It used to be most people saw boutique firms as a small collection of law-firm lawyers who practised just one area. In some cases, that’s still true. But today’s boutiques may also have as many lawyers as a mid-size firm, they may be made up of former general counsel, they may encompass practice areas that feed into its main focus.
Large or small, the one differentiator between them and the large national law firms remains the same: focus. It can be geographic, sectoral, or area of specialization, but without it, it’s hard to succeed in what is becoming an increasingly competitive sector of the legal landscape.
Here is a snapshot of three different boutiques.
Wildeboer Dellelce LLP
Lawyers: 50 (including students)
Focus: Corporate Finance and M&A
When five lawyers from Stikeman Elliott LLP decided to start a Corporate Finance and transactional boutique in 1993, more than a few people thought they were crazy. Without all the ancillary practice areas, how did they imagine they stood a chance at winning transactional work away from the big full-service business firms?
“Maybe we were crazy. No, not crazy — we were carefree,” says co-founder and managing partner Perry Dellelce, who was 29 at the time. “When we started, we knew three things: We wanted to act for entrepreneurs; we wanted to focus on transactions and corporate finance rather than day-to-day corporate commercial work; and we didn’t want to be in a large, bureaucratic firm. We wanted to do it our own way and have fun.”
Within a week of hanging out their shingle, they purchased a pool table for their library as a tangible symbol of their new culture. But inside the individual offices were lawyers who could do deals, including tax lawyers, because “you can’t even get into the room without that. Anybody can do a share- or asset-purchase agreement, but to file a prospectus, structure an ETF, structure mutual funds, do sophisticated cross-border transactions, you have to have the tax expertise. So we’ve always made sure we have high-quality tax practitioners.”
Pool table and tax lawyers in place, the young boutique set about going after clients. Not their old ones — new ones. Dellelce says they used an innovative marketing campaign combined with an aggressive approach to pricing.
“Our client base at the start wasn’t the Air Canadas, the CIBCs and the Nortels. Our client base was entrepreneurs building businesses, and legal fees were a significant expense for them. We were taking equity for fees long before Silicon Valley made it popular. We were doing alternative fee arrangements — a discount if it fails, a premium if it succeeds — and numbers of other ways of taking payment of fees for transactions from the start,” he says, a policy the firm has maintained for 25 years even as it has grown to more than 70 people.
By being sensitive to clients’ cash-flow needs and working with them to build their businesses, they not only have attracted clients in new industries, they have won their loyalty, keeping their files as their businesses grow, says Dellelce.
“We were pioneers in the cannabis sector,” he says. They and LaBarge Weinstein LLP in Ottawa did the very first financing by Tweed Marijuana Inc. in early 2014. Tweed has since renamed itself Canopy Growth Corp. and this summer had a market capitalization approaching $10 billion. Wildeboer Dellelce still acts for Canopy and other marijuana companies as well.
Dellelce says it also has a robust Fintech practice, adding when it comes to bitcoin mining and crypto-currency, he doubts any firm in Canada has acted on more deals. “If anyone really understands that world, it’s certainly us.”
Wildeboer Dellelce recently announced it will accept payment from clients in crypto-currency.
Katy Pitch, head of the firm’s tax practice, says the focus on entrepreneurs is a distinguishing factor “and it’s what gets us to these kinds of new industries. Whether it’s entrepreneurs starting the blockchain or starting the cannabis stuff, we’re there with them at the start.”
At a large business law firm, the path may not be that adaptable, she says, but at a boutique “our path can be flexible, so if someone comes in with a new idea or a new industry, we can adapt that very quickly.”
Pitch, who joined the firm from Stikeman less than two years ago, says the work itself has been “seamless.”
“The work I did before and the work I am doing now is very comparable, but the personal aspect is much different. For me one of the most notable differences is the appreciation for your hard work and what you’ve done. I constantly get thank yous and people checking in. I think it goes to the family and personal aspect of it.”
Dellelce says, “to make it perfectly clear, we view our competition as Torys, Stikemans, Goodmans, Davies ... the Seven Sisters. We lose our students to and get our students from those firms.”
That’s also where they do most of their lateral recruiting. Do their clients follow them to a boutique when it comes time to do a financing or a deal?
“If it’s a senior lawyer at partnership level, unless they have a specific expertise, like Katy, we wouldn’t ask them to join the firm unless they could deliver a significant portion of their book of business, 50%, 60% or 70%,” Dellelce says,. “If it’s a junior lawyer we need just to do the work, we don’t expect them to bring anything, really.”
While the firm does not belong to an international law firm alliance, it has contacts in many different countries and a series of informal alliances with Canadian Labour and Employment boutiques, Litigation boutiques, firms that do competition work, environmental work — whatever is needed to get the deal done.
As for the iconic pool table, Wildeboer Dellelce has grown so much, it’s now on a floor that has only client boardrooms and meeting rooms, which means these days, it’s more often covered with cheese plates and other hors d’oeuvres than pool balls.
Still emblematic, just in a different way.
Cito Energy Law LLP
Focus: International and Eastern Canada Energy Law
Tony Cioni and Jay Todesco, co-founders of Calgary-based Cito Energy Law LLP, are both former general counsel at large energy companies.
Todesco was in-house at CNOOC Nexen for more than a quarter century, and did transactions in more than 65 countries. Tony Cioni did the same kind of work at Husky Energy for five years before decamping for Torys LLP.
Around 2013, their worlds collided when Todesco used Torys and Cioni as outside counsel on a file in Eastern Canada.
Then came the big slide in oil prices. “When the downturn hit,” says Todesco, “the first thing we did (at Nexen) was renegotiate with our outside counsel to cut their fees by at least 20%. Then we stopped using outside counsel and started keeping everything in-house because we were just trying to survive on very small budgets.”
The next phase was to trim in-house departments. Todesco was among those who found himself without a job. He and a friend who had also been unexpectedly downsized realized they had significant experience in outbound international energy law, as well as servicing the day-to-day legal needs of a major oil companies. “We looked around Calgary and no one even at the big firms was advertising that they do international Oil & Gas,” whether incoming or outbound, he says.
The first idea was to talk to a major firm about becoming a lower-cost bolt onto its energy practice.
They talked to five major law firms in Calgary and said, “we’ve identified an area you’re not servicing, or not servicing well, and we have a different cost model and operating model. You don’t have to put us in your offices in downtown Calgary, you can put us in a satellite office, we don’t need expensive space and a library or research facilities. We’ll be a small, nimble, inexpensive operation you can sell to your clients.”
Surprisingly, he says, every firm turned them down. “They thought we would cannibalize their operation.”
Cioni saw their pitch while he was at Torys and felt a bolt-on was not a great idea. “I kept saying to them you should just do this on your own.”
It was around that time he decided to call Todesco and the other lawyer, saying: “Shove over, I’m joining you.” They started working on a boutique concept instead.
The other lawyer, who Cioni says “shall remain nameless, but who I plan to steal,” opted to join a major firm rather than go the boutique route. “I call him every month and bug him, asking: ‘Do you hate it yet? They focus so much on M&A and Finance, they don’t even know what you do.’ ”
Meanwhile, he and Todesco rented about 1,200 square feet in downtown Calgary and hung out their shingle as equal partners, taking on two more lawyers, one of whom was formerly in-house at Talisman (now Repsol).
Their business plan? Low-cost, highly specialized advice.
Their eyes on the bottom line help make low pricing possible.
Cito Energy Law saves money by using an off-site CFO who is a chartered accountant, Microsoft Office instead of an IT department, and has just three offices and a good-size boardroom, which is where Cioni usually works, as its space. “It’s a bit like hoteling. But for international work in particular, Jay and I are used to being told: ‘Here’s your laptop, here’s your passport. Don’t get arrested.’ ” It helps that Todesco has been seconded to Suncor on an open-ended retainer — “a good source of income for the partnership,” he says — and an arrangement that still gives him the freedom to take time if a large transaction comes his firm’s way, as it did over Christmas when French oil giant Total wanted to enter into agreements for two exploration licenses offshore Guyana.
The very small boutique acts for some very big names in the energy world, doing both day-to-day and transactional work.
When Cito needs advice in areas such as securities or competition, Todesco says they just pick up the phone. “We’re not affiliated with anybody so I don’t look for firms, I look for the best person to do the job.”
Since they’ve been up and running, a number of firms have asked if they could be Cito’s affiliate and provide their tax advice and securities advice. And Cito politely turns them down. If Cito needs tax advice on a deal, for example, Todesco says “we’ll look around and see who did the last one, who did a great one, who knows what they’re doing, and who would be a good fit with the client.”
Both partners say they’re mulling over expanding. But their model will not involve traditional partners and associates. While the firm could conceivably take another partner (profits would then be split evenly in three, Cioni says), the other lawyers will be senior people let go from an oil company, in-house counsel who are heading towards retirement or who have a young family and may only want to work three days a week — in other words, experienced counsel looking for flexibility.
While they may bring in some work, they’ll also be fed work.
Cito says the boutique can cover for in-house counsel on parental leave, off due to illness, or even be retained to do specific piece work.
In today’s harsh environment — for law firms if not the oil patch — it seems Cito has carved out a niche.
Brown Mills Klinck Prezioso LLP
Focus: Pension, Benefits and Executive Compensation
Elizabeth Brown, Lisa Mills and two other partners were part of the pensions and benefits team at Hicks Morley Hamilton Stewart Storie LLP, a Labour and Employment firm, when they realized there was a strong business argument for breaking away and operating as a stand-alone boutique.
The argument, says Brown, one of the boutique’s founding partners, is that designing a new pension plan or restructuring an old one these days increasingly involves shared risk between the company and its employees. To make it work requires an element of trust between the two sides.
But unions or other employees’ representatives who are across the table with lawyers from a firm that also practices employer-side Employment Law may have had an unhappy dealing with the firm in the past, albeit in a completely different area. She says that can create mistrust right off the bat.
“It’s best if you’re not as identified with one side or the other,” says Brown. Even as a boutique, she says, “we’ll never be viewed as neutrals” because the firm acts for the employers who are responsible for the plan. But because it doesn’t practice Labour and Employment Law, the hope is the employees’ representatives will come in without previous baggage “instead of literally being on the opposite side of the table, maybe the table’s a little bit rounder.”
It was an argument that resonated with four partners in the group. The summer of 2017, Brown Mills Klinck Prezioso LLP was formed practising only Pension and Benefits Law and Executive Compensation Law.
Their business model is based on reputation. At their previous firm, they were lead pension and benefits counsel to Stelco in both major restructurings, for example, and the client is among those that has moved with them for its pension matters.
One thing Brown is very clear about: Brown Mills Klinck Prezioso (or BMKP as it’s known) is not a lower-cost option.
“Every law firm today has to be examining how it provides legal services, and be open to discussions with clients about partnering in different ways. We’re no different. But in no way is this to offer a lower-cost alternative. It’s quite the opposite,” she says
Pension clients are often managing tens of billions of dollars in assets, she says, “and this is people’s retirement money. So clients are not necessarily looking for the deepest discounts in rates; they’re looking for expertise and experience and someone who can think outside the box. And that’s who we are.”
Mills says another element of their business plan is picking up work from some of the large firms that are thin on the ground in this area.
“A lot of the large national firms have a very small pension group, and it’s maintained typically to do deal work so that as part of an M&A, they have pension expertise. Some of them have over time decided they don’t want to maintain Pension and Benefits lawyers just to do deals, and so there are some opportunities where we can become their pension and benefits department, if you will, for the purposes of these transactions.”
BMKP, like other boutiques, will call on another firm if it needs litigation, corporate securities, tax or labour and employment advice, but is not part of any formal law firm network.
“That’s intentional,” says Brown. “We’ve spent time developing relationships with lawyers in other firms and we don’t want to be in a network where you have to use so-and-so. And often a client will say: ‘We have a lawyer in Québec we like, can we work with them?’ We say, of course.”
Mills, talking from Ottawa, sees one very big difference between working at a seven-lawyer boutique and a 120-lawyer labour and employment firm. “I actually made the payroll deposit the first few weeks because we needed to set up a payroll service provider, and I hadn’t done that,” she says, laughing. “So you’re closer to the ground, which from my perspective is very rewarding.”