Canada’s GDP growth slowed slightly in 2019 to 1.6%, with low oil prices and a cooling housing market dragging down business investment and residential investment, respectively. This was before COVID-19 made its way to Canadian soil. Now, the economic impact of the pandemic response presents a unique kind of challenge.
Canada’s rich natural resources are a significant economic driver, accounting for around 11.7% of its economy, with the oil and gas industry taking centre stage. Canada boasts the third-largest proven crude oil reserves globally and the sector represents around 66.4% of the country’s overall natural resources total. Therefore, the sharp downturn in the energy market off the back of a halted global economy has dealt a significant blow to the country’s already struggling oil and gas market. That said, mining has been relatively cushioned, with gold prices soaring by 16.8% in US-dollars during the first half of 2020. Canada is the fifth-largest gold producing nation in the world and mining accounts for a 20.3% share of its natural resources total.
Alberta, which houses the bulk of Canada’s energy market, has been hit particularly hard. The province entered a mild recession toward the end of 2019, which pushed GDP down by 0.2% on 2018. Following the double-barrelled impact of low oil prices and dried-up energy demand, economists are predicting a 7% decline in GDP for 2020.
Nationally, the pandemic saw Canada’s GDP fall by an unprecedented 11.6% in April 2020. However, the country’s robust response to the health emergency ensured that containment measures could be eased relatively quickly and preliminary reports from Statistics Canada show that recovery began in May, with GDP increasing by 3% that month. Overall, forecasts predict an 8.2% slide in growth this year, but Canada’s recession is expected to be short.
Against that backdrop, activity at Canada’s largest law firms has remained surprisingly stable. Among the key trends, banking and capital markets lawyers have reported a flight to refinancing, especially early on in the pandemic, as clients attempted to shore up against the coming crisis. Dispute resolution continues to climb. Some regional courts, not initially geared up to meet the technological challenges of virtual hearings, have quickly modernized to avoid case backlogs.
Trade lawyers are also expecting a flurry of activity in the coming months. After nearly a year of solid relations with the US — Canada’s number one trading partner — President Trump’s recent sabre-rattling may herald a US-Canada trade war. In August 2020, the US announced a 10% tariff on imports of non-alloyed unwrought aluminum products from Canada. Canada has responded by imposing 10% tariffs on US aluminum and aluminum-containing imports.
Canada’s sophisticated legal market has become a key strand in the international networks of several major global law firms: Baker McKenzie, DLA Piper (Canada) LLP, Dentons, Gowling WLG and Norton Rose Fulbright all have full-service offerings in the country. However, with few exceptions, the truly marquis corporate and finance mandates go to Canada’s so-called ‘Seven Sisters’: Blake, Cassels & Graydon LLP, Davies Ward Phillips & Vineberg LLP, Goodmans LLP , McCarthy Tétrault, Osler, Hoskin & Harcourt LLP, Stikeman Elliott LLP and Torys. Most of these firms have at least one international office, generally in New York and/or London.
That said, several other full-service Canadian firms dominate in specific sectors or regions. Cassels Brock & Blackwell LLP and Fasken are top-choice firms for mining deals, while Bennett Jones LLP is a leader in the oil and gas space, and in Western Canada more generally. Borden Ladner Gervais LLP is a standout player in the power sector, and Calgary’s Burnet Duckworth & Palmer LLP is a regional heavyweight and is considered a leading business law firm in Alberta.
Canada is also home to a number of impressive boutiques. In particular, Lax O’Sullivan Lisus Gottlieb LLP and Lenczner Slaght are both highly regarded for dispute resolution, Smart & Biggar is a leader in intellectual property and Cassidy Levy Kent LLP excels in international trade law.
Canada’s provincial jurisdictions align closely with the country’s economic sectors, and the individual character of each of those distinct legal environments cannot be overstated. Public and private law are separated in Canada, with responsibilities for the former exercised by Parliament and the latter overseen by the provinces. The largest legal centre is Toronto, Ontario, which is the base for most of the country’s largest corporate deals. Alberta is home to Canada’s oil and gas industry and thus Calgary has developed into a hub for energy work. British Columbia also is an important province for natural resources work, including forestry and mining. Finally, French-speaking Quebec is an especially distinct legal market; it retains a civil code for private law separate from the rest of Canada’s common law system.