Fran�ois Tougas, left, chairman of Lang Michener's Western Division, with Andrew Kent, CEO of Toronto-based law firm McMillan, and Bob Cranston, Lang Michener's Eastern managing partner, after the two law firms announced their merger this week.Fernando Morales/The Globe and Mail
It was codenamed Project Grayson - a boring label meant to throw the curious off the scent - and began about a year ago with a meeting between managing partners from two law firms at a downtown Toronto Starbucks. Now, the project is a reality.
The name of Lang Michener LLP will die as the firm merges with McMillan LLP in a move that creates a new Bay Street player with 400 lawyers, offices across the country - and big ambitions.
"He had a coffee, I had a hot chocolate," said Robert Cranston, Lang Michener's eastern managing partner, who suggested the meeting in a call to McMillan chief executive officer Andrew Kent. "That's how it all started. Nothing glamorous."
It was the first date, both firms say, of a marriage officially unveiled Tuesday that aims to create a serious new competitor among the country's top-tier law firms.
The two mid-sized firms have Toronto offices a few floors apart in Brookfield Place. With 200 lawyers each across the country, the merger creates a new national organization that rivals Ogilvy Renault LLP in size. (By comparison, heavyweight Blake Cassels & Graydon LLP has 550 lawyers.)
While head count by no means equals influence on Bay Street, the new McMillan LLP hopes to put its new size to good use, ramping up efforts on behalf of Canadian companies investing abroad and seeking opportunities to compete for global clients.
The move, which takes effect Jan. 1, may spell the end of Lang Michener's name - which honours co-founders former governor-general Roland Michener and senator Daniel Lang - but Mr. Cranston said it does not come from a place of weakness. Lang Michener's leadership had long been talking about a merger to take the firm to the next level, said Mr. Cranston, who becomes the new firm's Toronto managing partner.
McMillan was an obvious strategic fit. Lang Michener has offices in Toronto, Vancouver, Ottawa and Hong Kong, while McMillan has shingles hanging in Toronto, Calgary and Montreal. The merger allows the two firms to scale up dramatically in Toronto, as well combine their resources to ensure a presence across the country.
Key to the deal for McMillan is clearly Lang Michener's large Vancouver arm. It was created in 1989, when Lang Michener swallowed the Vancouver firm Lawrence & Shaw, but it remained a separate operation within the firm. In the 1990s, it shrank with the commodity markets on which its business depends, but has since boomed, doubling in size to 85 lawyers.
François Tougas, chairman of Lang Michener's western division, said the firm's Canadian mining clients are increasingly pursuing investments and financing overseas, while foreign investors shopping the globe for mining deals are also shopping for legal advice.
Getting bigger, and doing it quickly, was the only way to compete with established British and U.S. firms in this sector around the world, he said. "If you want to play on that field, you need a certain scope and scale."
McMillan has been on a merger-fed growth spurt in recent years, transforming itself into a firm with more of a national reach by swallowing Mendelsohn in Montreal in 2005 and much of Calgary's Thackray Burgess last year.
Mr. Kent, who becomes the new McMillan LLP's CEO when the merger takes effect, said the firm's latest move reflects the need to get bigger in order to deal with the increasingly complexity of the legal world.
"The demands in the marketplace on law firms keep going up," he said, pointing out that law firms in cities across North American have become bigger and more complex organizations in the past two decades.
Such a major merger is not without pitfalls. For example, sometimes clients must be jettisoned when two law firms merge, as it often turns out they are either fierce competitors or even at each other's throats in a legal battle. In this case, Mr. Kent said, the two firms are virtually conflict- free because many of their strong practice areas do not overlap.
There is also the issue of dissenting partners. Big mergers sometimes result in splinter groups. But in this case, of the 170 partners from both firms who voted on the deal, only three objected and have decided to leave, according to the firm's managing partners. (Neither Mr. Kent nor Mr. Cranston would reveal who they were.)
At least one rival says the move makes sense. Hugh MacKinnon, managing partner of Bennett Jones LLP, said firms that want to be truly national need to take advantage of economies of scale.
"If a firm is willing to deal with the increased business and other conflict issues inherent in having multiple domestic offices, it makes sense to be as broad as possible and enjoy the benefits that come with economies of scale and regional diversification," Mr. MacKinnon said. "In this case, I think it's a good move by both firms."