul F. Renault, Q.C., the name partner, was a nephew of former Liberal Prime Minister Louis St. Laurent. Other connections ranged across the political landscape, including ties to the former Union Nationale, which governed Quebec for years until the election of Liberal Premier Jean Lesage in the early 1960s. Paradoxically, Crevier, who is on the one hand careful to note the firm’s historical political connections, at the same time insists that Ogilvy Renault does not trade on them. “Only one or two of our lawyers are registered as lobbyists, and they only did so on a transactional basis,” he points out. “The types of clients we have don’t need us to open doors.” Right.
Despite the firm’s blue-chip client base, visitors will not find Ogilvys’ 163-lawyer Montreal contingent housed in Place Ville Marie, head office of the Royal Bank of Canada and generally regarded as the hub of business and legal activity in Montreal. Instead, the firm’s Montreal offices are located in impressive but lower profile quarters at the Banque Nationale de Paris building on McGill College Avenue. How Ogilvy Renault came to be there, away from the comfortable proximity it used to share with the Royal Bank, speaks volumes as to the firm’s comfort zone and its sense of entrenchment within Canada’s corporate establishment. As Pierre Hébert, a senior labour partner in Montreal, explains: “Some fifteen years ago, Trizec, the landlord at Place Ville Marie, tried to squeeze us on the rent, believing that we would never move out of the same complex that housed the Royal Bank. So we moved, and our relationship with the Royal Bank has continued to thrive.”
However, Ogilvy Renault has both won and lost in playing the odds. One hundred years of success—in 1972, Ogilvy was the largest law firm in the British Commonwealth and ten years later it was still the largest firm in Canada—led to a complacency tinged with arrogance that lead the firm to badly misjudge the impact of the wholesale flight of corporate head offices from Montreal to Toronto and Calgary during the last 25 years. “The number of Ogilvy Renault clients who moved their head offices could have provided enough work for a 100- lawyer law firm,” says Christopher Portner, who was a member of Ogilvy Renault from 1971 to 1978, before he himself left Montreal to join Oslers in Toronto.
The firm opened an office in Ottawa in 1983 and in Quebec City in 1991. In or about 1990, Ogilvy entered an association with Osler, Hoskin & Harcourt in Toronto and Ladner Downs (now merged into Borden Ladner Gervais LLP) in Vancouver, both pre-eminent corporate firms in their respective markets. Ogilvy had opened an office in Paris in 1987 and was interested in expanding internationally. Oslers had opened an office in London, England, also in 1987. In 1989, Ogilvy and Oslers announced the creation of a new, international law firm to be known as Osler Renault with offices in London and Paris. A year later, Ladner Downs was brought into the international partnership contributing its Hong Kong office. The new partnership opened an office in New York.
The Osler/Ogilvy/Ladner combination came apart in the mid-1990s with Oslers retaining the London and New York offices and Ogilvy maintaining a London office and keeping Paris. In retrospect, it is clear that Ogilvy had misread an unfolding situation. The firm was essentially locked out of the all-important Toronto market. In fairness, it was a situation where there was plenty of blame to go around. During the late 1980s/early 1990s practically every Canadian law firm of importance had followed a similar model, forming national associations as opposed to entering national mergers, i.e. Torys/Desjardins Ducharme/Lawson Lundell; Faskens/Martineau/Davis; and so on. Only McCarthy Tétrault had the prescience, as the 1998-to-date spate of mergers has demonstrated, to establish in 1989/90 a major corporate presence in the key markets of Toronto, Montreal, Calgary, and Vancouver.
In 1996, Ogilvy entered the Toronto market. It had lost serious ground. By comparison, Stikeman Elliott, who, along with Goodman Phillips & Vineberg are the firm’s principal rivals in Montreal, opened its Toronto office in the early 1970s, consequently enjoying tremendous success as Toronto became the center of gravity for Corporate Canada.
All of the many Ogilvy Renault partners interviewed for this article regretted the delay in expanding to Toronto. “Our timing wasn’t perfect,” acknowledges Andrew Fleming, now Managing Partner of the Toronto office and a member of the firm’s nine-member Executive Committee. “We’re lucky the train hadn’t completely left the station.” But when Ogilvy Renault finally did catch the train, it did so with a game plan that mirrored its unique culture; that is, the firm entered the Toronto market on its own terms.
Taking a huge risk, the Executive Committee, led by Raymond Crevier, decided on a “greenfield” operation premised on recruiting top-tier members of the Toronto bar. But the firm was only prepared to recruit those lawyers who, after a thorough investigation, were seen as capable of fitting into its extraordinary culture. “I have never been so thoroughly vetted as I was by Ogilvy Renault, even though they came to me, and I didn’t come to them,” says Charles F. Scott, a highly regarded litigator at Torys who was handpicked to head up Ogilvys’ litigation practice in Toronto.
The careful vetting that Scott experienced is a feature of all Ogilvy Renault hires, designed to ensure a solid fit in a unique culture. And, in taking a measure of Ogilvy Renault, there is no consideration more important than understanding the firm’s culture, and how it permeates and explains practically every decision of importance.
The core values of the firm’s culture may be described as follows: a closely-knit “family” of professionals within a single nationwide profit centre; working with clients who are all “firm clients on loan to individual lawyers”; within a closed compensation model where an all-powerful executive committee selected by the senior partners for an indefinite term annually evaluates partners and sets remuneration levels, always in absolute secrecy. “I’ve worked next door to some of my partners for more than 25 years,” says Pierre Hébert. “I have no idea what they earn, and I don’t care.”
Brian Mulroney, who returned to the firm in the early 1990s after an absence of two decades, found that the firm’s values had not changed. “It never crossed my mind that I would be going back to rest on my laurels as a former Prime Minister, because in the Ogilvy Renault culture that would not be helpful,” Mulroney explained. “I came to work, to develop clients as firm clients who would identify with a team of lawyers, not with me. I have never tracked the business that I bring in and I never will. That is antithetical to our fundamental values.”
And these values are directly related to the nature of the firm’s client relationships. “Clients have told me that Ogilvy Renault is different, that the closed compensation system leads to more teamwork in everything from marketing to doing the actual legal work,” says Michael Lang, a senior corporate lawyer, and the relationship partner for Nortel, who joined the Toronto office from Borden & Elliot (now Borden Ladner Gervais LLP). Clive Allen, for instance, praises the intensity of the firm’s teamwork, both within individual offices and among the different cities.
There is frequently a difference between what an organization purports to be and what it is. But what makes Ogilvy Renault special, according to tmp.worldwide Canada Division’s Chief Executive Officer Richard Moore, the Toronto-based headhunter who rocked Bay Street by recruiting for Ogilvy the likes of Charles Scott from Torys, Jim Riley from Stikes, and Thomas Allen, Q.C. from Davies, Ward & Beck LLP, “is the almost perfect match between the formal system and the informal system.” When he was initially retained, Moore was skeptical about the importance placed in securing a solid fit between a recruit and the firm’s culture. But that changed. “I soon realized that the culture is very rich and very deep,” Moore says. “The values are not only espoused but they’re cherished as sacred turf.”
At the core of the firm’s culture is what some outsiders regard as an antiquated, paternalistic notion of a “continuing trust”, a concept most recently articulated by Yves Fortier at the firm’s Annual Lawyers’ Dinner last January. In language arguably reminiscent of an age gone by, Fortier recounted that:
“Since 1879, the firm’s objective has been to create an environment in which a large number of highly intelligent, motivated and ambitious lawyers are able to practice their chosen profession under one roof, in an atmosphere of mutual respect and assistance, and thereby achieve the greatest possible degree of both professional success and personal satisfaction. At the heart of this vision is the belief—borne out in practice over the years—that, in order to preserve such a unique environment, it is necessary that at the end (of) the day, the most crucial decisions be made by a body distinct from the general membership. In effect, the ‘compact’ between the firm and its members has always been: we will provide an environment in which you can flourish; in exchange, while we will always consult you when important decisions are being considered, while we will always communicate with you in a thorough, clear and lucid manner, you must trust us, at the end of the day, to manage the affairs of the partnership in the interest of all. This is the ‘OR Model.’”
As is self-evident, it is a model which places a significant premium on leadership. And it was strong leadership that shepherded the firm through what was probably its most difficult period—the transformation from a patrician, anglophone, Westmount-rooted law firm in the 1960s to a functionally bilingual firm by the late 1970s. By 1979, Ogilvy Renault boasted an equal number of anglophone and francophone members among its 84 lawyers. At the same time, the lawyers in each group represented both the largest group of anglophone lawyers and the largest group of francophone lawyers in private practice in Quebec. It was a remarkable achievement for a firm with a number of inflexible senior Anglophone partners who at one point, according to several sources, had threatened to “throw out anyone who voted for the Parti Québecois.” And it is an achievement that has not been matched by a number of other prominent Montreal firms, where reports of continuing tension between English and French partners—in the Montreal office or between Montreal partners and partners elsewhere in Canada—persist.
“1975 to 1980 was a very emotional time,” Raymond Crevier explains. “The younger francophone lawyers in the firm, like Yves Fortier and myself, made a conscious effort to cool things down and encourage the firm to grow in the context of the reality of the PQ government.” According to Crevier, a concerted effort to hire more francophone lawyers did not prove difficult. “With the political situation, it was harder to get anglophone students from McGill. The English kids from McGill had other choices. And as more and more French-speaking lawyers graduated in Quebec and more and more francophone business managers emerged, our recruitment shifted to the University of Montreal, the University of Sherbrooke, and to Laval University.” Ogilvy Renault still offers French courses for employees who desire them, and firm communications remain bilingual despite the Canada-wide expansion. “In meetings, our rule was that you spoke whatever language you wanted to speak, although certainly we are very conscious of language when a partner from Vancouver or Toronto who does not speak French is in attendance.”
After transforming its home-office culture to reflect the political and linguistic reality of Montreal, Ogilvy Renault went on to imprint its greenfield office in Ottawa with that culture and practice model. Ottawa began with a half-dozen lawyers specializing in federal administrative law. In some respects, the Ottawa and Quebec City offices were a dress rehearsal for Toronto. In Ottawa, David Gavsie, then heading up Gowling & Henderson’s (now Gowling Lafleur Henderson LLP) corporate group, was recruited. The practice began to gain momentum. Michael Phelan, head of Oslers’ administrative law practice, was added. Phelan’s national client base, according to Crevier, “changed the dynamics of the office.” D. John Naccarato from the Perley-Robertson firm joined and, trading partly on relationships built by the now established Toronto office, captured all of Nortel’s real estate work which the corporate giant had decided to outsource. Under Managing Partner Ian Fraser, in the last two years, the Ottawa office has grown from 17 to 26 lawyers.
Ogilvy Renault’s other pre-Toronto expansion was to Quebec City, where the firm’s 34 lawyers, according to Managing Partner Pierre Cimon, a top litigator, represent the largest national law firm contingent in that city and make Ogilvy Renault among the three largest firms in the province’s capital. Partly because of the dominance of local firms, Quebec City was not an easy market to crack. “Cimon’s job was even tougher than mine,” says Jim Riley, the high profile banking/corporate lawyer who shook up Bay Street by becoming Ogilvy Renault’s first top-tier recruit in Toronto. “His movement from a local firm had more impact than anything I could do in Toronto. Cimon is an individual who really knows his marketplace.”
There is no question that Ogilvy Renault’s transformation in Montreal during 1975-80, and the firm’s successful extension of that model to the Ottawa and Quebec City greenfield start-ups built around senior recruitments, set the agenda for Toronto. The firm would enter the market, as it had in Ottawa and Quebec City, on its own terms. But Toronto as a legal market, in more ways than one, is a long way from Ottawa and Quebec City. And while it may be true that those who don’t know their way around Quebec City will find themselves served up on a brochette, Toronto is where the big sharks feed.
As the senior Calgary corporate lawyer quoted at the beginning of this article pointed out, entering the Toronto market meant going head-to-head with the top guns, a tight group of muscle-plated firms who patrol their turf like unblinking sharks. It’s no joke. As Riley notes, “I’ve been mauled by the best of them.” It further meant entering a fiercely transactional market where client relationships are based more on “what have you recently done for me” than notions of loyalty, which are commonly regarded as the sole preserve of wide-eyed boy scouts. It further meant entering a legal market—stunned by the recession of the early 1990s—where “democracy”, “transparency”, “measurable merit-based compensation”, and “legal entrepreneurialship”, were the new buzzwords of major law firm culture and politics.
Toronto, on its face, hardly seemed fertile ground for the “OR Model”, with its dependence on strong client relationships, internal loyalty, the law firm as family, and a decidedly oligarchial, highly centralized management structure. Andrew Fleming acknowledges as much when he notes that: “Any sane person would not have made the decision we made (to move to Toronto) in 1996.”
Against what appeared to be the odds, Ogilvy’s greenfield entry to the Toronto market is a textbook example of how to do it right. First, the firm transferred a number of key decision makers from Montreal. Executive Committee members William Hesler, Q.C. and Thomas Gillespie relocated for an extended period, in Hesler’s case 18 months. Partners Patrick Kierans (intellectual property) and William McNamara (litigation) relocated on a permanent basis. Second, the firm embarked on an audacious—“marauding” was the word used by one pundit—program of high profile recruitment, the net effect of which was to provide instant corporate credibility of the highest order. Key senior laterals included Jim Riley (corporate) from Stikes and Thomas Allen, Q.C. (corporate) from Davies, Ward & Beck, followed by John West (labour) from Heenan Blaikie and Charles Scott (litigaton) from Torys, and then Scott Wilkie (tax), again from Stikes.
Nothing was left to chance. The Big Guns were rolled out. Yves Fortier and Brian Mulroney played an important part. Fortier recalls that he was frequently in the Toronto office at this time, “encouraging our new partners with the promise of important work by arranging many client-driven luncheons and dinners.” Mulroney hosted meetings with existing and prospective clients in Toronto and according to John West, and contrary to Pat Carney’s recent reminisces, “never failed to follow up on a promise”. As explained by Fortier, the rationale for the concerted effort was simple: “We wanted our new partners to see the personification of our culture.”
And it worked. In four years, the Toronto office has grown to 53 lawyers working in the cornerstone “four pillars” of the firm’s practice: business law, labour and employment law, litigation and intellectual property. Transactional coups include Riley’s retainer by the Royal Bank on its thwarted takeover of London Life, a deal Riley calls Ogilvy Renault’s “breakthrough transaction in Toronto”; Riley’s subsequent representation of the Bank on the corporate end of the proposed merger with the Bank of Montreal (McMillan Binch was retained on the competition aspects); and the firm’s retainer in the BCE spin-off of Nortel. On the labour side, John West brought most of his high-profile practice from Heenan Blaikie, adding an important Toronto dimension to the firm’s representation of national labour law clients—a dimension significantly reinforced by the 1999 addition of a new Vancouver office, principally comprised of the entire labour group from Vancouver-based Alexander, Holburn, Beaudin & Lang, led by Thomas Roper, Q.C., which essentially decamped to Ogilvy Renault.
Impressive. But not conclusive. In the minds of many, Ogilvys’ position in both the Toronto and the national legal framework remains uncertain. Pundits point to the departure of Scott Wilkie, a top tax lawyer, to Oslers less than a year after he was recruited from Stikes as evidence that the firm has an insufficient high-end deal flow to attract or retain the legal talent it needs to break through to the top; to Andrew Fleming’s arrival in Toronto from London, England, to become Managing Partner as signifying the Executive Committee’s concern over the performance of the office; to a reported schism between Fleming and Riley; and finally to alleged unhappiness among the Montreal partners over the reportedly nose-bleed salaries paid to the top Toronto recruits.
To be sure, there are many unanswered questions surrounding Ogilvy Renault’s decision to go national. Did the firm “mortgage the chateau” simply buying a piece of the Toronto market by paying over-the-top salaries? Is the Toronto office profitable? If so, is it making money at the expense of work that would otherwise have gone to Montreal? Where does Ogilvy Renault rate among Toronto firms? Which firms, if any, suffered most when Ogilvy Renault came to Toronto? What are the firm’s long-term goals, and how do they compare to its realistic prospects?
“Seven hundred thousand dollars annually, guaranteed for three years? And a signing bonus! Is that what the Street says?” Such is Raymond Crevier’s deadpan response to a pointed question as to what the firm paid Jim Riley to jump ship from Stikes. Without confirming the exact amount of Riley’s compensation, both Crevier and Riley maintain that while the figure was at “the top of the market,” it was not out of line considering the risk in moving from an established practice. “It wasn’t a baseball contract,” says Riley, confirming that no “signing bonus” was involved. Nor, as the Street would have it, was there a guarantee beyond the first year. “We’ve never guaranteed compensation to anyone beyond the first year,” says Crevier. Riley did, however, have the “final say” on all Toronto hires. “I wanted to avoid personality clashes,” he said.
John West confirms that his initial remuneration was at “the high end of the market,” while “compensatory” is how Charles Scott describes his financial package. “I hear the rumors and drive on,” Scott says. More to the point, however, Riley—together with Thomas Allen, Charles Scott, and John West—maintain that money was the last item discussed in the negotiations, an assertion confirmed by Richard Moore at tmp.worldwide. “West accepted our offer before we even talked about money,” says Gilles Touchette, a senior Ogilvy labour lawyer in Montreal, who was instrumental in recruiting West. With classic Ogilvy Renault attention to cultural fit, the firm also chose West over other Toronto prospects because his philosophy of labour law matched that of the firm generally. “My vision with the firm is that we’re middle of the road,” West says. “We don’t want to represent sweatshop employers and employers with hardass anti-union attitudes.”
It is Jim Riley’s conversion to the OR Model that is perhaps the most surprising, coming from a man known as “Nuclear Jim” to his former colleagues at Stikeman Elliott. Thomas Allen, who notes that the system at Davies, Ward & Beck was “the antithesis of the closed system,” says he came with an open mind. “My observation now is that, even though it’s not the only way to run a law firm, it works very well. The system allows lawyers to direct their energies externally and not in internal competition, at being the best lawyer they can be rather than worrying about what the lawyer in the next office is making.”
Culture, then, may not have been the primary attraction for all the top recruits, but it was certainly a powerful draw. Says one high-level recruit, describing his reasons for joining Ogilvy Renault: “Put it down in the ‘life’s too short’ column. I didn’t know how long I could keep practising in my old firm, where the politics meant that I started every day by trying to figure out who was going to mess with me.” Indeed, as the firm never tires of pointing out, the lateral hires are often among the strongest advocates of the Ogilvy Renault governance model and closed compensation system. “When you stop and think about it,” Riley says, “we wouldn’t advise any of our clients to run their business on an open, democratic model.”
But all of this was not enough to keep Scott Wilkie. Generally regarded as one of Canada’s top tax talents, Wilkie left Ogilvys’ Toronto office for Oslers only a few months after joining the firm from Stikeman Elliott. His departure was a disappointment that clearly marks the low point of Ogilvys’ Toronto experience.
Shortly after Wilkie joined the firm, Ogilvy recruited tax lawyers Leslie Morgan and Heather Kerr to join the new tax group and round out the business law practice in Toronto. When Wilkie left for Oslers, Morgan quickly returned to Blake, Cassels & Graydon LLP and Kerr moved on to Ernst & Young. Neither Wilkie or Morgan would discuss their period with Ogilvy Renault nor their reasons for leaving, and by press time, Lexpert was unable to contact Kerr. But Crevier, Riley and others at Ogilvy Renault are consistent in their frank explanation that Wilkie left because he simply was not seeing enough cutting-edge deals. “At that stage of our development, we weren’t getting enough of those types of deals to feed three partners, and being a very sensitive person, perhaps Scott felt responsible for bringing Lesley and Heather to our firm,” says Crevier. “Scott was also worried about falling out of the high-end loop that tax practitioners have to frequent in order to stay at the top of their field.” One of Wilkie’s current partners at Oslers confirms the lack of deal flow as Wilkie’s reason for switching firms, at the same time emphasizing that “Wilkie has nothing but the best things to say about Ogilvy Renault.”
As one would expect, pundits and competitors alike pounced on Wilkie’s defection as evidence that the sheer numbers of lawyers joining Ogilvys’ Toronto office was misleading and that the growth was disproportionate to the quality of the work. They further speculated that the Toronto office was draining the firm’s resources to the consternation of the Montreal partners.
On the tax front, Ogilvy stepped back up to the plate earlier this year by recruiting Kenneth Snider, a well-known tax practitioner previously with Goodman Phillips & Vineberg. Highly thought of by those who know him, Snider nevertheless lacks Wilkie’s profile, perhaps because he is several years Wilkie’s junior. Despite this, Snider has established an impressive track record since joining Ogilvy, generating enough work to add two associates to the firm’s tax group and playing an important role in the Ogilvy Renault tax team retained in the high profile BCE-Nortel spin-off and Quebecor-Vidéotron merger. According to Snider, “There is no shortage of work here, and the work is of a wide variety.”
Andrew Fleming’s arrival as Managing Partner in Toronto in 1998 also provided ample fodder for the rumor mill. Fleming has been with Ogilvy Renault for his entire career. He moved to London, England, in the early 1990s for three years to practise in the then Osler Renault office, returned to Montreal, and then went back to London. What the Street could not understand was why Fleming, who makes no secret of his love for London, came to Toronto—unless there were problems in the Toronto office. Fleming, a banking lawyer closely associated with the Royal Bank throughout his career, dismisses the suggestion that he was parachuted into Toronto to safeguard the firm’s investment. “When Ogilvy Renault offered me a seat on the firm’s Executive, I decided, without prompting from my partners, that I could not be an effective manager without returning to Canada,” he explains. “I considered going back to Montreal, but then I thought ‘been there, done that.’ Overall, Toronto seemed like a better place as far as my practice was concerned, and the firm needed an Executive Committee member to replace Thomas Gillespie who was returning to Montreal, because it is firm policy that at least one member of the executive should always be in Toronto.”
As to the rumors that Riley, also a senior banking lawyer, saw Fleming’s arrival as Managing Partner as an affront, Fleming says: “Jim Riley and I could not be on better terms. I respect Jim’s knowledge of this marketplace, his incredibly intuitive nose, and his uncanny ability to see the big picture out of little movements in the market. I couldn’t survive, and the firm wouldn’t survive, without that kind of help.” Adds Executive Committee member Norman Steinberg, a corporate securities lawyer from the Montreal office: “By his own admission, Riley is not interested in being an administrator. Andrew Fleming is a deal guy, but was willing to put in the time required to take on the heavy administrative responsibilities that growing fast requires.” Riley, for his part, is effusive about the positive relationship he enjoys with Fleming and Associate Managing Partner Ava Yaskiel, who was at the Ontario Securities Commission on a secondment from Blake, Cassels & Graydon when Ogilvy Renault recruited her.
All this, however, still leaves unanswered important questions about the firm’s financial and market performance as well as its position in the Toronto and national legal landscape. Not surprisingly, the answers to the questions vary with who is doing the talking.
“After four years, the Toronto office is close to a break even,” says Raymond Crevier, “depending to some extent on how you allocate costs.” Norman Steinberg and Andrew Fleming, however, say flatly that the Toronto office is making money. Perhaps the various members of the Executive Committee “allocate costs” differently. “How you allocate costs,” after all, can be a problematic exercise.
On the one hand, given the firm’s operation as a single profit centre, the distribution of costs should not impact on individual partners’ incomes. On the other hand, if Toronto does not make money over time, it is hard to justify the high-end hiring costs incurred in staffing Toronto. Complicating the calculation is the fact that in an organization as centralized as Ogilvy Renault is, the firm’s office in Montreal will bear most of the “back-end” costs of the national operation, and an inappropriate allocation of these costs can distort the profit picture in individual centres. Finally, overhead expenses in Montreal are substantially less than those in Toronto, allowing a Toronto office (with Montreal back-end costs) charging Toronto rates to maintain a higher profit margin than the typical Toronto firm.
From Steinberg’s perspective, these considerations must yield to a larger overview. “You can’t assess the value of the Toronto office properly unless you look at what business the firm would have had and would not have had in the absence of a Toronto office,” he says. “On some deals, we might not have been retained on a national matter if we were only based in Montreal. On the whole, our clients are sophisticated users of services who know that in a lot of M&A transactions and financings it is important to have lawyers on the scene in both Montreal and Toronto, particularly to deal with the regulatory authorities.” And having an office in Toronto, Steinberg adds, consolidates Ogilvy Renault’s position elsewhere. The Ottawa and Quebec City offices, he notes, now do work for Nortel, retainers that would not have come about but for the Toronto connections.
Conversely, notes Pierre Cimon, the Quebec City office has developed national clients who are being serviced in Toronto. The Toronto office has also added depth to Montreal-oriented transactions that have national dimensions, while Montreal concerns remain a significant aspect of Toronto-based national transactions that the firm handles internally for its clients. “For example, we’re now able to serve Montreal-based clients like Domtar and Bombardier in the Ontario marketplace,” Steinberg says.
On a less concrete, but nevertheless very important level, a law firm of Ogilvy Renault’s stature that lacks a Toronto office may suffer from an image problem, both internally and with its clients. “Not having an operation in Toronto felt like we didn’t have a complete law firm,” is the way Steinberg puts it.
It seems clear that the move to Toronto has reinforced important client relationships, particularly the relationship with the Royal Bank. “Yves Fortier, who is on the Royal Bank’s board, didn’t even know that Riley had been hired on the bank merger until one week after the bank retained us,” says Crevier. As well, Michael Lang has formed a close relationship with Nortel; and partner Bogdan Teofilovici, who moved to Toronto from Montreal in 1996, is deeply involved with Bombardier’s aircraft business. “The establishment of the Toronto and Ottawa offices allowed us to consider using Ogilvy Renault for Toronto and Ottawa matters that would not otherwise have been handled by them,” notes Clive Allen, Nortel’s former chief legal officer.
The litigation, labour groups, and IP groups have also benefited from the synergies. “We’re now able to handle class actions right across the country, and across common law and civil law jurisdictions,” Charles Scott notes. Despite the troubled economy in British Columbia, the new Vancouver office has grown from 10 to 14 lawyers in just over a year, growth that both Thomas Roper and senior litigation lawyer Gregory Nash attribute to the elevation of their practices “to a national level.” The synergies have been going both ways. Sources in the labour bar say that Canada Post, a longtime Ogilvy Renault client in Montreal, is now sending work to the Vancouver office; and Kruger, the paper giant whose labour work in British Columbia was done by Roper’s group, is reportedly set to transfer its labour work across the country to the firm. “American firms,” Roper reports, “are more interested in referring work to us because of our national profile.”
Raymond Crevier says he is “totally happy” with the progress of the Toronto office. “We have achieved what we expected,” he notes. “If we had not made the Toronto move, we would be going downhill because Montreal is saturated, and we won’t grow that much here anymore.” Yves Fortier is less restrained. “Our move to Toronto has exceeded our expectations, including our most optimistic forecasts.” The partners at Ogilvy Renault are also adamant that the Toronto expansion in all areas has not occurred at the expense of work that would otherwise have gone to Montreal. “By increasing our talent pool in all practice areas, we have increased the amount of work the firm has overall.”
However the firm measures its success internally, there is little doubt anywhere that the firm is in Toronto to stay. But what has their presence meant to the Toronto market, and what lies ahead?
Conventional wisdom has it that the firm with the most to fear from Ogilvy Renault’s entry to Toronto is McMillan Binch. For both firms their flagship client is the Royal Bank. Before 1996, McMillan Binch did much of the Bank’s Toronto-generated lending and syndication work, while Ogilvy Renault did the head office and corporate work. On the surface at least, a neat and stable division of labour. It did not take long, however, before pundits questioned how long-lasting this legal “détente” would prove to be.
Soon after Ogilvy Renault entered Toronto in 1996, it was retained by the Royal Bank in the important London Life and Bank of Montreal mergers. Shortly thereafter, an exit of high-profile and important partners from McMillan Binch began that has continued through to this year. John Kazanjian left for Oslers, Patricia Olasker left for Davies, Ward & Beck LLP, Terrence O’Sullivan left to co-found a new litigation boutique practice, William Horton left for Blakes, Bruce Barker left for Bennett Jones, and James D. Scarlett left for Torys. The Street smelled blood.
Two sources close to McMillan Binch, but independent of the firm, say there is little truth to the rumors connecting the McMillan Binch departures to Ogilvys entry to Toronto and its high-profile work with the Royal Bank. “Ogilvy Renault always got the big ticket M&A deals, so nothing has changed in that regard,” said one. Both sources also say McMillan Binch’s billings to the Royal Bank have increased each year since 1996. Further, in the proposed Bank of Montreal merger, the Royal was careful to split the work, giving Ogilvy Renault the corporate component and McMillan Binch the all-important competition component. The sources also point out that top-rated Andrew Kent at McMillan Binch continues as the Bank’s foremost insolvency advisor in Toronto, with no current rivals at Ogilvy Renault. And no less an insider, Ogilvy Renault Managing Partner Raymond Crevier himself acknowledges that, to date, his Toronto office has neither attempted nor made inroads into McMillan Binch’s traditional strengths in lending and syndication matters.
McMillan Binch’s problems, says one of the sources, have nothing to do with Ogilvy Renault or the Royal Bank. “The firm’s problems come from competing visions, pitting those who preferred maintaining a high-end financial services firm in preference to the creation of a national or international firm,” the source explained. “Those in favor of a local firm won out when the associated firm Byers Casgrain in Montreal joined Fraser Milner. Some of the star players then left, but the core of the firm remained. How the firm retools itself at the elite level, not the presence of Ogilvy Renault in Toronto, is the question going forward.”
Thomas (Ted) Scott at McMillan Binch points out that none of his former partners (noted earlier) did much Royal Bank work. “Rumors that our relationship with the Royal Bank has soured are just plain wrong,” Scott says. To the contrary, citing the firm’s retainer on the Royal Bank’s acquisition of both Royal Trust and Prudential Insurance in the early 1990s, Scott argues that it was McMillan Binch which made inroads into Ogilvy Renault’s traditional work with the Bank. Scott also convincingly argues that his firm’s retainer late last year by the Royal in its divestiture of massive real estate holdings across the country, one of the largest commercial real estate transactions in Canada’s history, provides ample evidence of a continuing excellent relationship with the important client. According to Scott: “Things are going very well and this firm, which is generally underrated, has a lot of momentum. We value the relationship with the Royal Bank. Ogilvy Renault does a good job and is certainly serious local competition that wasn’t here before, and we are working hard to meet it by providing excellent client service.” Edwin Weir, Q.C., the Royal Bank’s general counsel at the time of the proposed Royal Bank/Bank of Montreal merger, and a former partner with McMillan Binch, would not comment on any aspect about Ogilvy Renault’s move to Toronto or on the Bank’s relationship with either firm.
The truth of the matter, in the words of one pundit, may be that “the high tide (of the booming economy) has lifted all boats.” In other words, Ogilvy Renault’s timing from an economic perspective was perfect, because there was enough work to go around for both firms. This analysis may suggest that the real showdown between Ogilvy and McMillan Binch over the Royal is yet to come. It would also suggest that Ogilvy Renault’s rapid growth is to some extent the function of a prestigious, capable, and well-connected firm arriving in the Toronto market at the right time. That may be the case, but Clay Horner, the head of Osler, Hoskin & Harcourt LLP’s business law department, says more credit is due: “Ogilvy Renault moved into this market in a very intelligent way, recruiting excellent people and capitalizing on the recruiting to fortify certain historical and longstanding relationships with clients like the Royal Bank and Nortel.”
Some pundits go so far as to say that Ogilvy Renault’s move to Toronto set the ‘cat among the pigeons’ and has been an indirect driver in the spate of Canadian law firm mergers in recent years. One leading Toronto business lawyer calls Ogilvy Renault’s presence in Toronto “the most significant development in the Canadian legal market in the last decade.” Another lawyer, who was at one time the managing partner of a large Toronto firm, regarded Ogilvy Renault as “a threat from the outset, who almost immediately showed up on deals where someone else would have acted otherwise.”
Jim Riley, however, concedes that Ogilvy Renault has not yet joined the “top-tier” of Toronto firms which he identifies (in no particular order) as made up of Davies, Ward & Beck LLP, Stikeman Elliott, McCarthy Tétrault, Blake, Cassels & Graydon LLP, Osler, Hoskin & Harcourt LLP and Torys. “Then there’s everybody else,” he says. “Right now, we would like to think that we’re at the top of the ‘everybody else’ list.”
Neither Christopher Portner at Oslers, nor sources at Torys, nor Managing Partner Sean Weir at Borden Ladner Gervais LLP regard Ogilvy Renault as “our competition”. Portner notes that in the recent $3.5 billion CanWest purchase of Hollinger assets, Oslers represented CanWest, while Torys represented Hollinger. “Jim Riley was there, but for the lending syndicate, not for the vendor or purchaser,” Portner notes, going on to add that “Ogilvy Renault has neither the resources nor the breadth of skills to act for either of those parties.” Portner is not even prepared to concede “second-tier” status to Ogilvys’ Toronto presence. “They’re more of a niche firm, but not as competition for our firm,” he says, while acknowledging Riley as a heavyweight and lauding the overall caliber of the firm. “The greatest impact of Ogilvy Renault’s foray into Toronto to date,” Portner maintains, “is in the notoriety surrounding Riley’s compensation and the impact it had on firms doing something about compensating their top practitioners properly.”
Speculation as to Ogilvy Renault’s exact place in the market aside, no one, including Portner, attaches anything but the word “successful” to the Toronto move. More important, however, are questions surrounding the future. Portner maintains that the firm will find the next phase of its evolution much more difficult. “They have a semi-Noah’s Ark, one of everything in key areas, but no depth or breadth,” he says. “The firm has only two exceptional performers in Toronto (Jim Riley and Andrew Fleming) in the business law area, but they need 20 national caliber practitioners to move to the next level.” Peter McKelvey, a consultant to the profession with Ernst & Young, agrees that Ogilvy Renault’s ability to challenge the top-tier firms will “depend on their ability to continue to attract high-caliber people.”
Riley’s argument however, endorsed by his partners, is that the necessary critical mass to become Canada’s leading firm can come from Ogilvy Renault as a whole, not necessarily from the Toronto office alone. Portner, however, rejects the argument. For instance, he says that Ogilvy Renault’s concept of foregoing a real estate practice in Toronto and drawing on the Ottawa office’s expertise in that regard when necessary simply won’t work. “I’ve never seen an Ottawa-based law firm in a major real estate transaction,” Portner says. “There are only three firms in the country that could do the CanWest deal for the vendor or purchaser.”
That may be, responds Raymond Crevier, because large Toronto firms, like New York firms, tend to “overlawyer” files. “At the bank merger negotiations, Jim Riley was there with one other partner, Francis Legault, while Osler, Hoskin & Harcourt had five or six lawyers in the same room,” Crevier says. “In Montreal, we try to be lean and mean, and we have brought that to Toronto. Sooner or later, clients are going to wake up to the reality of paying for six lawyers at a meeting.”
From Ottawa, Ogilvys’ Michael Phelan says that Christopher Portner’s perspective is marred by a business approach that differs markedly from that of his firm. “Oslers is focused in Toronto, and its other offices are satellites,” he says. “Our firm doesn’t focus anywhere but on the clients and servicing them however it might be necessary to do so.” Adds Andrew Fleming: “Sixteen teams are unnecessary. What I need is two or three teams that can do the major deals in this country. Bear in mind the limited focus of the Toronto office and the firm as a whole. We have never wanted to be all things to all people. For example, we don’t espouse general commercial law. We’re not trying to get supply contracts. Our firm is not a collection of individual practices, but a team to the core.”
And while Fortier concedes there are still “certain matters” that cannot be handled out of Toronto, that doesn’t seem to bother him, or Riley, or any other senior Ogilvy Renault partner. “Growth for its own sake has never been in our cards,” Fortier says. “Growth will be driven by opportunities presented by our clients.” The firm’s strategic plan targets “top-tier business clients” and “high-end transactional business—investment bankers” in the Toronto market, with a view to having 100 lawyers in Canada’s business hub by 2003. It is a modest goal considering the firm’s growth to date, but one that is consistent with Ogilvy Renault’s stated goal of remaining the dominant firm in the Montreal market while “punching above our weight” in Toronto.
Also on the agenda is expansion in Western Canada. The gameplan includes “controlled growth” in Vancouver, to be achieved by enhancing the labour and litigation practices and examining the business law and IP opportunities. The firm has “an opportunistic approach” to Calgary, geared to investigating the possibility of a business law practice in that city. “The five cities we’re in now are not enough to cover Canada,” says Crevier. “So we have to look at Calgary, and maybe Halifax.” The difficulty in Calgary, according to Crevier, is that a greenfield operation is hard to assemble because “there are few significant people available to build the strong tax team you need to carry on a business law practice.”
Which raises the obvious question: what about a merger with Calgary powerhouse Bennett Jones LLP? Preliminary talks between the firms ended abruptly in early 1999 when the Calgary firm turned its attention to negotiations with Torys that ultimately failed. Martin Lambert, the Calgary-based former CEO of Bennett Jones LLP, agrees that a merger bringing together the dominant firms in Montreal and Calgary makes sense on paper. “But we run with a fully open system, and they are managed by a conclave of cardinals,” Lambert says. “The cultures were so different, I didn’t think we could ever get together.” And although common sense suggests that the recent turmoil in Bennett Jones’ Toronto office would be sufficient incentive, at least from the Calgary firm’s perspective, to kick-start fresh discussions, Lambert is pessimistic. “I don’t think it will get back on.” Crevier, while acknowledging the 1999 discussions, would not comment on future prospects for such a merger. But a lawyer at Ogilvy Renault, speaking on condition of anonymity, speculated that Bennett Jones were “damaged goods that could taint our success in the Toronto market,” an attitude that certainly will not mesh with the Calgary office’s “propensity to be in charge all the time,” to use the words of a former Bennett Jones partner.
There are indeed differing views among Ogilvy Renault’s partners as to the best method of future expansion. John West notes “differing degrees of openness to merger as an option exist among the partners.” Louis Gouin, a senior insolvency partner in Montreal firmly backs the culture-preserving aspects of the “greenfield” approach, although he concedes it is a slower process than other forms of growth. Riley believes that creating a platform that attracts groups from other firms, as the firm did in Vancouver, may be a preferable alternative to outright merger. The Executive Committee, for its part, is keeping all options open. “We’ve never turned off our phone,” says Yves Fortier. “We’ve looked at others, and others have looked at us.”
However Ogilvy Renault decides to expand, Jim Riley is determined that his new firm will be a “world class player” within 20 years. “To do that, you have to be the number one firm in Canada, and I’ve given us ten years to do that,” he says, “because it requires going through three generations of young lawyers, at five years a generation and we’ve already been around for almost five years.”
When our Calgary corporate lawyer with the “insatiable appetite for crow” was asked his views regarding Ogilvys’ future prospects in Toronto, he laughingly questioned what value could be attributed to the opinion of someone who was so obviously wrong at the outset. When pressed, he answered as follows: “I think people underestimate the long term impact of Ogilvys’ Toronto office. The real advantage or payback of a greenfield office, once they hit their stride and assuming the initial recruitment was carried out intelligently, is that they are not saddled with ‘under-performing’ partners. We’ve seen this very clearly in the Calgary market with the performance of Blakes and McCarthys which were greenfield start-ups that now compete with Bennett Jones and Macleod Dixon. I think you will see the same in Toronto with Ogilvy going up against major transactional pratices like Oslers, Davies, Ward & Beck, and Goodmans.” And this is undoubtedly what Riley means when he says, “The trick is to find the least size required to attain market dominance.” Classic trompe l’oeil.
Julius Melnitzer is a Toronto legal affairs writer.
The lawyer in question, who subsequently requested anonymity, is a great admirer of Ogilvy Renault calling them the pre-eminent Quebec-based law firm. But, at the time, he had a point. His argument went like this. Look at the facts, he said. The only regionally-based major that has cracked the top-tier corporate market in Toronto is Stikeman Elliott. But that was in the 1970s. The situation was different then. The market was going transactional and this provided an opening. But more importantly, in the late 1970s and early 1980s, the Toronto majors were preoccupied with the massive restructurings taking place. Their eye was off the ball. That’s not the case now. Assuming Ogilvy is targeting top-tier corporate work, this means going head-to-head with heavyweights like Oslers, McCarthys, Torys, Blakes, Stikes, and Davies, Ward & Beck; all of whom, when rubbed the wrong way, make barbed wire a comforting experience. They are going to get badly bruised.
Four years later, when asked whether he stood by his earlier assessment, there was an embarrassing silence, followed by a rueful comment about an insatiable appetite for crow. “No,” he finally said. “I still maintain that they took an enormous risk, but there’s no question that they’re an important player in the Toronto market. The threshold event was when they acted for the Royal Bank on the failed London Life and Bank of Montreal mergers. The fact that the mergers didn’t go ahead is irrelevant. The retaining of their Toronto office by Royal changed the landscape. And they have followed-up with other important work. The question is where they will fit in. They’ve done a remarkable job, but they’re not Stikes.”
So who is Ogilvy Renault? And why are they different?
Trompe l’œil is an ingenious and elegant French expression which has no real counterpart in English. It means that which deceives the eye. It is generally used in an artistic sense, but can have other uses as well. It is an apt descriptor for Ogilvy Renault, a law firm that for almost 125 years has been closely associated with the boardrooms and backrooms of power in Quebec. When Ogilvys made its greenfield entry into the Toronto market in 1996, the major Toronto firms knew perfectly well who they were and understood exactly the significance, and the risk, of the step being taken. Ogilvy Renault is no stranger to the Corridors of Power.
Apart from the Royal Bank of Canada, who Managing Partner Raymond Crevier, Q.C., calls “our number one client,” the firm’s clients in the financial services sector alone include the Bank of Montreal, the Canadian Imperial Bank of Commerce, Credit Suisse First Boston Canada, Goldman, Sachs & Co., Gordon Capital Corporation, the National Bank of Canada and Scotia Capital. Other representative clients include Quebecor, Inc., Alcan Aluminum Limited, Nortel Networks Limited, the Bombardier Group, Power Corporation, Domtar Inc., Hydro-Quebec, the Weston Group and 724 Solutions, Inc., as well as a host of international drug manufacturers, large insurance companies, and national retailers.
Central to the firm’s success, and underpinning much of the strategy in entering the Toronto market, is a client loyalty that eludes many other firms. One of Ogilvys’ strengths is its fixation on client relationships. A key component of the strategic calculus is that clients will follow the firm.
According to Clive Allen, now retired after a 25-year career with Nortel culminating in his position as Executive Vice-President, Law, the firm has earned its client loyalty with a combination of high quality work, continuity, and dedication. “Ogilvy Renault is one of those firms committed to serving clients very well, no matter at what sacrifice,” Allen says. “I have used them for a variety of very important matters. They are a good firm to work with, have very high standards, and have always done an excellent job.” Allen goes on to note that: “They could be a role model for a lot of other firms.” Ogilvy Renault’s Chairman L. Yves Fortier, Q.C., attaches great importance to a distinction he draws between two very different professional service models. “Much as we love important transactions, we are very loyal to our clients, and much more client driven than transaction driven.”
The firm’s preoccupation with client relationships has been recognized and rewarded. Ogilvy Renault partners sit on the boards of at least 75 national and international business enterprises, including the Royal Bank, Quebecor, Petro-Canada, Nortel, Bombardier, Domtar, Barrick Gold Corporation, Chanel Inc., the Chase Manhattan Corporation, Dupont Canada Inc., the Hudson’s Bay Company, Noranda Inc., Nortel, Southam Inc., Sun Media Corporation, TrizecHahn Corporation, and Volvo Canada Ltd. Arguably, pound for pound, the firm has one of the strongest board representations, on a per lawyer ratio, of any law firm in the country.
With 288 lawyers in offices in Montreal (163), Toronto (53), Quebec City (30), Ottawa (26), and Vancouver (14), Ogilvy Renault is the ninth largest law firm in Canada, significantly smaller than McCarthy Tétrault (677), Borden Ladner Gervais LLP (573) and Fasken Martineau DuMoulin LLP (518). Yet it enjoys an international stature disproportionate to both its size and Canada’s position in the global economic order.
Yves Fortier, a former Canadian Ambassador to the United Nations, is a member of the Permanent Court of Arbitration in the Hague as well as President of the London Court of International Arbitration. He is a Director of many corporations, including the Royal Bank of Canada. Christopher Portner, a senior corporate partner at Osler, Hoskin & Harcourt LLP in Toronto, calls Fortier “among the two or three leading lawyers in Canada.”
Joining Fortier on the international front is The Rt. Hon. Brian Mulroney, who rejoined the firm after a twenty-year absence during which he was President of the Iron Ore Company of Canada and then Canada’s eighteenth Prime Minister. The former Prime Minister’s international connections, and his famous rolodex, are legendary. Together, Fortier and Mulroney constitute a national and international team of business envoys that no other law firm in Canada can match. It is a team that is particularly effective when placed in the context of Ogilvy Renault’s historical international connections. “Mulroney is a huge factor in our firm’s growth, both nationally and internationally,” says Raymond Crevier. “He’s a great salesman, frequently telling potential clients that if they want him on their board, it better not be with the intention of making Stikeman Elliott (Ogilvys’ historical Montreal arch-rival) richer.”
Founded in 1879, Ogilvy Renault’s fabled political connections are deeply rooted. The Hon. Sir Joseph-Adolphe Chapleau, Q.C., who co-founded Carter, Church & Chapleau, the first of a long line of predecessor firms, was an early Premier of Quebec. John S. Hall, Jr., Q.C., Quebec’s Treasurer, joined the firm in 1881. Paul F. Renault, Q.C., the name partner, was a nephew of former Liberal Prime Minister Louis St. Laurent. Other connections ranged across the political landscape, including ties to the former Union Nationale, which governed Quebec for years until the election of Liberal Premier Jean Lesage in the early 1960s. Paradoxically, Crevier, who is on the one hand careful to note the firm’s historical political connections, at the same time insists that Ogilvy Renault does not trade on them. “Only one or two of our lawyers are registered as lobbyists, and they only did so on a transactional basis,” he points out. “The types of clients we have don’t need us to open doors.” Right.
Despite the firm’s blue-chip client base, visitors will not find Ogilvys’ 163-lawyer Montreal contingent housed in Place Ville Marie, head office of the Royal Bank of Canada and generally regarded as the hub of business and legal activity in Montreal. Instead, the firm’s Montreal offices are located in impressive but lower profile quarters at the Banque Nationale de Paris building on McGill College Avenue. How Ogilvy Renault came to be there, away from the comfortable proximity it used to share with the Royal Bank, speaks volumes as to the firm’s comfort zone and its sense of entrenchment within Canada’s corporate establishment. As Pierre Hébert, a senior labour partner in Montreal, explains: “Some fifteen years ago, Trizec, the landlord at Place Ville Marie, tried to squeeze us on the rent, believing that we would never move out of the same complex that housed the Royal Bank. So we moved, and our relationship with the Royal Bank has continued to thrive.”
However, Ogilvy Renault has both won and lost in playing the odds. One hundred years of success—in 1972, Ogilvy was the largest law firm in the British Commonwealth and ten years later it was still the largest firm in Canada—led to a complacency tinged with arrogance that lead the firm to badly misjudge the impact of the wholesale flight of corporate head offices from Montreal to Toronto and Calgary during the last 25 years. “The number of Ogilvy Renault clients who moved their head offices could have provided enough work for a 100- lawyer law firm,” says Christopher Portner, who was a member of Ogilvy Renault from 1971 to 1978, before he himself left Montreal to join Oslers in Toronto.
The firm opened an office in Ottawa in 1983 and in Quebec City in 1991. In or about 1990, Ogilvy entered an association with Osler, Hoskin & Harcourt in Toronto and Ladner Downs (now merged into Borden Ladner Gervais LLP) in Vancouver, both pre-eminent corporate firms in their respective markets. Ogilvy had opened an office in Paris in 1987 and was interested in expanding internationally. Oslers had opened an office in London, England, also in 1987. In 1989, Ogilvy and Oslers announced the creation of a new, international law firm to be known as Osler Renault with offices in London and Paris. A year later, Ladner Downs was brought into the international partnership contributing its Hong Kong office. The new partnership opened an office in New York.
The Osler/Ogilvy/Ladner combination came apart in the mid-1990s with Oslers retaining the London and New York offices and Ogilvy maintaining a London office and keeping Paris. In retrospect, it is clear that Ogilvy had misread an unfolding situation. The firm was essentially locked out of the all-important Toronto market. In fairness, it was a situation where there was plenty of blame to go around. During the late 1980s/early 1990s practically every Canadian law firm of importance had followed a similar model, forming national associations as opposed to entering national mergers, i.e. Torys/Desjardins Ducharme/Lawson Lundell; Faskens/Martineau/Davis; and so on. Only McCarthy Tétrault had the prescience, as the 1998-to-date spate of mergers has demonstrated, to establish in 1989/90 a major corporate presence in the key markets of Toronto, Montreal, Calgary, and Vancouver.
In 1996, Ogilvy entered the Toronto market. It had lost serious ground. By comparison, Stikeman Elliott, who, along with Goodman Phillips & Vineberg are the firm’s principal rivals in Montreal, opened its Toronto office in the early 1970s, consequently enjoying tremendous success as Toronto became the center of gravity for Corporate Canada.
All of the many Ogilvy Renault partners interviewed for this article regretted the delay in expanding to Toronto. “Our timing wasn’t perfect,” acknowledges Andrew Fleming, now Managing Partner of the Toronto office and a member of the firm’s nine-member Executive Committee. “We’re lucky the train hadn’t completely left the station.” But when Ogilvy Renault finally did catch the train, it did so with a game plan that mirrored its unique culture; that is, the firm entered the Toronto market on its own terms.
Taking a huge risk, the Executive Committee, led by Raymond Crevier, decided on a “greenfield” operation premised on recruiting top-tier members of the Toronto bar. But the firm was only prepared to recruit those lawyers who, after a thorough investigation, were seen as capable of fitting into its extraordinary culture. “I have never been so thoroughly vetted as I was by Ogilvy Renault, even though they came to me, and I didn’t come to them,” says Charles F. Scott, a highly regarded litigator at Torys who was handpicked to head up Ogilvys’ litigation practice in Toronto.
The careful vetting that Scott experienced is a feature of all Ogilvy Renault hires, designed to ensure a solid fit in a unique culture. And, in taking a measure of Ogilvy Renault, there is no consideration more important than understanding the firm’s culture, and how it permeates and explains practically every decision of importance.
The core values of the firm’s culture may be described as follows: a closely-knit “family” of professionals within a single nationwide profit centre; working with clients who are all “firm clients on loan to individual lawyers”; within a closed compensation model where an all-powerful executive committee selected by the senior partners for an indefinite term annually evaluates partners and sets remuneration levels, always in absolute secrecy. “I’ve worked next door to some of my partners for more than 25 years,” says Pierre Hébert. “I have no idea what they earn, and I don’t care.”
Brian Mulroney, who returned to the firm in the early 1990s after an absence of two decades, found that the firm’s values had not changed. “It never crossed my mind that I would be going back to rest on my laurels as a former Prime Minister, because in the Ogilvy Renault culture that would not be helpful,” Mulroney explained. “I came to work, to develop clients as firm clients who would identify with a team of lawyers, not with me. I have never tracked the business that I bring in and I never will. That is antithetical to our fundamental values.”
And these values are directly related to the nature of the firm’s client relationships. “Clients have told me that Ogilvy Renault is different, that the closed compensation system leads to more teamwork in everything from marketing to doing the actual legal work,” says Michael Lang, a senior corporate lawyer, and the relationship partner for Nortel, who joined the Toronto office from Borden & Elliot (now Borden Ladner Gervais LLP). Clive Allen, for instance, praises the intensity of the firm’s teamwork, both within individual offices and among the different cities.
There is frequently a difference between what an organization purports to be and what it is. But what makes Ogilvy Renault special, according to tmp.worldwide Canada Division’s Chief Executive Officer Richard Moore, the Toronto-based headhunter who rocked Bay Street by recruiting for Ogilvy the likes of Charles Scott from Torys, Jim Riley from Stikes, and Thomas Allen, Q.C. from Davies, Ward & Beck LLP, “is the almost perfect match between the formal system and the informal system.” When he was initially retained, Moore was skeptical about the importance placed in securing a solid fit between a recruit and the firm’s culture. But that changed. “I soon realized that the culture is very rich and very deep,” Moore says. “The values are not only espoused but they’re cherished as sacred turf.”
At the core of the firm’s culture is what some outsiders regard as an antiquated, paternalistic notion of a “continuing trust”, a concept most recently articulated by Yves Fortier at the firm’s Annual Lawyers’ Dinner last January. In language arguably reminiscent of an age gone by, Fortier recounted that:
“Since 1879, the firm’s objective has been to create an environment in which a large number of highly intelligent, motivated and ambitious lawyers are able to practice their chosen profession under one roof, in an atmosphere of mutual respect and assistance, and thereby achieve the greatest possible degree of both professional success and personal satisfaction. At the heart of this vision is the belief—borne out in practice over the years—that, in order to preserve such a unique environment, it is necessary that at the end (of) the day, the most crucial decisions be made by a body distinct from the general membership. In effect, the ‘compact’ between the firm and its members has always been: we will provide an environment in which you can flourish; in exchange, while we will always consult you when important decisions are being considered, while we will always communicate with you in a thorough, clear and lucid manner, you must trust us, at the end of the day, to manage the affairs of the partnership in the interest of all. This is the ‘OR Model.’”
As is self-evident, it is a model which places a significant premium on leadership. And it was strong leadership that shepherded the firm through what was probably its most difficult period—the transformation from a patrician, anglophone, Westmount-rooted law firm in the 1960s to a functionally bilingual firm by the late 1970s. By 1979, Ogilvy Renault boasted an equal number of anglophone and francophone members among its 84 lawyers. At the same time, the lawyers in each group represented both the largest group of anglophone lawyers and the largest group of francophone lawyers in private practice in Quebec. It was a remarkable achievement for a firm with a number of inflexible senior Anglophone partners who at one point, according to several sources, had threatened to “throw out anyone who voted for the Parti Québecois.” And it is an achievement that has not been matched by a number of other prominent Montreal firms, where reports of continuing tension between English and French partners—in the Montreal office or between Montreal partners and partners elsewhere in Canada—persist.
“1975 to 1980 was a very emotional time,” Raymond Crevier explains. “The younger francophone lawyers in the firm, like Yves Fortier and myself, made a conscious effort to cool things down and encourage the firm to grow in the context of the reality of the PQ government.” According to Crevier, a concerted effort to hire more francophone lawyers did not prove difficult. “With the political situation, it was harder to get anglophone students from McGill. The English kids from McGill had other choices. And as more and more French-speaking lawyers graduated in Quebec and more and more francophone business managers emerged, our recruitment shifted to the University of Montreal, the University of Sherbrooke, and to Laval University.” Ogilvy Renault still offers French courses for employees who desire them, and firm communications remain bilingual despite the Canada-wide expansion. “In meetings, our rule was that you spoke whatever language you wanted to speak, although certainly we are very conscious of language when a partner from Vancouver or Toronto who does not speak French is in attendance.”
After transforming its home-office culture to reflect the political and linguistic reality of Montreal, Ogilvy Renault went on to imprint its greenfield office in Ottawa with that culture and practice model. Ottawa began with a half-dozen lawyers specializing in federal administrative law. In some respects, the Ottawa and Quebec City offices were a dress rehearsal for Toronto. In Ottawa, David Gavsie, then heading up Gowling & Henderson’s (now Gowling Lafleur Henderson LLP) corporate group, was recruited. The practice began to gain momentum. Michael Phelan, head of Oslers’ administrative law practice, was added. Phelan’s national client base, according to Crevier, “changed the dynamics of the office.” D. John Naccarato from the Perley-Robertson firm joined and, trading partly on relationships built by the now established Toronto office, captured all of Nortel’s real estate work which the corporate giant had decided to outsource. Under Managing Partner Ian Fraser, in the last two years, the Ottawa office has grown from 17 to 26 lawyers.
Ogilvy Renault’s other pre-Toronto expansion was to Quebec City, where the firm’s 34 lawyers, according to Managing Partner Pierre Cimon, a top litigator, represent the largest national law firm contingent in that city and make Ogilvy Renault among the three largest firms in the province’s capital. Partly because of the dominance of local firms, Quebec City was not an easy market to crack. “Cimon’s job was even tougher than mine,” says Jim Riley, the high profile banking/corporate lawyer who shook up Bay Street by becoming Ogilvy Renault’s first top-tier recruit in Toronto. “His movement from a local firm had more impact than anything I could do in Toronto. Cimon is an individual who really knows his marketplace.”
There is no question that Ogilvy Renault’s transformation in Montreal during 1975-80, and the firm’s successful extension of that model to the Ottawa and Quebec City greenfield start-ups built around senior recruitments, set the agenda for Toronto. The firm would enter the market, as it had in Ottawa and Quebec City, on its own terms. But Toronto as a legal market, in more ways than one, is a long way from Ottawa and Quebec City. And while it may be true that those who don’t know their way around Quebec City will find themselves served up on a brochette, Toronto is where the big sharks feed.
As the senior Calgary corporate lawyer quoted at the beginning of this article pointed out, entering the Toronto market meant going head-to-head with the top guns, a tight group of muscle-plated firms who patrol their turf like unblinking sharks. It’s no joke. As Riley notes, “I’ve been mauled by the best of them.” It further meant entering a fiercely transactional market where client relationships are based more on “what have you recently done for me” than notions of loyalty, which are commonly regarded as the sole preserve of wide-eyed boy scouts. It further meant entering a legal market—stunned by the recession of the early 1990s—where “democracy”, “transparency”, “measurable merit-based compensation”, and “legal entrepreneurialship”, were the new buzzwords of major law firm culture and politics.
Toronto, on its face, hardly seemed fertile ground for the “OR Model”, with its dependence on strong client relationships, internal loyalty, the law firm as family, and a decidedly oligarchial, highly centralized management structure. Andrew Fleming acknowledges as much when he notes that: “Any sane person would not have made the decision we made (to move to Toronto) in 1996.”
Against what appeared to be the odds, Ogilvy’s greenfield entry to the Toronto market is a textbook example of how to do it right. First, the firm transferred a number of key decision makers from Montreal. Executive Committee members William Hesler, Q.C. and Thomas Gillespie relocated for an extended period, in Hesler’s case 18 months. Partners Patrick Kierans (intellectual property) and William McNamara (litigation) relocated on a permanent basis. Second, the firm embarked on an audacious—“marauding” was the word used by one pundit—program of high profile recruitment, the net effect of which was to provide instant corporate credibility of the highest order. Key senior laterals included Jim Riley (corporate) from Stikes and Thomas Allen, Q.C. (corporate) from Davies, Ward & Beck, followed by John West (labour) from Heenan Blaikie and Charles Scott (litigaton) from Torys, and then Scott Wilkie (tax), again from Stikes.
Nothing was left to chance. The Big Guns were rolled out. Yves Fortier and Brian Mulroney played an important part. Fortier recalls that he was frequently in the Toronto office at this time, “encouraging our new partners with the promise of important work by arranging many client-driven luncheons and dinners.” Mulroney hosted meetings with existing and prospective clients in Toronto and according to John West, and contrary to Pat Carney’s recent reminisces, “never failed to follow up on a promise”. As explained by Fortier, the rationale for the concerted effort was simple: “We wanted our new partners to see the personification of our culture.”
And it worked. In four years, the Toronto office has grown to 53 lawyers working in the cornerstone “four pillars” of the firm’s practice: business law, labour and employment law, litigation and intellectual property. Transactional coups include Riley’s retainer by the Royal Bank on its thwarted takeover of London Life, a deal Riley calls Ogilvy Renault’s “breakthrough transaction in Toronto”; Riley’s subsequent representation of the Bank on the corporate end of the proposed merger with the Bank of Montreal (McMillan Binch was retained on the competition aspects); and the firm’s retainer in the BCE spin-off of Nortel. On the labour side, John West brought most of his high-profile practice from Heenan Blaikie, adding an important Toronto dimension to the firm’s representation of national labour law clients—a dimension significantly reinforced by the 1999 addition of a new Vancouver office, principally comprised of the entire labour group from Vancouver-based Alexander, Holburn, Beaudin & Lang, led by Thomas Roper, Q.C., which essentially decamped to Ogilvy Renault.
Impressive. But not conclusive. In the minds of many, Ogilvys’ position in both the Toronto and the national legal framework remains uncertain. Pundits point to the departure of Scott Wilkie, a top tax lawyer, to Oslers less than a year after he was recruited from Stikes as evidence that the firm has an insufficient high-end deal flow to attract or retain the legal talent it needs to break through to the top; to Andrew Fleming’s arrival in Toronto from London, England, to become Managing Partner as signifying the Executive Committee’s concern over the performance of the office; to a reported schism between Fleming and Riley; and finally to alleged unhappiness among the Montreal partners over the reportedly nose-bleed salaries paid to the top Toronto recruits.
To be sure, there are many unanswered questions surrounding Ogilvy Renault’s decision to go national. Did the firm “mortgage the chateau” simply buying a piece of the Toronto market by paying over-the-top salaries? Is the Toronto office profitable? If so, is it making money at the expense of work that would otherwise have gone to Montreal? Where does Ogilvy Renault rate among Toronto firms? Which firms, if any, suffered most when Ogilvy Renault came to Toronto? What are the firm’s long-term goals, and how do they compare to its realistic prospects?
“Seven hundred thousand dollars annually, guaranteed for three years? And a signing bonus! Is that what the Street says?” Such is Raymond Crevier’s deadpan response to a pointed question as to what the firm paid Jim Riley to jump ship from Stikes. Without confirming the exact amount of Riley’s compensation, both Crevier and Riley maintain that while the figure was at “the top of the market,” it was not out of line considering the risk in moving from an established practice. “It wasn’t a baseball contract,” says Riley, confirming that no “signing bonus” was involved. Nor, as the Street would have it, was there a guarantee beyond the first year. “We’ve never guaranteed compensation to anyone beyond the first year,” says Crevier. Riley did, however, have the “final say” on all Toronto hires. “I wanted to avoid personality clashes,” he said.
John West confirms that his initial remuneration was at “the high end of the market,” while “compensatory” is how Charles Scott describes his financial package. “I hear the rumors and drive on,” Scott says. More to the point, however, Riley—together with Thomas Allen, Charles Scott, and John West—maintain that money was the last item discussed in the negotiations, an assertion confirmed by Richard Moore at tmp.worldwide. “West accepted our offer before we even talked about money,” says Gilles Touchette, a senior Ogilvy labour lawyer in Montreal, who was instrumental in recruiting West. With classic Ogilvy Renault attention to cultural fit, the firm also chose West over other Toronto prospects because his philosophy of labour law matched that of the firm generally. “My vision with the firm is that we’re middle of the road,” West says. “We don’t want to represent sweatshop employers and employers with hardass anti-union attitudes.”
It is Jim Riley’s conversion to the OR Model that is perhaps the most surprising, coming from a man known as “Nuclear Jim” to his former colleagues at Stikeman Elliott. Thomas Allen, who notes that the system at Davies, Ward & Beck was “the antithesis of the closed system,” says he came with an open mind. “My observation now is that, even though it’s not the only way to run a law firm, it works very well. The system allows lawyers to direct their energies externally and not in internal competition, at being the best lawyer they can be rather than worrying about what the lawyer in the next office is making.”
Culture, then, may not have been the primary attraction for all the top recruits, but it was certainly a powerful draw. Says one high-level recruit, describing his reasons for joining Ogilvy Renault: “Put it down in the ‘life’s too short’ column. I didn’t know how long I could keep practising in my old firm, where the politics meant that I started every day by trying to figure out who was going to mess with me.” Indeed, as the firm never tires of pointing out, the lateral hires are often among the strongest advocates of the Ogilvy Renault governance model and closed compensation system. “When you stop and think about it,” Riley says, “we wouldn’t advise any of our clients to run their business on an open, democratic model.”
But all of this was not enough to keep Scott Wilkie. Generally regarded as one of Canada’s top tax talents, Wilkie left Ogilvys’ Toronto office for Oslers only a few months after joining the firm from Stikeman Elliott. His departure was a disappointment that clearly marks the low point of Ogilvys’ Toronto experience.
Shortly after Wilkie joined the firm, Ogilvy recruited tax lawyers Leslie Morgan and Heather Kerr to join the new tax group and round out the business law practice in Toronto. When Wilkie left for Oslers, Morgan quickly returned to Blake, Cassels & Graydon LLP and Kerr moved on to Ernst & Young. Neither Wilkie or Morgan would discuss their period with Ogilvy Renault nor their reasons for leaving, and by press time, Lexpert was unable to contact Kerr. But Crevier, Riley and others at Ogilvy Renault are consistent in their frank explanation that Wilkie left because he simply was not seeing enough cutting-edge deals. “At that stage of our development, we weren’t getting enough of those types of deals to feed three partners, and being a very sensitive person, perhaps Scott felt responsible for bringing Lesley and Heather to our firm,” says Crevier. “Scott was also worried about falling out of the high-end loop that tax practitioners have to frequent in order to stay at the top of their field.” One of Wilkie’s current partners at Oslers confirms the lack of deal flow as Wilkie’s reason for switching firms, at the same time emphasizing that “Wilkie has nothing but the best things to say about Ogilvy Renault.”
As one would expect, pundits and competitors alike pounced on Wilkie’s defection as evidence that the sheer numbers of lawyers joining Ogilvys’ Toronto office was misleading and that the growth was disproportionate to the quality of the work. They further speculated that the Toronto office was draining the firm’s resources to the consternation of the Montreal partners.
On the tax front, Ogilvy stepped back up to the plate earlier this year by recruiting Kenneth Snider, a well-known tax practitioner previously with Goodman Phillips & Vineberg. Highly thought of by those who know him, Snider nevertheless lacks Wilkie’s profile, perhaps because he is several years Wilkie’s junior. Despite this, Snider has established an impressive track record since joining Ogilvy, generating enough work to add two associates to the firm’s tax group and playing an important role in the Ogilvy Renault tax team retained in the high profile BCE-Nortel spin-off and Quebecor-Vidéotron merger. According to Snider, “There is no shortage of work here, and the work is of a wide variety.”
Andrew Fleming’s arrival as Managing Partner in Toronto in 1998 also provided ample fodder for the rumor mill. Fleming has been with Ogilvy Renault for his entire career. He moved to London, England, in the early 1990s for three years to practise in the then Osler Renault office, returned to Montreal, and then went back to London. What the Street could not understand was why Fleming, who makes no secret of his love for London, came to Toronto—unless there were problems in the Toronto office. Fleming, a banking lawyer closely associated with the Royal Bank throughout his career, dismisses the suggestion that he was parachuted into Toronto to safeguard the firm’s investment. “When Ogilvy Renault offered me a seat on the firm’s Executive, I decided, without prompting from my partners, that I could not be an effective manager without returning to Canada,” he explains. “I considered going back to Montreal, but then I thought ‘been there, done that.’ Overall, Toronto seemed like a better place as far as my practice was concerned, and the firm needed an Executive Committee member to replace Thomas Gillespie who was returning to Montreal, because it is firm policy that at least one member of the executive should always be in Toronto.”
As to the rumors that Riley, also a senior banking lawyer, saw Fleming’s arrival as Managing Partner as an affront, Fleming says: “Jim Riley and I could not be on better terms. I respect Jim’s knowledge of this marketplace, his incredibly intuitive nose, and his uncanny ability to see the big picture out of little movements in the market. I couldn’t survive, and the firm wouldn’t survive, without that kind of help.” Adds Executive Committee member Norman Steinberg, a corporate securities lawyer from the Montreal office: “By his own admission, Riley is not interested in being an administrator. Andrew Fleming is a deal guy, but was willing to put in the time required to take on the heavy administrative responsibilities that growing fast requires.” Riley, for his part, is effusive about the positive relationship he enjoys with Fleming and Associate Managing Partner Ava Yaskiel, who was at the Ontario Securities Commission on a secondment from Blake, Cassels & Graydon when Ogilvy Renault recruited her.
All this, however, still leaves unanswered important questions about the firm’s financial and market performance as well as its position in the Toronto and national legal landscape. Not surprisingly, the answers to the questions vary with who is doing the talking.
“After four years, the Toronto office is close to a break even,” says Raymond Crevier, “depending to some extent on how you allocate costs.” Norman Steinberg and Andrew Fleming, however, say flatly that the Toronto office is making money. Perhaps the various members of the Executive Committee “allocate costs” differently. “How you allocate costs,” after all, can be a problematic exercise.
On the one hand, given the firm’s operation as a single profit centre, the distribution of costs should not impact on individual partners’ incomes. On the other hand, if Toronto does not make money over time, it is hard to justify the high-end hiring costs incurred in staffing Toronto. Complicating the calculation is the fact that in an organization as centralized as Ogilvy Renault is, the firm’s office in Montreal will bear most of the “back-end” costs of the national operation, and an inappropriate allocation of these costs can distort the profit picture in individual centres. Finally, overhead expenses in Montreal are substantially less than those in Toronto, allowing a Toronto office (with Montreal back-end costs) charging Toronto rates to maintain a higher profit margin than the typical Toronto firm.
From Steinberg’s perspective, these considerations must yield to a larger overview. “You can’t assess the value of the Toronto office properly unless you look at what business the firm would have had and would not have had in the absence of a Toronto office,” he says. “On some deals, we might not have been retained on a national matter if we were only based in Montreal. On the whole, our clients are sophisticated users of services who know that in a lot of M&A transactions and financings it is important to have lawyers on the scene in both Montreal and Toronto, particularly to deal with the regulatory authorities.” And having an office in Toronto, Steinberg adds, consolidates Ogilvy Renault’s position elsewhere. The Ottawa and Quebec City offices, he notes, now do work for Nortel, retainers that would not have come about but for the Toronto connections.
Conversely, notes Pierre Cimon, the Quebec City office has developed national clients who are being serviced in Toronto. The Toronto office has also added depth to Montreal-oriented transactions that have national dimensions, while Montreal concerns remain a significant aspect of Toronto-based national transactions that the firm handles internally for its clients. “For example, we’re now able to serve Montreal-based clients like Domtar and Bombardier in the Ontario marketplace,” Steinberg says.
On a less concrete, but nevertheless very important level, a law firm of Ogilvy Renault’s stature that lacks a Toronto office may suffer from an image problem, both internally and with its clients. “Not having an operation in Toronto felt like we didn’t have a complete law firm,” is the way Steinberg puts it.
It seems clear that the move to Toronto has reinforced important client relationships, particularly the relationship with the Royal Bank. “Yves Fortier, who is on the Royal Bank’s board, didn’t even know that Riley had been hired on the bank merger until one week after the bank retained us,” says Crevier. As well, Michael Lang has formed a close relationship with Nortel; and partner Bogdan Teofilovici, who moved to Toronto from Montreal in 1996, is deeply involved with Bombardier’s aircraft business. “The establishment of the Toronto and Ottawa offices allowed us to consider using Ogilvy Renault for Toronto and Ottawa matters that would not otherwise have been handled by them,” notes Clive Allen, Nortel’s former chief legal officer.
The litigation, labour groups, and IP groups have also benefited from the synergies. “We’re now able to handle class actions right across the country, and across common law and civil law jurisdictions,” Charles Scott notes. Despite the troubled economy in British Columbia, the new Vancouver office has grown from 10 to 14 lawyers in just over a year, growth that both Thomas Roper and senior litigation lawyer Gregory Nash attribute to the elevation of their practices “to a national level.” The synergies have been going both ways. Sources in the labour bar say that Canada Post, a longtime Ogilvy Renault client in Montreal, is now sending work to the Vancouver office; and Kruger, the paper giant whose labour work in British Columbia was done by Roper’s group, is reportedly set to transfer its labour work across the country to the firm. “American firms,” Roper reports, “are more interested in referring work to us because of our national profile.”
Raymond Crevier says he is “totally happy” with the progress of the Toronto office. “We have achieved what we expected,” he notes. “If we had not made the Toronto move, we would be going downhill because Montreal is saturated, and we won’t grow that much here anymore.” Yves Fortier is less restrained. “Our move to Toronto has exceeded our expectations, including our most optimistic forecasts.” The partners at Ogilvy Renault are also adamant that the Toronto expansion in all areas has not occurred at the expense of work that would otherwise have gone to Montreal. “By increasing our talent pool in all practice areas, we have increased the amount of work the firm has overall.”
However the firm measures its success internally, there is little doubt anywhere that the firm is in Toronto to stay. But what has their presence meant to the Toronto market, and what lies ahead?
Conventional wisdom has it that the firm with the most to fear from Ogilvy Renault’s entry to Toronto is McMillan Binch. For both firms their flagship client is the Royal Bank. Before 1996, McMillan Binch did much of the Bank’s Toronto-generated lending and syndication work, while Ogilvy Renault did the head office and corporate work. On the surface at least, a neat and stable division of labour. It did not take long, however, before pundits questioned how long-lasting this legal “détente” would prove to be.
Soon after Ogilvy Renault entered Toronto in 1996, it was retained by the Royal Bank in the important London Life and Bank of Montreal mergers. Shortly thereafter, an exit of high-profile and important partners from McMillan Binch began that has continued through to this year. John Kazanjian left for Oslers, Patricia Olasker left for Davies, Ward & Beck LLP, Terrence O’Sullivan left to co-found a new litigation boutique practice, William Horton left for Blakes, Bruce Barker left for Bennett Jones, and James D. Scarlett left for Torys. The Street smelled blood.
Two sources close to McMillan Binch, but independent of the firm, say there is little truth to the rumors connecting the McMillan Binch departures to Ogilvys entry to Toronto and its high-profile work with the Royal Bank. “Ogilvy Renault always got the big ticket M&A deals, so nothing has changed in that regard,” said one. Both sources also say McMillan Binch’s billings to the Royal Bank have increased each year since 1996. Further, in the proposed Bank of Montreal merger, the Royal was careful to split the work, giving Ogilvy Renault the corporate component and McMillan Binch the all-important competition component. The sources also point out that top-rated Andrew Kent at McMillan Binch continues as the Bank’s foremost insolvency advisor in Toronto, with no current rivals at Ogilvy Renault. And no less an insider, Ogilvy Renault Managing Partner Raymond Crevier himself acknowledges that, to date, his Toronto office has neither attempted nor made inroads into McMillan Binch’s traditional strengths in lending and syndication matters.
McMillan Binch’s problems, says one of the sources, have nothing to do with Ogilvy Renault or the Royal Bank. “The firm’s problems come from competing visions, pitting those who preferred maintaining a high-end financial services firm in preference to the creation of a national or international firm,” the source explained. “Those in favor of a local firm won out when the associated firm Byers Casgrain in Montreal joined Fraser Milner. Some of the star players then left, but the core of the firm remained. How the firm retools itself at the elite level, not the presence of Ogilvy Renault in Toronto, is the question going forward.”
Thomas (Ted) Scott at McMillan Binch points out that none of his former partners (noted earlier) did much Royal Bank work. “Rumors that our relationship with the Royal Bank has soured are just plain wrong,” Scott says. To the contrary, citing the firm’s retainer on the Royal Bank’s acquisition of both Royal Trust and Prudential Insurance in the early 1990s, Scott argues that it was McMillan Binch which made inroads into Ogilvy Renault’s traditional work with the Bank. Scott also convincingly argues that his firm’s retainer late last year by the Royal in its divestiture of massive real estate holdings across the country, one of the largest commercial real estate transactions in Canada’s history, provides ample evidence of a continuing excellent relationship with the important client. According to Scott: “Things are going very well and this firm, which is generally underrated, has a lot of momentum. We value the relationship with the Royal Bank. Ogilvy Renault does a good job and is certainly serious local competition that wasn’t here before, and we are working hard to meet it by providing excellent client service.” Edwin Weir, Q.C., the Royal Bank’s general counsel at the time of the proposed Royal Bank/Bank of Montreal merger, and a former partner with McMillan Binch, would not comment on any aspect about Ogilvy Renault’s move to Toronto or on the Bank’s relationship with either firm.
The truth of the matter, in the words of one pundit, may be that “the high tide (of the booming economy) has lifted all boats.” In other words, Ogilvy Renault’s timing from an economic perspective was perfect, because there was enough work to go around for both firms. This analysis may suggest that the real showdown between Ogilvy and McMillan Binch over the Royal is yet to come. It would also suggest that Ogilvy Renault’s rapid growth is to some extent the function of a prestigious, capable, and well-connected firm arriving in the Toronto market at the right time. That may be the case, but Clay Horner, the head of Osler, Hoskin & Harcourt LLP’s business law department, says more credit is due: “Ogilvy Renault moved into this market in a very intelligent way, recruiting excellent people and capitalizing on the recruiting to fortify certain historical and longstanding relationships with clients like the Royal Bank and Nortel.”
Some pundits go so far as to say that Ogilvy Renault’s move to Toronto set the ‘cat among the pigeons’ and has been an indirect driver in the spate of Canadian law firm mergers in recent years. One leading Toronto business lawyer calls Ogilvy Renault’s presence in Toronto “the most significant development in the Canadian legal market in the last decade.” Another lawyer, who was at one time the managing partner of a large Toronto firm, regarded Ogilvy Renault as “a threat from the outset, who almost immediately showed up on deals where someone else would have acted otherwise.”
Jim Riley, however, concedes that Ogilvy Renault has not yet joined the “top-tier” of Toronto firms which he identifies (in no particular order) as made up of Davies, Ward & Beck LLP, Stikeman Elliott, McCarthy Tétrault, Blake, Cassels & Graydon LLP, Osler, Hoskin & Harcourt LLP and Torys. “Then there’s everybody else,” he says. “Right now, we would like to think that we’re at the top of the ‘everybody else’ list.”
Neither Christopher Portner at Oslers, nor sources at Torys, nor Managing Partner Sean Weir at Borden Ladner Gervais LLP regard Ogilvy Renault as “our competition”. Portner notes that in the recent $3.5 billion CanWest purchase of Hollinger assets, Oslers represented CanWest, while Torys represented Hollinger. “Jim Riley was there, but for the lending syndicate, not for the vendor or purchaser,” Portner notes, going on to add that “Ogilvy Renault has neither the resources nor the breadth of skills to act for either of those parties.” Portner is not even prepared to concede “second-tier” status to Ogilvys’ Toronto presence. “They’re more of a niche firm, but not as competition for our firm,” he says, while acknowledging Riley as a heavyweight and lauding the overall caliber of the firm. “The greatest impact of Ogilvy Renault’s foray into Toronto to date,” Portner maintains, “is in the notoriety surrounding Riley’s compensation and the impact it had on firms doing something about compensating their top practitioners properly.”
Speculation as to Ogilvy Renault’s exact place in the market aside, no one, including Portner, attaches anything but the word “successful” to the Toronto move. More important, however, are questions surrounding the future. Portner maintains that the firm will find the next phase of its evolution much more difficult. “They have a semi-Noah’s Ark, one of everything in key areas, but no depth or breadth,” he says. “The firm has only two exceptional performers in Toronto (Jim Riley and Andrew Fleming) in the business law area, but they need 20 national caliber practitioners to move to the next level.” Peter McKelvey, a consultant to the profession with Ernst & Young, agrees that Ogilvy Renault’s ability to challenge the top-tier firms will “depend on their ability to continue to attract high-caliber people.”
Riley’s argument however, endorsed by his partners, is that the necessary critical mass to become Canada’s leading firm can come from Ogilvy Renault as a whole, not necessarily from the Toronto office alone. Portner, however, rejects the argument. For instance, he says that Ogilvy Renault’s concept of foregoing a real estate practice in Toronto and drawing on the Ottawa office’s expertise in that regard when necessary simply won’t work. “I’ve never seen an Ottawa-based law firm in a major real estate transaction,” Portner says. “There are only three firms in the country that could do the CanWest deal for the vendor or purchaser.”
That may be, responds Raymond Crevier, because large Toronto firms, like New York firms, tend to “overlawyer” files. “At the bank merger negotiations, Jim Riley was there with one other partner, Francis Legault, while Osler, Hoskin & Harcourt had five or six lawyers in the same room,” Crevier says. “In Montreal, we try to be lean and mean, and we have brought that to Toronto. Sooner or later, clients are going to wake up to the reality of paying for six lawyers at a meeting.”
From Ottawa, Ogilvys’ Michael Phelan says that Christopher Portner’s perspective is marred by a business approach that differs markedly from that of his firm. “Oslers is focused in Toronto, and its other offices are satellites,” he says. “Our firm doesn’t focus anywhere but on the clients and servicing them however it might be necessary to do so.” Adds Andrew Fleming: “Sixteen teams are unnecessary. What I need is two or three teams that can do the major deals in this country. Bear in mind the limited focus of the Toronto office and the firm as a whole. We have never wanted to be all things to all people. For example, we don’t espouse general commercial law. We’re not trying to get supply contracts. Our firm is not a collection of individual practices, but a team to the core.”
And while Fortier concedes there are still “certain matters” that cannot be handled out of Toronto, that doesn’t seem to bother him, or Riley, or any other senior Ogilvy Renault partner. “Growth for its own sake has never been in our cards,” Fortier says. “Growth will be driven by opportunities presented by our clients.” The firm’s strategic plan targets “top-tier business clients” and “high-end transactional business—investment bankers” in the Toronto market, with a view to having 100 lawyers in Canada’s business hub by 2003. It is a modest goal considering the firm’s growth to date, but one that is consistent with Ogilvy Renault’s stated goal of remaining the dominant firm in the Montreal market while “punching above our weight” in Toronto.
Also on the agenda is expansion in Western Canada. The gameplan includes “controlled growth” in Vancouver, to be achieved by enhancing the labour and litigation practices and examining the business law and IP opportunities. The firm has “an opportunistic approach” to Calgary, geared to investigating the possibility of a business law practice in that city. “The five cities we’re in now are not enough to cover Canada,” says Crevier. “So we have to look at Calgary, and maybe Halifax.” The difficulty in Calgary, according to Crevier, is that a greenfield operation is hard to assemble because “there are few significant people available to build the strong tax team you need to carry on a business law practice.”
Which raises the obvious question: what about a merger with Calgary powerhouse Bennett Jones LLP? Preliminary talks between the firms ended abruptly in early 1999 when the Calgary firm turned its attention to negotiations with Torys that ultimately failed. Martin Lambert, the Calgary-based former CEO of Bennett Jones LLP, agrees that a merger bringing together the dominant firms in Montreal and Calgary makes sense on paper. “But we run with a fully open system, and they are managed by a conclave of cardinals,” Lambert says. “The cultures were so different, I didn’t think we could ever get together.” And although common sense suggests that the recent turmoil in Bennett Jones’ Toronto office would be sufficient incentive, at least from the Calgary firm’s perspective, to kick-start fresh discussions, Lambert is pessimistic. “I don’t think it will get back on.” Crevier, while acknowledging the 1999 discussions, would not comment on future prospects for such a merger. But a lawyer at Ogilvy Renault, speaking on condition of anonymity, speculated that Bennett Jones were “damaged goods that could taint our success in the Toronto market,” an attitude that certainly will not mesh with the Calgary office’s “propensity to be in charge all the time,” to use the words of a former Bennett Jones partner.
There are indeed differing views among Ogilvy Renault’s partners as to the best method of future expansion. John West notes “differing degrees of openness to merger as an option exist among the partners.” Louis Gouin, a senior insolvency partner in Montreal firmly backs the culture-preserving aspects of the “greenfield” approach, although he concedes it is a slower process than other forms of growth. Riley believes that creating a platform that attracts groups from other firms, as the firm did in Vancouver, may be a preferable alternative to outright merger. The Executive Committee, for its part, is keeping all options open. “We’ve never turned off our phone,” says Yves Fortier. “We’ve looked at others, and others have looked at us.”
However Ogilvy Renault decides to expand, Jim Riley is determined that his new firm will be a “world class player” within 20 years. “To do that, you have to be the number one firm in Canada, and I’ve given us ten years to do that,” he says, “because it requires going through three generations of young lawyers, at five years a generation and we’ve already been around for almost five years.”
When our Calgary corporate lawyer with the “insatiable appetite for crow” was asked his views regarding Ogilvys’ future prospects in Toronto, he laughingly questioned what value could be attributed to the opinion of someone who was so obviously wrong at the outset. When pressed, he answered as follows: “I think people underestimate the long term impact of Ogilvys’ Toronto office. The real advantage or payback of a greenfield office, once they hit their stride and assuming the initial recruitment was carried out intelligently, is that they are not saddled with ‘under-performing’ partners. We’ve seen this very clearly in the Calgary market with the performance of Blakes and McCarthys which were greenfield start-ups that now compete with Bennett Jones and Macleod Dixon. I think you will see the same in Toronto with Ogilvy going up against major transactional pratices like Oslers, Davies, Ward & Beck, and Goodmans.” And this is undoubtedly what Riley means when he says, “The trick is to find the least size required to attain market dominance.” Classic trompe l’oeil.
Julius Melnitzer is a Toronto legal affairs writer.
Lawyer(s)
Raymond Crevier
Clive V. Allen
L. Yves Fortier
Christopher Portner
M. Brian Mulroney
Michael J. Lang
James A. Riley
Thomas I.A. Allen
David C. Gavsie
William Hesler
Thomas S. Gillespie
Patrick E. Kierans
William W. McNamara
Charles F. Scott
J. Scott Wilkie
John B. West
Thomas A. Roper
Gilles Touchette
Kenneth J. Snider
Ava G. Yaskiel
Norman M. Steinberg
Andrew Fleming
Gregory J. Nash
Patricia L. Olasker
Bruce C. Barker
James D. Scarlett
T.E. (Ted) Scott
E. K. (Ted) Weir
Clay Horner
Peter D. McKelvey
Francis R. Legault
Michael L. Phelan
Firm(s)
Norton Rose Fulbright Canada LLP
Stikeman Elliott LLP
Osler, Hoskin & Harcourt LLP
McCarthy Tétrault LLP
Torys LLP
Blake, Cassels & Graydon LLP
Davies Ward Phillips & Vineberg LLP
Royal Bank of Canada
Bank of Montreal
CIBC Mellon
Credit Suisse First Boston Canada
Goldman Sachs & Co.
Gordon Capital Corp
National Bank of Canada
Scotiabank - Global Banking and Markets
Quebecor World Inc.
Rio Tinto Alcan Inc.
Bombardier Inc. - Corporate Office
Power Corporation of Canada
Domtar Corporation
Hydro-Québec
George Weston Limited
724 Solutions Inc.
Suncor Energy Inc.
Barrick Gold Corporation
J.P. Morgan Chase & Co.
Hudson's Bay Company
Canwest Publications
Sun Media Corp.
Volvo Commercial Finance Canada
Borden Ladner Gervais LLP (BLG)
Fasken Martineau DuMoulin LLP
McGill University
Université de Montreal
University of Sherbrooke
Université Laval
Gowling WLG
McMillan LLP
Alexander Holburn Beaudin + Lang LLP
Ernst & Young LLP - General Counsel's Office
Bennett Jones LLP
Cole & Partners Valuation
Césart Création Inc.
Norton Rose Fulbright Canada LLP