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Sitting at an elegant French restaurant across the street from his office, Andr� Pr�vost urges a lunch companion to linger at the table and order the profiteroles drizzled with chocolate sauce. “It’s very French,” says Pr�vost, managing partner of the 180-lawyer Montreal office of Toronto’s McCarthy T�trault. The 52-year-old Pr�vost, whose exuberance occasionally produces a high-pitched giggle, speaks fluent English with a thick French Canadian accent. When asked to describe the difference between big U.S. law firms and their counterparts in Montreal, Pr�vost grins. He starts small. “This,” he says, gesturing around the dining room, “is the difference. The U.S. firms have huge cafeterias. Open until 3 a.m. My God, why do you stay open? Here, there’s no eating dinner at the office.” Back at McCarthy’s office, a historic, remodeled hotel called Le Windsor that dates back to the 1800s, Pr�vost points out more examples. There is a large library that lawyers use regularly; U.S. lawyers, he contends, are more apt to do their research online than in the stacks. Downstairs, a half-dozen chandeliers light up Le Windsor’s marble lobby, a touch of Old World elegance unheard of at U.S. firms. Off the lobby, Pr�vost throws open French doors to reveal an ornate gilded ballroom, named for Versailles and painted Tiffany blue. But don’t let the facade fool you. These days, McCarthy — an 800-lawyer-plus Toronto firm whose roots in Montreal stretch back to the 19th century — models itself after modern U.S. firms. It has eight offices (including one in London) and an affiliation with New York’s Fried, Frank, Harris, Shriver & Jacobson. Its practice groups, which had long reported to regional managers, are consolidated under national leaders. Partner compensation, previously calculated on a region-by-region basis, is determined by a central committee, and comes out of a single pool. The firm created a board late last year and selected a chief executive officer; two other management positions were created as well. Pr�vost says that in May he toured the New York and Washington, D.C., offices of several big U.S. firms to meet with managing partners and office administrators. He was interested, he says, to see how U.S. heavyweights use office space and new technology. He’s in the market for fresh ideas: With the lease on its Montreal office due to expire in a few years, McCarthy may abandon the chandeliers and move to more pedestrian digs in one of Montreal’s skyscrapers. There is a reason for the changes: It’s a brand-new legal market in Canada generally, and in Montreal in particular. In the past few years, Montreal’s firms have been through a major consolidation, and the city’s premier hometown firm, 400-lawyer Ogilvy Renault, has gone national, launching offices across Canada. Ogilvy entered the Toronto market in 1996, but reinforced its presence last October, when it merged with Toronto’s Meighen Demers. Says Ogilvy corporate finance partner Norman Steinberg: “Our goal is to be present in all key [Canadian] markets and all key sectors.” Meanwhile, newcomers from Toronto have come to Montreal, joining such longtime eminences as McCarthy and 400-lawyer Stikeman Elliott. Last year 380-lawyer Osler, Hoskin & Harcourt and 480-lawyer Blake, Cassels & Graydon opened offices in Montreal, staffing them mostly with talent poached from local firms, including a few key partners from McCarthy’s Montreal office. Another Toronto firm merged with a top Montreal firm last year, creating the 200-lawyer Davies Ward Phillips & Vineberg. All this upheaval has introduced Canadian lawyers to a principle that U.S. lawyers have known for a long time: Bigness begets bigness. Salaries have skyrocketed, law school recruitment has intensified, and billing rates have shot up. Partners are no longer wedded to one firm for their entire careers. The lateral market and the accompanying rumor mill are in full force. In late 2000, National Post, a general circulation daily, began publishing a column every Wednesday that tracks law firm lateral moves and industry gossip. Some differences remain between Montreal’s large firms and their U.S. counterparts. Montreal firms offer shorter billables targets than American firms, as well as a collegial workplace in which lawyers leave early on summer weekends. Associate layoffs? Pas de tout. And talk of profits per partner and gross revenue is confined to a whisper. But Montreal’s lawyers know that law has become a business, and that they have lessons to learn from the Americans. Now that a bottom-line orientation has hit town, is there still a place for long lunches and grand ballrooms? In the ’60s and ’70s, Montreal was Canada’s financial center. But that era ended in the late ’70s, when separatist leaders began pushing for Quebec’s sovereignty. With only a few exceptions, such as Air Canada, the aerospace firm Bombardier Inc., and the defense company CAE Inc., the city’s banks and businesses eventually fled to Toronto, leaving Montreal with high unemployment, weak real estate prices, and a high crime rate. It wasn’t until a referendum on separatism was defeated in 1995 that political tensions began to abate. “The separatist issue has largely moved off the political agenda,” says CAE vice president and general counsel Hartland Paterson. Montreal’s four universities became magnets for biotechnology research, the city’s media industry began to develop, job stability increased, and investor confidence rose. Such Toronto law firms as Osler and Blake followed that growth to open offices in Montreal or build affiliations with firms there. As firms from Toronto moved in, they brought higher rates and salaries to a much smaller market. But compared to the U.S. market, the numbers are pretty low. First-year associates at top Canadian firms earn about $50,000 to $75,000 (Canadian), or about $33,000 to $50,000 (U.S.), says Caroline Haney, a recruiter at ZSA Legal Recruitment. A sixth- or seventh-year associate who is up for partner may take home about $133,000 (U.S.). Profits per partner “are all over the place,” Haney says. But she says she recently helped place a partner at a top Montreal firm with a million-dollar (Canadian) book of business. That partner’s compensation was about $233,000 (U.S.). Others say that for senior partners, compensation can reach into the high six figures. Fees have gone up, too. Clients in Montreal used to pay rates about 20 percent to 30 percent lower than those in Toronto, but that’s becoming a thing of the past, says Air Canada senior vice president and general counsel John Baker, who heads a 16-lawyer department and primarily uses Stikeman for the company’s legal work. “There is a greater array of choices and a higher degree of aggressive marketing [in choosing counsel],” Baker says. “These firms sell national service, but what’s not stated is that national rates come with that.” This may seem old hat to Am Law 200 firms, which have done the merger talks, designed the strategic planning, and long ago started poaching top prospects from competitors. But Montreal’s culture, language and legal system adds a layer of complexity. Nearly all of the city’s lawyers use either French or English as their primary language. But at the large firms, almost all lawyers are bilingual, almost by necessity. Canada’s other nine provinces use legal codes based on common law; Quebec’s is based on civil law. Deals and court documents in such practice areas as contracts, personal liability and local real estate are generally executed in French. National laws that govern such things as antitrust, bankruptcy and criminal law use common law, and documents in those practice areas are usually drafted in English. In court, witnesses have the right to testify in either language. Since Canada lacks a central securities regulatory body such as the Securities and Exchange Commission, an offering structured in Quebec but issued nationwide could be subject to 10 different provincial securities laws, and would require a legal team that is familiar with all of them. Pierre-Denis Leroux, a Blake partner based in Montreal, says he recently completed a $350 million (Canadian) public securities offering for a subsidiary of CDP Capital, a Quebec-based fund manager. “The structuring work was done here [in Montreal],” Leroux says. “But there were local law implications in all 10 provinces.” Leroux organized a team of roughly 30 lawyers at Blake offices all over the country to work on the transaction. The bilingual nature of Montreal’s business community requires that lawyers function in both languages in business and socially. Business meetings are often conducted in both English and French, and a question asked in English is sometimes answered in French, says Norman Saibil, a partner at Blake’s Montreal office. That can make meetings “much more interesting,” he says. And in Montreal, it never hurts to speak at least a few words of French to the wait staff at a French restaurant to ensure the best service. Language isn’t the only barrier that non-Quebec law firms must overcome to succeed in Montreal. There are regulatory ones, too. Just ask Osler. The firm had wanted to open an office in Montreal for years. But it didn’t want to merge with a local firm; instead, its leadership wanted to seed the new office with a few of its Toronto lawyers and recruit laterally from the Montreal market, says Brian Levitt, the firm’s Montreal-based co-chair. It also wanted to hire non-Quebec-trained lawyers as it saw fit. This was untested territory. Under guidelines set by Quebec’s bar, the Barreau du Qu�bec, lawyers who are not certified in civil law need to obtain permission from the bar to practice in Quebec — and such permission had never been given to outsiders, although some non-Quebec lawyers working on transactions in Montreal had been allowed to set up temporary offices. In the past, firms from other provinces that wanted to work in Montreal simply brought on local counsel. The question that Osler posed was: Would the bar open its doors to non-Quebec lawyers? The firm’s management, fearing a fight, hired one of Montreal’s top litigators, Langlois Gaudreau’s Raynold Langlois. Although Langlois says that the bar was open to Osler’s entry, he went through six or seven months of discussions, helping the organization develop a business plan to determine what regulations should be placed on non-Quebec lawyers. For Osler, the move to Montreal was strategic. “We saw large deals we weren’t getting,” says Robert Yalden, a partner who moved to Montreal from the firm’s Toronto office. For high-end work — the deals that Stuart “Kip” Cobbett, the managing partner of Stikeman’s Montreal office, calls the “top, top business transactions” — Stikeman, Ogilvy, and Davies Ward are better known. But Osler had made inroads. In 2000, partner H.B. Clay Horner was Canadian counsel to The Seagram Company Ltd. in its sale to Vivendi Universal S.A., a $46.5 billion (Canadian) transaction that was Canada’s biggest M&A deal to date. The seller, Montreal’s Bronfman family, was not an institutional client, Yalden says — most of its work had gone to a Montreal firm that has since merged into Davies Ward. But New York’s Simpson Thacher & Bartlett, which represented Seagram in the United States, had recommended Osler to the family, he says. Due to that transaction’s prominence and Osler’s hiring of Levitt, a former CEO of a Montreal company, to head its local office, Osler has thrived. It opened its doors in April 2001 with three lawyers from Toronto. Since then, the office has grown to 40 lawyers by hiring laterals. The Montreal office recently moved to a larger space — in contrast to McCarthy’s office, it’s in one of the city’s skyscrapers. The firm’s partners helped redesign the space, choosing modern furniture in muted colors. (Blake followed Osler to Montreal in September 2001, similarly building its office — which now has 19 lawyers — through lateral hiring.) Not every big Canadian firm acts on the urge to set up shop in Montreal. For instance, Toronto’s 275-lawyer Torys, which has a New York office and specializes in U.S.-Canada cross-border work, does not have a Montreal office. Though rumors circulate that Torys talked to a few firms about merging in Montreal, managing partner Les Viner says that for now its strategy doesn’t include opening an office in Montreal. The firm relies on several Montreal firms for counsel on Quebec law, particularly Montreal’s Desjardins Ducharme Stein Monast, he says. Although Torys has the strongest New York presence of any large Canadian firm, thanks to its 1999 merger with New York’s 75-lawyer Haythe & Curley, there’s no question that marketing south of the border has become important to all Canadian firms. (Osler, Stikeman and Davies Ward maintain offices in New York. Of those three, only Davies Ward regularly practices U.S. law.) Still, another Canadian-U.S. merger seems far off. “I don’t see one on the radar screen,” says Pierre-Andr� Themens, the managing partner of Davies Ward’s Montreal office. Likewise, the big U.S. firms in Toronto, which include Skadden, Arps, Slate, Meagher & Flom; Shearman & Sterling; Baker & McKenzie; and Dorsey & Whitney, seem to have little inclination to set up shop in Montreal, a market still too small and too insular to be profitable for them. With the exception of Baker, which has offices in Calgary and Toronto, none of the U.S. firms regularly practice Canadian law. (Coudert Brothers, which merged in 1997 with McDougall Caron, a midsize Montreal firm, announced in 2001 that it would close its Montreal office. A number of lawyers left Coudert after that announcement, and the firm ultimately shut its doors in Montreal.) So for now, the Montreal legal market belongs to its native firms and its Toronto newcomers. And while in some ways those firms mirror the consolidation of the U.S. market, most Canadian lawyers here think Montreal’s differences will always set it apart. A case in point: “We would never do layoffs,” says McCarthy’s Pr�vost. In a down year, he says, “partners would take less income.” For many firms in the United States, that just doesn’t translate.

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