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Our top 12 for '12

By Yves Faguy December 17 2012 17 December 2012

    It’s been a year full of changes at National and we look forward to what promises to be a fun and fascinating 2013.

    But before we tackle a whole new set of trends and developments in law, we’d like to take this opportunity to revisit some of our best articles from 2012. So, in no particular order, and in the spirit of palindrome and same-number calendar dates that characterized this last year, we offer you our top 12:

    1. The hurting profession
    2. The tipping point
    3. Unwarranted access 
    3. Crime and punishment 
    4. The art of intervention 
    5. In conversation: Alison Redford
    6. The endangered partner
    7. Interview with Jean Chrétien
    8. The law of expedience 
    9. Taking the short view
    10. Licensed to know
    11. So you want to be a judge?
    12. Evidence over ideology

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    CNOOC-Nexen reactions

    By Yves Faguy December 11 2012 11 December 2012

      There's plenty of commentary out there applauding the government's handling of a tricky file. But some dissenting opinions stand out. La Presse’s André Pratte, for one, gives Harper high marks for striking the right balance:

      The signal sent to foreign state investors is clear: Your money is welcome in Canada, provided it doesn’t enable your government to get the upper hand in important sectors of the Canadian economy (Our translation).

      Ibbitson sees a new economic policy brought about by compromise within Tory ranks:

      Not only was caucus largely opposed, the debate within cabinet was intense, with one side favouring an open environment for investment and the other demanding protection for strategic industries, especially from state-owned enterprises in emerging markets.

      Mr. Harper’s solution was to permit the CNOOC/Nexen deal, but with tough new rules requiring reciprocity from countries seeking to invest in Canada, and with special restrictions on state-owned enterprises. Cabinet voted unanimously in favour of that solution. And when caucus was briefed Friday, according to sources, any who still had reservations kept those reservations to themselves
      .

      Coyne, after calling Harper’s foreign takeover policy “murky” and “incoherent”, worries that the central question has been overlooked:

      The real conflict here isn’t between China’s interests and Canada’s, but between one group of Canadian investors and another. The government hopes, by refusing to allow the Canadian owners of certain assets to sell them to China, to pressure China into allowing other Canadian investors to buy assets from them. Certainly it would be preferable if China were to do that. But why should the interests of those Canadian investors, the ones who would like to buy, take precedence over the interests of the others, the ones who would like to sell? Did anyone even stop to ask?

      Meanwhile, the folks at Osler explain the murkiness:

      Interestingly, the New SOE Guidelines do not elaborate upon the nature of specific undertakings that SOEs will be required to give to the government in order to establish a net benefit. For example, the government did not make it mandatory for an SOE to publicly list its shares or those of the Canadian target company on a Canadian exchange. The Prime Minster did indicate that the CNOOC and PETRONAS decisions “will be closely studied”. This suggests both that the undertakings given by these SOEs to the federal government will be disclosed and that the undertakings will have precedential value for other SOEs contemplating reviewable investments.

      It is important to underline that the government has not announced any restrictions on private investment in Canada, and in fact re-confirmed the government’s commitment to liberalize the regime governing such investment by raising the threshold for “net benefit” review under the ICA over a period of four years to $1 billion based on enterprise value rather than asset value. However, the increased threshold will be applicable to private sector investments only. SOEs will be subject to the existing net benefit review threshold of $330 million in asset value (not enterprise value), adjusted annually to reflect the change in nominal gross domestic product in the previous year
      .

      We should note that the Canadian Bar Association sent a letter at the end of May to the House of Commons Standing Committee on Finance recommending, among other things, a requirement in the Investment Canada Act to publicly disclose reasons for Ministerial decisions approving or rejecting an investment. Bottom line:

      “The ability for the Minister to issue opinions is already in the ICA but there is no requirement to disclose the opinions. These opinions – purged of commercially-sensitive information – could form a body of helpful guidance and ensure consistency in the government’s interpretation and enforcement of the Act. There is precedent for this: ICA opinion summaries were issued in the 1980s.”

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      Law firm valuations: Don't forget the liabilities

      By Yves Faguy December 5 2012 5 December 2012

        Last week, The American Lawyer tried calculating the value of the world’s highest-grossing law firms: 


        The Global 100 is collectively worth $97 billion, as calculated by our formula, which takes each firm's net profit, makes deductions by assigning equity partners with a notional salary, then applies a multiple based on the firm’s size, average growth rates in revenue and profits, and brand strength. Kirkland & Ellis narrowly edges out Latham & Watkins to head the list with a valuation just shy of $4 billion. In total, 33 firms have valuations exceeding $1 billion. In value per equity partner, Quinn Emanuel Urquhart & Sullivan is the clear leader. Its $1.96 billion valuation puts the effective stakes held by its 111 equity partners at an average worth of more than $17 million — almost $5 million more than any other Global 100 firm.

        Schumpeter cautions readers to take the rankings “with a grain of salt”:

        In assigning a multiple of profits to reach a total value, American Lawyer had to make some tricky calls: how to calculate average profit, how to project it years out, how to weight revenue growth versus profit growth, and, perhaps most subjectively, how to assign a multiple based on the firm's brand. The editors gamely lay out how they did all this, admitting that it is impossible to be perfectly scientific. One twist, for example, is that London's elite "Magic Circle" firms were hurt by the weakening of the pound against the dollar in recent years.

        But perhaps the biggest flaw in this calculation is that it doesn't show what any investor would demand to know when buying a firm: its liabilities. Law firms are small compared to other professional-services firms. The big audit firms, or a public consulting firm like Accenture, have staff numbering in the hundreds of thousands. The biggest law firms are in the single-digit thousands. The smaller size makes them less robust. When hard times hit, money-making partners begin to leave, revenue dries up, and more partners leave in a spiral that can quickly turn fatal. Ask anyone from Dewey & Leboeuf, a firm that ranked 38th in the AmLaw 100 in 2011 in profits per lawyer. What readers of that years' charts didn't know was the size of Dewey's debts, which quickly became unmanageable late last year, forcing the company into bankruptcy in May this year.

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        A season of epic reinvention

        By December 4 2012 4 December 2012

          The legal profession is changing. But is the future as dire as some fear? There is plenty of evidence that there is reason for optimism and opportunity for renewal.

          The repercussions of the 2008 financial crisis continue to reverberate around the globe. But something interesting is emerging: a new sharing economy. As Leo Singer writes in this issue, cash-strapped young people shut out of the traditional economy are learning to create wealth by other means, including the use of time banks to exchange skills — a new twist on the ancient practice of bartering. There’s a move to community ownership, and people without access to traditional sources of capital are using social networks to crowdfund projects ranging from theatre shows to co-working office space.

          But our laws and legal practices are out of sync with the new realities of the sharing economy. Janet Orsi, a California lawyer who advises social enterprises with unconventional needs, observes that “the reality of most activities in the sharing economy is that they don’t fit into traditional legal boxes and categories.” She believes that transactional lawyers are needed en masse to aid in an “epic reinvention” of our economic system.

          Meanwhile, a new generation of lawyers is finding meaning working to improve the lives of the disadvantaged. Michael Dempster spoke to Amanda Dodge, winner of the CBA’s inaugural Legal Aid Leader Award. She is the supervising lawyer at Community Legal Assistance Services for Saskatoon Inner City where last year more than 100 students served nearly 700 clients and learned a powerful lesson in the roots of inequality.

          There will always be a place for lawyers motivated by a passion for change in a world where so much work still needs to be done. That’s a reason for optimism as we enter the season of hope and goodwill.

          From everyone here at National, best wishes for a joyous holiday season and a peaceful and prosperous new year.

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          A little good news

          By Robert Brun December 3 2012 3 December 2012

            What will the law firm of the future look like?

            When I attended a meeting of the International Bar Association in Dublin, I wasn’t the only one preoccupied with this question; thoughtful professionals in every jurisdiction, I learned, are wondering what’s next.

            For years now, we’ve been inundated with information about how the profession is changing — and it hasn’t been a good-news story. Law firms of every size and description are experiencing flat or declining revenue or profit. Around the world, the legal services market is feeling the slowdown in the wake of the financial crisis.

            The current operating model of most firms is also showing signs of strain. A growing chorus of voices is warning that firms that insist on following an outdated business model risk a meltdown like the one at Dewey & LeBoeuf which saw the global firm — 1,300 lawyers in 12 countries — file for bankruptcy earlier this year. Furthermore, the competition doesn’t look like it used to: non-lawyer providers from other jurisdictions who aren’t subject to the same restrictions want a piece of the pie. Add outsourcing, alternative fee models and technology to the mix and we’re looking at major disruption.

            Fortunately, firms are starting to embrace new ways of doing things. Here in Canada, firms are experimenting with alternative fee models, trying on project management for size and leveraging technology to gain efficiency. Individual lawyers are using social media as a marketing tool. No one I know is under any illusion that it’s business as usual.

            The CBA is taking a leadership role in assessing the future market for legal services and in developing tools and strategies to help lawyers succeed. The best way to predict the future is to invent it — and if we don’t, others will. These are challenging times. Working together, we can ensure our future success. Send your comments to cbapres@cba.org.

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            How much will the union disclosure bill cost?

            By Yves Faguy November 27 2012 27 November 2012

              $10.6 million, according to the Canada Revenue Agency.

              Bill C-377, Russ Hiebert’s private member’s bill that would force extensive public financial disclosures by labour organizations, has always been controversial. Opponents say that, in addition to constitutional and privacy concerns, it boils down to simple union-bashing by trying to set the CRA loose on organized labour. The bill’s supporters say it will bring more accountability and transparency to the way unions operate. (Though private member’s bills historically rarely make it into law, that trend is changing, particularly when bills have the support of the PMO, as is the case here.)

              Yesterday came news that the Canada Revenue Agency estimates the cost of implementing the bill at $10.6 million in the first two years. In what essentially amounted to a Canadian-style filibuster, the NDP responded by tabling a motion in finance committee calling on the House of Commons to put a stop to the bill.

              The CBA has already made clear its position that the bill shouldn’t be passed. Here’s a passage from its September 2012 submission to government:

              As a threshold statement, it is unclear what issue or perceived problem the Bill is intended to address. The Bill mandates greater public disclosure of details of the financial operations of labour unions, and limitations on their political and lobbying activities using mechanisms that could be problematic from a constitutional and a privacy perspective.

              Specifically, the requirements that unions detail disbursements for political, lobbying and collective bargaining activities could violate freedom of expression and freedom of association rights under the Charter. In terms of privacy, the bill forces disclosure of what might be considered sensitive personal information – “financial information and information about political activities or political beliefs.” Here’s what CBA Privacy Law Section Chair Mike Mazzuca (a Partner at Koskie Minsky LLP) told the Commons finance committee on October 25 (his statement begins around the 40 minute mark in the proceedings):

              “To the extent that the bill requires the reporting and making publicly available details of salary benefits for all officers, directors, trustees and employees (of labour groups), we believe it would infringe upon privacy concerns and existing privacy laws.”

              Ultimately, the CBA’s overriding point is this: Federal and provincial labour laws already require unions to disclose, for the benefit of their members, regular and extensive financial statements. So, should governance and transparency really be a matter of general concern to the public as well? Should they be more so than they are for closed corporations, which are accountable to their shareholders? Again, from the CBA’s submission:

              The additional cost of administration to meet the Bill’s requirements would be significant. Unions could be forced to raise dues or reduce services to their members. If dues are raised, unions may in turn seek higher wages to compensate members, potentially resulting in increased costs for employers. Finally, the federal government could also be subject to significant new costs to administer its own obligations under the Bill.

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              Inside Canada-EU trade talks

              By Yves Faguy November 26 2012 26 November 2012

                It isn't always easy gaining insight into how trade negotiations are conducted, which is why these leaked documents prepared fro EU negotiators makes for a good read. Michael Geist and Paul Wells both offer up strong analyses of the document, which had one of Quebec’s opposition parties wringing its hands last week. But what seems clear is that there is still plenty of daylight between each party’s positions, whether it’s on patent protection for brand name pharmaceuticals, supply management, rules of origins for a wide range of goods and cultural protections.

                That said, EU negotiators seem to be broadly satisfied about progress on access to Canada’s public procurement market, however controversial Canada’s concessions might be among the provinces. Also it seems clear that concessions on supply management rules will be limited for both sides, as “there is agreement that these products will not be totally liberalised.”

                Perhaps the most interesting comment in the memo is the one that gets to the pith and substance of what’s at stake for both parties:

                Overall, our key challenge remains that our list of offensive interests is larger than the Canadian one, which puts Canada at a tactical advantage in the end game. On the other hand, Canada will, at this point, also have to take into consideration that the EU market to which it gains preferential access is much larger than its own. The proposed landing zones have also been looked at from the perspective of the fall-out on future negotiations, in particular the US.

                Geist picks up on this last point:

                Investor protection is another major stumbling block, particularly since the EU is concerned that the Canadian agreement will establish a precedent for a possible future deal with the United States. For example, Canada wants reduced investor protection in the financial services sector, which the EU says is unacceptable. Canada also wants the right to expropriate without compensation to pursue "legitimate" policy objectives, an approach the EU will not accept. Further, there are major disagreements over the structure and applicability of an investor-to-state dispute settlement mechanism.

                It also hasn’t escaped anyone’s attention that, with respect to investment market access, “the primary target remains exempting EU investors from the Investment Canada Act” and its (as yet to be fully fleshed out) net benefit test.

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                Norton Rose's next steps

                By Yves Faguy November 26 2012 26 November 2012

                  Last week I caught up with Norman Steinberg to talk about what's ahead in the wake of its recent merger with Fulbright & Jaworski:

                  Interview with Norman Steinberg on recent merger from National Magazine TV on Vimeo.

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                  Where did all the women go?

                  By Yves Faguy November 20 2012 20 November 2012

                    After posting this departure memo sent by a former junior associate (and mother) at Clifford Chance, Paul Campos does his own math and concludes:

                    There were 55,063 more JD students at ABA law schools in 2011 than 1971. 59,665 more women were enrolled as JD students in ABA law schools in 2011 than in 1971, while 4,632 fewer men were enrolled as JD students in ABA law schools in 2011 than in 1971. Holding everything else constant, if the gender ratio between men and women law students had remained the same over the past 40 years there would have been about 86,141 people enrolled as JD students in ABA law schools in 2011, and about 24,498 people would have graduated from those schools. This number of graduates is approximately 12% higher than the total number of new jobs for lawyers (21,880) the BLS estimates will become available on average per year for lawyers between 2010 and 2020. Clearly, the fact that law schools have produced an enormous oversupply of people with law degrees over the course of the last generation has an extremely significant gender component. Note that there’s all sorts of evidence that egalitarian gender practices in regard to law school admissions have had a remarkably muted effect in regard to making law less of a male-dominated profession (For example, 35 years after women started going to law school in numbers not much smaller than men, 85% of the partners and 95% of the managing partners at large law firms are men).

                    Which leads Campos to ask this question:

                    Have law schools managed to expand far beyond the actual economic demand for law degrees in large part because of an always unstated and usually unconscious assumption that comparatively large numbers of women law graduates would drop out of the profession within a few years of graduation?

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                    "The US border has been breached for Canadian law firms"

                    By Yves Faguy November 15 2012 15 November 2012

                      National caught up with Jordan Furlong this week to discuss the impact of recent mergers involving Norton Rose, FMC and Fasken Martineau on Canadian firms:

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                      The pro-life movement's new approach

                      By Yves Faguy November 14 2012 14 November 2012

                        Charlie Gillis explains how the pro-life movement is changing its tactics in advocating for fetal rights:

                        A pivotal moment came last May, when representatives from the Association for Reformed Political Action, a national Christian advocacy group, approached Vancouver-based activist Mike Schouten about running an initiative to build support for fetal protection legislation. Schouten, 36, is a former Christian Heritage Party candidate with a history of backing hardline conservative causes (including limits on Muslim immigration). He also has a knack for teasing rational arguments out of emotional issues. The result was WeNeedaLaw.ca, an online campaign using social media and electronic petitions to paint Canada’s lack of an abortion law as an international anomaly—an embarrassment not by the standards of social conservatives, but of liberal democracies like Sweden and France.[...]

                        The group’s approach is part of a broader strategy within the anti-abortion movement to win hearts and minds instead of lecturing or shaming. “Changing the culture” was the theme of a national conference held last month in Toronto by LifeCanada, the umbrella organization of pro-life groups across the country; it could be viewed as the coalition’s mission statement for the future. “The view of the pro-life movement for the last two decades has been that of a small minority outside the mainstream, older and probably religious fundamentalist,” says Lisa Smith, president of LifeCanada’s board, from her home in Drayton Valley, Alta. “But we can look around now and see young people taking up the cause. I think there’s a lot of optimism and encouragement.”

                        The effect has been to refurbish the image of the anti-abortion movement, and its newfound momentum has not escaped the attention of its pro-choice foes. Carolyn Egan, a veteran activist with the Abortion Rights Coalition of Canada (ARCC), says the pro-choice camp must now step up its response that even discussing a fetal rights law is the first step on a slippery slope. “Their strategy could be referred to as anti-choice by stealth,” she says. “Step by step, they want to create barriers for women to access abortions. But it’s true that the message is gaining some traction.”

                        Be that as it may, The National Post has a new poll out in which finds that a full 60 percent of Canadians say that abortion should always be legal, without restriction.That's up from 51 percent in February.  And yes, it probably has something to do with this vote.

                         

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                        Using counsel's submissions without attribution

                        By Yves Faguy November 13 2012 13 November 2012

                          An interesting case was heard today at the SCC, with Osler’s Mahmud Jamal representing the CBA as intervenor. In Cojocaru v. BC Women's Hospital et al, the justices are considering a judge’s duties in giving attribution when writing reasons for judgment.

                          Briefly, the trial judge found in favour of a child born severely brain damaged, who sued for medical malpractice. Trouble is he used, without attribution, the plaintiff’s written argument (321 paragraphs of a 368 paragraph judgment) and apparently neglected to address several arguments raised by the defendants. The CBA’s position on this is that the SCC should follow a functional context-specific approach.

                          Jamal tried to make the case that judicial writing draws upon many sources including past judgments, submissions and doctrine. It can be appropriate at times to adopt submissions, Jamal told Natalie Stechyson at Postmedia. “The challenge is to identify the circumstances where doing so gives the perception that the losing party hasn’t been heard – and that’s the difficult question for the Supreme Court Tuesday.”

                          The test asks whether the reasons given are sufficient to fulfil their various functions, namely:

                          • to justify and explain the result
                          • to tell the losing party why he or she lost (for the judge to give proof that he has heard and considered both sides' evidence and arguments and has not taken extraneous considerations into account)
                          • to provide public accountability (to satisfy the public that justice is not only done, but seen to be done), and to permit effective appellate review (to allow for informed consideration of the grounds of appeal).

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