Winnipeg, one of Canada’s largest cities, has been slighted by the national firms because they say it lacks the business infrastructure to support legal expansion and investment. Photo courtesy Destination Winnipeg/Ruehle Design Click here to see full sized version.

A well-established local market and insufficient prospects for future business have kept Canada’s national law firms from expanding into Winnipeg. And, according to legal players in the Manitoba capital and Toronto, that’s not necessarily a bad thing.

Quite simply, according to officials at Osler, Hoskin & Harcourt LLP and Fraser Milner Casgrain LLP (FMC) – both of which have offices across the country – the expansion business case just isn’t there for a city the size of Winnipeg (pop. 700,000) when the costs of real estate and legal talent are weighed against projected revenue.

“Winnipeg is well serviced by law firms,” said David Fuller, Toronto-based CEO and partner at FMC. “It’s not as if there’s a void or opportunity that is apparent to us. To go into Winnipeg we’d either be competing with well-established firms or we’d have to amalgamate or merge with an existing firm. To do that we’d have to be satisfied the market is big enough to meet our criteria and we aren’t certain the market is big enough to support a national firm.”

Fuller says the only other way his firm could rationalize coming to Winnipeg is to poach a significant number of lawyers from one or more of the existing firms.

“You’d never come to Winnipeg and just open an office with two or three lawyers and try to build from that nucleus. You’d have to have a critical mass to justify having a presence. If you don’t have that or achieve it very quickly, you don’t have an office that works in the system,” he said.

Judy Stein-Korte, Toronto-based chief client services officer at Osler, agrees with Fuller’s assessment of Winnipeg. “We don’t intend to try to compete with (the local firms). As a national firm, our experience is we can serve Winnipeg’s larger national and international corporations from our existing offices in Calgary, Toronto, Ottawa, Montreal and New York,” she said.

“We also have clients on both the west and east coasts as well as a great many outside Canada that we work with from our current offices.”

Fuller notes there are plenty of other Canadian cities where national firms do not have a presence, including Halifax, Regina and St. John’s.

“It’s not as if Winnipeg is being left out, it’s consistent with what you see in other cities that don’t have the business infrastructure,” he said, noting FMC has full-service offices in Montreal, Ottawa, Toronto, Edmonton, Calgary and Vancouver.

The preponderance of branch rather than head offices in Winnipeg and the relatively inexpensive hourly rates are two other factors repelling national firms, says Bryan Schwartz, a professor of law at the University of Manitoba and counsel at local firm Pitblado.

“The most fruitful work is from corporate head offices in your city,” he said.

Despite this, he notes there are still some major players in Winnipeg, including CanWest Global Communications, IGM Financial (formerly Investors Group), Great-West Lifeco, Manitoba Hydro, the Assembly of First Nations and the province.

He also that notes the cost of legal services in Winnipeg is a relative pittance by national standards. Whereas a large firm in Toronto might charge $500 to $700 per hour, top firms in Winnipeg generally charge less than half that.

“Those prices would get you a junior person in Toronto. If you’re a big firm and you’re used to billing sizable hourly rates and you look at Winnipeg, you’d say, ‘my goodness, this is what we’re charging for people with only a few years experience. Are we going to make a lot of money coming into Winnipeg? Not if we have to bill our time at Winnipeg rates. It’s not as lucrative a market,’ ” he said.

But it’s not as if Winnipeg-based firms such as Aikins, MacAulay & Thorvaldson LLP have restricted themselves to work within Manitoba’s borders. Jim Spencer, director of operations at the largest firm in town with 88 lawyers, says it recently joined the World Services Group, a global association that boasts many other regional firms as members.

“If we need somebody to head local knowledge in another jurisdiction, we would call on another member of the group. It’s easy to stay in contact with major regional firms. We have a lot in common and we aren’t in competition with each other in our respective regions,” he said, noting a number of the firm’s lawyers are leading practitioners in their areas and work at a national level.

“In many cases, they work out of other provinces but they’re based [in Winnipeg]. With the new mobility rules in Canada, lawyers can practise in other provinces more than they used to be able to.”

Doug Ward, the former managing partner at Pitblado, which has 60 lawyers, said he doesn’t think the absence of national firms has had a negative impact on the Winnipeg market. “We’re quite profitable doing our own business and most of the other local firms are in the same position,” he said.

The legal fabric of Winnipeg hasn’t proven to be a major hindrance when it comes to hiring local talent either, Ward notes. “We have several partners here that went to law school elsewhere and came home. Some worked for large Toronto law firms and came home,” he said.

There has been the occasional young lawyer from Winnipeg who has set out to earn their stripes in New York or to work for an international firm headquartered elsewhere, he notes.

“People we hire are happy to be in Winnipeg. We actively solicit graduates from the University of Manitoba law school and we’ve been very successful in recruiting them,” he said.

Spencer agrees, saying factors such as some of the best real estate bargains in the country helps keep its staffing at a full complement.

“People love the lifestyle Winnipeg has to offer. They can have a cottage within easy commuting distance, they have friends and family here, that motivates them to stay,” he said.

With the Canadian market well covered, Fuller says that leaves the U.S. as the primary opportunity for expansion. In addition to the seven lawyers in its New York office, the firm has designated people in Chicago, Houston, Washington, San Francisco and Los Angeles.

“[U.S. expansion] may be inevitable because the border is becoming less and less significant,” he said. “Trade is flowing north-south and south-north, not east-west. Ultimately law firms have to follow the trade patterns.”

As for Winnipeg, all say that unless the population grows significantly or several firms relocate to the city, it’ll be status quo for the foreseeable future.