Worth the wait? As DLA finally enters Canada, how does its merger shape up?
After years of trying DLA Piper has finally entered Canada through a merger with mid-market player Davis, how does the deal look?
March 06, 2015 at 02:08 AM
4 minute read
It has been a long time coming but, after several years of trying, DLA Piper has finally secured a merger partner in Canada.
The global giant has entered into a combination with mid-market Vancouver-based firm Davis, which has seven offices and a lawyer headcount of 260, including 112 partners.
Davis will be rebranded as DLA Piper Canada when the merger is finalised in April, with the legacy Davis partnership operating as a separate profit pool under the global firm's Swiss verein structure.
Of most significance when it comes to running the rule over DLA's deal is the fact that Davis is not a member of the 'seven sisters', the Canadian equivalent of the UK magic circle. In fact it sits a long way outside.
And while it does boast a small 50-lawyer office in Toronto – Canada's business hub – Davis' presence is heavily weighted towards western Canada, where it is best known for its infrastructure-related work.
"It is probably a good fit for both of them, but for us it does not change anything -it does not change the way we view the competition," is the verdict of Francois Duquette, who heads Allen & Overy's representative office in Toronto. "It would have been difficult for them to merge with a larger firm. Canadian firms are quite significant in terms of size and this was probably the right size for DLA."
That DLA has spent a considerable period of time eyeing the Canadian market is testified by the fact the firm held talks with Fasken Martineau as far back as 2008.
Since then both Norton Rose Fulbright – through its 2011 merger with Ogilvy Renault – and Dentons – through its tie-up with Fraser Milner Casgrain in 2013 – have successfully launched in Canada.
According to Roger Meltzer, DLA's global co-chairman, the firm widened its search for a suitable merger partner after talks with a group of partners from now defunct Heenan Blaikie fell through last year.
"After that experience we reached the conclusion that we had to be more assertive and look west and look at the things that are important to us rather than the things that are important to everyone else," he says.
"We wanted a firm of size but not so huge as to dwarf the local opportunity. I think Davis is a firm that people do not know that well because of the importance of the seven sisters. We think we will make a huge difference in helping them really grow the DLA Canada brand, and aspirationally their lawyers wanted to do something different from being a national Canadian firm."
The draw of the Canadian legal market for firms such as DLA is beyond doubt. The country's close economic ties with the US and its natural resources opportunities make it an attractive proposition. Nevertheless, the continuing dominance of Canada's local firms at the top end of the market will pose a major challenge for DLA and its ilk.
"Toronto is a very crowded and competitive market," Duquette observes."The relationships between firms and clients are very well entrenched and to try and become the new kid in town is very difficult."
However, Jay Kellerman, managing partner of Stikeman Elliott's Toronto office, adds: "What DLA is getting is offices in a number of major cities in Canada. Maybe they will use this as a base to get more talent in."
Meltzer agrees that his firm's new Canadian arm will provide it with a platform from which to grow. "When these things happen it is a major disruption," he says. "You have one of the largest firms in the world coming into the market doing something a bit different. Lots of our Canadian clients are seeking to make investment into other places internationally, such as Latin America, where we are present. It is about recognising the arbitrage."
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