Tech downturn hits local law firms

Courtney
Courtney Symons
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One Ottawa law firm’s decision to close down its business law operations is, to some, another blow to high tech in Ottawa.

(Stock photo)

Multiple sources say Blakes, Cassels & Graydon LLP has closed all but its government-focused operations, going from approximately 20 lawyers down to four. The law firm declined to comment.

During tech’s glory days in the run-up to the turn of the millennium, the number of professional service providers catering to the sector boomed alongside it. But how are those service providers faring in the aftermath of Silicon Valley North’s decline, with fewer public companies and large deals going on in the capital?

OBJ takes a look at how several other local law and accounting firms are responding to the changing technology landscape in Ottawa.

 

LABARGE WEINSTEIN LLP

“I’ve noticed a number of legal and accounting departures over the last three to six months,” says Debbie Weinstein, co-founder and partner at LaBarge Weinstein LLP. “Ottawa is a byproduct of a softer economy nationally and a more difficult economy locally.”

Despite that, the local business law firm is up to 21 lawyers and has expanded its reach to serve Toronto, Waterloo and Vancouver.

“We have not turned our back to Ottawa,” Ms. Weinstein says, noting many startups have popped up in the region in recent years.

LaBarge Weinstein now spends more time with those early-stage companies through networking events and provides introductions to angel investors. For startups unable to afford payment for services, fees are deferred until they can. If they go out of business, the firm writes it off.

“We’re very tactical,” Ms. Weinstein says. “We have to be agile.”

 

KELLY SANTINI LLP

“We certainly feel the difference in that there aren’t as many of those exciting deals and financing transactions going on as there were a few years ago,” says Kelly Sample, a managing partner at Kelly Santini LLP. “Something was always around the corner. It was an exciting time to be a business lawyer.”

These days, the city doesn’t see nearly the same volume of merger and acquisition deals and investment transactions, she says.

An unfortunate new avenue for business has popped up, however: assisting firms with downsizing their workforces.

“It’s not as fun as doing deals,” she says.

The firm has managed to double in size over the past four years, which she says comes from being diversified and not relying on any one industry.

Robert Ford, a business lawyer specializing in tech who was formerly with Gowlings, has just joined the team at Kelly Santini – a sign of the firm’s hope for the future of the local tech landscape.

 

GOWLING LAFLEUR HENDERSON LLP

“We’re excited by some of the startup activity we see (in Ottawa),” says Wayne Warren, a managing partner at Gowling Lafleur Henderson LLP’s Ottawa office. “We’re trying to partner with those young enterprises early on.”

The national firm, which began in Ottawa, has been able to maintain a fairly stable head count, Mr. Warren says, because of its diversified business streams.

Gowlings has been involved in Startup Canada, the national entrepreneur-led initiative to foster Canadian innovation, as well as in Invest Ottawa and various university initiatives.

To adapt to the decrease in large public companies, the firm has begun bundling its services for startups and allowing alternative payment methods for those who can’t afford it, Mr. Warren says.

“We would obviously like to see an upsurge in the technology industry in Ottawa,” he says. “We think there’s a good foundation for that … but the resurgence is maybe not as fast as we would like it to be.”

 

DELOITTE

“An IPO is not the way to go these days,” says Michael Runia, managing partner for accounting firm Deloitte in Ottawa.

With fewer public companies, the firm’s transaction work decreased. But the number of private, equity-based startups began to rise and Deloitte saw an opportunity, Mr. Runia says.

Services for startups now include connections to angel investors and other financing vehicles, hosting venture capital fairs and the continuation of the Fast 50 program, a list of the top 50 Canadian technology companies.

As those startups mature into growth-oriented businesses, Deloitte offers services including tax planning, business structuring and strategic consulting to help them grow.

“We continue to have strong market share (in Ottawa’s tech sector),” Mr. Runia says. “We absolutely continue to play there and invest there.”

SIDEBAR: FALLEN FIRM

McCarthy Tétrault LLP used to have a thriving Ottawa branch that serviced various technology companies, but its downtown office was shuttered in September 2009. A spokesperson wasn’t available for comment to discuss the shutdown, but media reports at the time called the decision “puzzling.” The firm had seven partners, two associates and 11 administrative staff, according to an article in the Law Times online publication. The branch’s experienced lawyers were quickly snatched up by other local law firms.

Many legal experts speculated the closure was due to fewer large clients available in the city, but a representative of the law firm said at the time that it was the result of a strategic review of the firm’s national business plan.

Organizations: LABARGE WEINSTEIN, Gowlings, Startup Canada Fast 50

Geographic location: Ottawa, Silicon Valley North, Toronto Waterloo Vancouver

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Recent comments

  • hansonduby
    July 03, 2013 - 05:20

    Great information about the closing of the business law operations by an Ottawa law firm. It is surprising that law firms like Blakes, Cassels and Graydon LLP has closed almost all its government focused operations. The operation has declined to four lawyers from the 20 lawyer’s strength. The local law firms seem to respond in their own way to the changing technology in Ottawa. Many other such companies have been affected and it seems unpredictable now to say what would be an approach by a specific law firm as some other private firms are doing well.

  • Bruce Lazenby
    December 11, 2012 - 06:54

    I am confused. You talk about Blake's shrinking (never a big players in tech) then you talk about Labarge Weistein - who are hiring, Kelly Santini who have "doubled in the last four years" , Gowlings is "excited by some of the startup activity",, Delotte says "we continue to have strong market share", then you mention a McCarthy transaction that is over 3 years old. and you didn't even mention firms like McMillan, BLG and Welch that are moving into tech in a big way - very successfully. Seems like your - title should have been "Tech upturn hits law firms" Unless you are thinking back to 2000 - and if you are - just stop it. That was stupid and its over. :-)

  • Luc Lalande
    December 10, 2012 - 11:43

    This story comes as no surprise given that much of the professional staffing in these firms was anchored around venture deals, M&A activity and some (rare) IPOs in its heyday. What this report doesn't mention is the impact of the tech downturn on those firms specializing in intellectual property services such as patent filing. Ditto for comprehensive legal firms with large IP staff.