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November 15, 2010 3:58 PM

What's Behind Ogilvy Renault's Merger with Norton Rose?

Posted by Julie Triedman

The merger of Canada's Ogilvy Renault and London-based Norton Rose, reported earlier today by The Am Law Daily, is more than just the legal industry's latest splashy transatlantic union.

In joining forces with a firm in the United Kingdom, Ogilvy becomes the first leading Canadian firm--it ranks eleventh in size nationally--to expand internationally via a merger, rather than through green-fielding offices or cherry-picking laterals.

Until now, Canadian firms have generally chosen to increase revenue flow internationally via informal business relationships with firms in other countries. But those firms, say top brass at Ogilvy Renault and Norton Rose, may be hearing from clients what the new merger partners have been hearing.

"Our message is that clients wanted us to be more international," says Norton Rose chair Stephen Parish. "If other firms are getting a similar message, they [may] respond in a similar way."

For Norton Rose, Ogilvy is an attractive partner. Its most significant clients include airplane and train maker Bombardier Inc.; engineering and construction firm SNC-Lavalin; the Royal Bank of Canada; and the giant pension fund Caisse de depot et placement du Quebec.

Much of the work that these companies do, notes Ogilvy chair Norm Steinberg, occurs outside Canada. And, Steinberg says, the newly combined firm will be better able to compete for a piece of that work. "Now we have an opportunity to possibly work with them around the world," he says. "Obviously, it's up to us now to demonstrate that we are the best firm around the world."

Members of the Canadian firm, speaking Monday morning via conference call, say that, so far, clients' response to news of the merger has been enthusiastic. Clients that are growing globally "understand the need for law firms to do the same thing if they want to experience growth in revenues," says Ogilvy national managing partner John Coleman.

Norton Rose's Parish says his firm is keen to break into the Canadian economy, which has been among the world's strongest in recent years. The U.K. firm is especially interested in capturing more work in the natural resources and energy sectors, which, along with technology and financial services industries, have been particularly robust lately.

Interestingly, Ogilvy has not really been a player in the Albertan oil sands, having only opened its Calgary office ten months ago. That office is expected to grow given Norton Rose's international platform. "This news has been extremely well received," says Calgary-based partner Rusty Miller, the former general counsel of Petro-Canada (now Suncor Energy Inc.). Miller joined the firm in January. (All told, Ogilvy has 450 lawyers spread between Calgary and its other offices, in Montreal, Ottawa, Quebec, Toronto, and London.)

A third firm, South Africa's Deneys Reitz, also announced on Monday that it is merging with Norton Rose. The three-way merger will create a firm that took in more than $1 billion in revenue last year, and has some 2,500 lawyers spread across 38 offices around the world. The firms expect the union to be complete June 1 of next year. 

Under the merger, 131-year-old Ogilvy will lose its name and identity as a separate firm, although Canadian profits will remain local. The new entity will have a single management board but the partnerships of the predecessor firms will not be financially integrated.

That's because the unified firm will adopt the Swiss Verein structure, a legal arrangement embraced by the firms created in the year's previous transatlantic mergers--Hogan Lovells, SNR Denton, the just-announced union between Squire, Sanders & Dempsey and Hammonds--as well as by Baker & McKenzie and DLA Piper. 

The new firm will be known as Norton Rose OR in Canada but will be part of Norton Rose for all intents and purposes. "We're married," says Parish. "This is as close as firms can get. Financial integration is not relevant." 

It is an interesting fate for a firm known as the home of some of the most well-known names in Canada since its founding in Quebec. One of its first partners was a former treasurer of the province, and its senior partner roster currently includes former prime minister Brian Mulroney and former ambassador to the United States L. Yves Fortier.

Firm leaders say their global push will give them an edge over other Canadian firms when it comes to attracting talent. "This massively enhances our ability to recruit young lawyers especially," says Parish. Mitch Kowalski, writing for the Legal Post, says that the Canadian firm also stands to gain something unique in the Canadian landscape: superior knowledge management, training, and online services "unseen in Canadian firms." 

As for what's next, Norton Rose's Parish says that the firm is looking to plug the main "hole" in its international coverage: the United States. "The U.S. remains an important location. We're not quite there yet." he says, adding that he hopes to remedy that soon.

 

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