Calgary is flush with litigation lawyers, while Bay Street business law offices are leaving the field over conflict-of-interest fears

Calgary’s crawling with litigators.

They make up almost half of Bennett Jones, the city’s heftiest law firm – however you wish to define heft. They’re thick on the ground at virtually every indigenous Calgary firm: Burnet Duckworth & Palmer, Macleod Dixon, Fraser Milner Casgrain, Borden Ladner Gervais … the list goes on.

The legal powerhouses of Bay Street will tell you this is a misguided strategy. Instead, in their quest to become national business law firms, they have been steadily devaluing litigation. Better to avoid the potential conflicts of interest that can arise from taking sides in legal disputes and chase better-paying mandates from clients doing business deals.

Even in Calgary, from the 108-lawyer Blake Cassels & Graydon through to the 55-lawyer shop of Stikeman Elliott, the outposts of Toronto firms are deliberately light on litigators.

Too many litigators is bad for the business of a business law firm, especially since the Supreme Court of Canada broadened the definition of conflicts of interest and client loyalty in the 2002 R v. Neil decision. As currently interpreted, Neil essentially imposes on law firms a duty of loyalty regarding clients’ strategic business interests. And that can fetter a firm’s litigators.

“To the extent that a firm has a large litigation practice that isn’t focused, business-critical litigation, and doesn’t go through a rigorous selection process, that compounds the problem,” said Robert Lehodey, a corporate partner with Osler Hoskin & Harcourt in Calgary. A $50,000 or $500,000 collection file for a junior oil and gas company can be a pretty good case from a litigator’s perspective, he said.

For a business law firm? Peanuts in revenue, and opens up the risk of losing a more profitable mandate down the road.

“We would have a hard time taking something like that on without thinking if that would compromise us, not just from a technical conflict, but from a business conflict,” Mr. Lehodey said.

If you have to have litigation, the national business law firms say, keep it subordinated to the firm’s larger vision. Tax litigation, good. Labour litigation, not. Family law and personal injury are almost as bad as wanting to sue a bank.

“Part of our drive to represent Canada’s largest companies means our litigators have to represent our clients,” said Gregory Turnbull, managing partner of McCarthy Tetrault’s Calgary office. “That eliminates a lot of the kind of litigation you can do.”

It’s conventional wisdom on Bay Street, but not in Calgary.

“Litigation has always been our strength, and it’s been complementary to the business law practice, and a critical part of the overall business here,” said John Cordeau, a senior litigator with Bennett Jones. “Two of our largest new clients last year came into the firm as a result of our litigation capability and expertise – in our Toronto office.”

Calgary’s legal community is not just peopled with litigators – they’re running the show. Matthew Lindsay, the Calgary managing partner of Fraser Milner Casgrain, is a litigator. So is Kenneth Warren at Gowlings (which, admittedly, favours litigators in management positions in many of its offices). Ditto Jerri Cairns, the new managing partner of regional firm Parlee McLaws.

And Miller Thomson’s Calgary managing partner Michael Bailey, as well as Davis LLP’s current and former Calgary managing partners, Robert Calvert and Gwen Randall. McLennan Ross, which is a full-service firm in its Edmonton office, is all litigators in Calgary.

Bennett Jones, Macleod Dixon, Burnet Duckworth & Palmer and Borden Ladner Gervais have been giving the top management spot to corporate partners for a while. And not just as a sop to Bay Street sensitivities – these firms all see themselves as business law firms too.

But litigators cast a long shadow over their management and strategy – especially at Bennett Jones, which owes much of its market position and reputation to litigation superstars such as Jack Major and Clifton O’Brien.

After more than 10 years of competing against comparatively litigation-heavy Calgary incumbents, the national law firms still don’t get it.

“We don’t play in as many markets as some of the Calgary firms and we don’t want to,” said Christopher Nixon, a corporate partner with Stikeman Elliott in Calgary.

Mr. Lehodey concurred. “We want work that hits our sweet spot.”

Here’s one reason for the difference: Calgary’s litigation heavyweights don’t just perform in the courtroom. They’re players in the boardroom too.

“I sit on boards, Jack Major sat on boards, Cliff O’Brien sat on boards, our other litigators are part of the business community here, and they bring in business to the firm,” Mr. Cordeau said.

But that’s only half the story. The other half has to do with the nature of Calgary’s economy and energy industry. They’re cyclical. A downswing always comes. Deal flow dries up, and it is a firm’s litigation partners who feed it until commodity prices start to rise and capital returns to the sector.

“Litigation capability in this city is critical,” said Kent Anderson, head of Miller Thomson’s litigation department in Calgary and – surprise – former office managing partner. “Everybody gets in trouble along the way, and there’s generally more litigation during downturns.”

In Toronto, firms specializing in litigation proliferated after the Bay Street elite became more sensitive to issues of conflict of interest.

So far, Calgary has comparatively few litigation boutiques – Peacock Linder & Halt and Code Hunter form the vanguard – but, with conflicts exacerbating, the market may well be ripe for more.

“Conflicts are a problem in this market, and it is fair to say that, in particular in commercial litigation, we have been beneficiaries of that,” said James Lebo, a litigator with McLennan Ross. They have benefited not just in the war for clients – grabbing files the nationals won’t touch – but in the quest for talent as well.

“As you see firms refining what they want to do, it makes sense for a litigator like me or some of my colleagues to say, well, given the type of work I want to do, maybe I should go to a place like McLennan Ross.”

Credit: SPECIAL TO THE GLOBE AND MAIL

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