Legal Market Overview
Following challenging months marked by lockdowns and economic setbacks, Canada is on a slow, but steady road to recovery fueled by a high vaccination rate and cautious reopening. According to the Bank of Canada, the Canadian economy is expected to grow 6% in 2021 and more modestly, at 4.5% in 2022.
Since the economy began gradually reopening, law firms have been increasingly engaged in major financial and M&A transactions which had slowed during the onset of the health crisis. The first three months of 2021 saw a substantial uptick in M&A activity driven by encouraging financing conditions, with dealmaking reaching its highest level since 2016 in the third quarter of the year, as strong equity markets and low interest rates stimulated transactions that were put on hold due to the Covid-19 pandemic.
On the capital markets front, lawyers reported a considerable surge in initial public offerings (IPOs) which kept the mid-market Toronto stock exchange particularly busy with several Canadian companies seeking to go public through the traditional IPO route. Unsurprisingly, the technology sector took centre stage in IPO deals and outbound investments during the first half of the year.
The importance of the natural resources sector, which represents approximately 11.3% of the Canadian economy, cannot be overlooked. The country’s oil and gas sector has been greatly impacted by a sharp downturn in the global energy market, which prompted the consolidation of upstream producers as well as the exit of foreign capital as major players rationalise their portfolios. In addition, the heightened focus on green energy and carbon neutrality rendered environmental, social and governance (ESG) metrics leading guideposts for investment. This presents itself as a crucial challenge for a resource-rich country like Canada. As a result, federal and provincial governments have taken strong action to increase the share of renewable generation in each province’s supply mix, as a major component of efforts to meet Paris Accord emissions reductions targets.
In the infrastructure projects sphere, joint ventures and partnerships are becoming more and more prevalent as many First Nations continue to seek opportunities for economic participation. In many of these business arrangements, environmental stewardship is a prominent priority. Among other key trends, dispute resolution lawyers have reported that class actions are seen to be progressing to trial more often, though this is still rare. Hostile takeovers and disputes involving M&A transactions have also increased since companies have adopted more offensive M&A strategies.
Canada’s competitive legal market is home to a large number of full-service firms. With few exceptions, the so-called ‘Seven Sisters’ take the helm in the majority of complex, large-cap and consequential corporate and finance deals. These include Blake, Cassels & Graydon LLP, Davies Ward Phillips & Vineberg LLP, Goodmans LLP, McCarthy Tétrault, Osler, Hoskin & Harcourt LLP, Stikeman Elliott LLP and Torys. A select few international firms with full-service offerings- such as Baker McKenzie, DLA Piper (Canada) LLP, Dentons, Gowling WLG and Norton Rose Fulbright– also operate in the country. Other strong domestic players include oil and gas powerhouse Bennett Jones LLP; Cassels Brock & Blackwell LLP and Fasken, which excel in mining deals; Borden Ladner Gervais LLP, which is especially sought after for its experience in the power sector; and Calgary’s Burnet Duckworth & Palmer LLP, a top choice for Alberta-related matters.