Canada - Law Firms Fraser Milner Casgrain On Translating The Skills Successfully Deployed In A Canadian Context To The Global Arena

Friday, April 1, 2005 - 01:00

The Editor interviewsBrian R. Carr, Partner,John S. Elder Q.C., Partner,Rick H. Kesler, Partner,Karim Mahmud, Partner,Donald B. Houston, Partner andRandal T. Hughes, Partner, Fraser Milner Casgrain LLP (FMC).

Editor: Would each of you gentlemen tell our readers something about your professional experience?

Elder: My background is in commerce and finance, and I was drawn to the business and corporate side of the practice when I began my career. Upon graduation from the University of Toronto Law School, I joined Fraser & Beatty, predecessors of our present firm.

Hughes: I joined Fraser & Beatty in 1985. Since I started my career, I have been practicing competition and antitrust law, both on the merger side, which concerns the review of approval of a variety of cross-border and international merger transactions, and on the litigation side.

Kesler: I began my career as a lawyer with the Canadian Department of Justice.In acting as counsel to the Department of Finance, most of what I did was related to policy in trade and commodity pricing. I was also part of the committee charged by the Minister of Finance with proposing a new sales tax for the country. The present value added tax is the result of that effort. I joined Fraser & Beatty about 20 years ago.

Carr: Much of my work is in the area of corporate reorganizations and financing transactions.In addition, part of my practice involves advising on the taxation of various receipts and expenses of taxpayers.Early in my career, I developed an expertise in oil and gas and mining taxation.Reorganizations and financings in the oil and gas and mining industries constitute a large portion of my current practice.

I joined FMC at the time they were establishing a national platform.Given my practice, being part of such a platform with a Western Canadian office was a very attractive proposition.

Houston: I am a more recent arrival at FMC, having spent almost 20 years with another large firm in Toronto. Like Randy's practice, my practice is focused on antitrust and competition, but with a particular emphasis on litigation.

Mahmud: I pursued legal studies at Christ Church, Oxford and have a jurisprudence degree from the University of Oxford. Following Oxford, I went on to Dalhousie University in Halifax for my LL.B. After a couple of years in Calgary, I joined The World Bank and worked on a variety of energy projects and project financings. I then spent two years in Hong Kong with the largest law firm in Southeast Asia. I moved back to Calgary in 2001.In the past, I had the opportunity to work with Doug Black, and at his instigation, I joined FMC.He lends great strength to the firm's energy practice, and I am very glad to have joined him and the team.I have been with FMC for just over two years, and I was made a partner this year.

Editor: How do your connections with the Canadian government help your practice?

Houston: It helps a great deal. For example, the fact that we have represented the Competition Bureau in adversarial proceedings means that our judgement is respected by the Bureau. That is of great benefit to our clients in appearing before the Competition Bureau.

Hughes: There is stature that goes along with having represented the Competition Bureau. The proceedings that Don and I have handled for the Commissioner have been significant proceedings. In Canada there are few cases that are litigated before our competition tribunals. Whether we are acting on behalf of the authorities or for some private sector client, the reputation that accrues to the firm from having been involved in these infrequent undertakings is of very great value to us and to our clients.

Editor: And when your former colleagues are adversaries?

Hughes: That has not been a problem. The Competition Bureau is staffed by very professional lawyers and economists who approach their work from the public interest standpoint. Being on opposite sides in a proceeding has never impaired the relationship.

Editor: How have your respective practices evolved over the years?

Carr: When I began my career, a significant portion of my practice related to the taxation of private corporations and individual shareholders.Since then, my practice has evolved and I am actively engaged with reorganizations and financings within the energy and mining industries.

Mahmud: I work with the Alberta oil and gas and power sectors and on overseas energy projects.This work includes the acquisition, development of upstream, midstream and downstream assets, the disposition of such assets, the development and implementation of international joint ventures, large energy project construction and EPC work. Increasingly, I have been engaged in liquefied natural gas (LNG) work, which involves all three parts of the oil and gas cycle - upstream, midstream and downstream. The firm has an extraordinary depth of expertise in connection with its long history in Canada's oil patch, including large multibillion-dollar energy projects in northern Alberta's oil sands and cross-border pipelines.

FMC is building on its significant international energy practice, and I am a member of the development team. This has been particularly helpful in LNG projects and overseas upstream investments that Calgary based energy companies are increasingly involved in. In addition to North America, we have done significant energy work in the North Sea, China, India, Southeast Asia, the Middle East, South America and Central Asia.

Kesler: My practice is focussed on commodity tax. Recently, one of the most significant aspects of my practice concerns Canada's adoption of a new federal sales tax and the implementation of a European-style value added tax. U.S. businesses that are trading with Canada are required to collect this tax, and much of my practice involves bringing them into compliance with these tax obligations, tax-planning and, inevitably, appeals for reassessment. NAFTA is also a part of my practice, to the extent that Canada, Mexico and the U.S. have agreed to treat the corporations of their NAFTA partners no better and no worse than they treat domestic corporations. There are, however, some interesting questions that are going to have to be addressed in the near future. Canada has made a significant commitment under the Kyoto Protocols to reduce emissions, and the resulting legislation will bind Canadian corporations. The U.S. has not signed on to Kyoto, so the question is how then is Canada going to treat American corporations doing business in Canada?

Hughes: Concerning antitrust and competition law, we believe that FMC has a top-of-the-line practice in Canada. We want to move forward and continue to keep building this group with bright young attorneys who will carry us into the future. With Don Houston joining us two years ago, that process is already underway. He has enhanced the image of our practice. The international aspect of our practice continues to grow. We propose to build on the already strong relationships we have with U.S. firms to increase the flow of work, both on the merger side and on the cartel side. We hope to do more in Europe and the UK, where the enforcement of competition laws on the criminal side has recently been stepped up, and in places like Korea and Japan, where antitrust enforcement has also been strengthened.

Editor: The firm has experienced an interesting evolution from its origins in two or three Canadian cities to the status of a national Canadian firm and now onto the international stage. Would you give us a brief overview of this development?

Elder:Fraser & Beatty was a substantial law firm based in Toronto and felt that its service offerings would be enhanced if we expanded. The initial step, which took place in 1985, was to open an office in Ottawa. That office, predictably, had a focus on the firm's federal government and regulatory work. In 1990 we opened a Vancouver office with about 13 or 14 high-quality business practice lawyers. The Vancouver office has grown into a full-service operation with about 60 lawyers. In the mid-1990s we recognized that our clients would be well served by a national firm. Milner Fenerty, which had grown through its own series of mergers to form the largest law firm in Alberta, had come to a similar conclusion.There was a mutual recognition of the advantages of national stature, and we merged in 1998.With our client-driven service approach, two years later came the merger with the Byers Casgrain firm in Montreal. As a consequence of these steps, FMC has established strong offices in Montreal, Ottawa, Toronto, Edmonton, Calgary and Vancouver, which are all the country's key business centers. With over 550 legal experts and a national reach, FMC has distinguished itself as a leading Canadian business law firm.

Editor: Why has it been necessary for the firm to evolve in this way? Is the alternative stagnation, even demise?

Elder: In a country where the practice of law is governed on a province-by-province basis, there is considerable logic to having a national platform as opposed to a base in just one city. In addition, in Quebec civil law prevails. Having a presence in most of the provinces, including Quebec, means that we are able to better serve our clients and, with the resources of a national firm, in just about any practice area required.The business of law is like any other. To stay at the leading edge, you must meet your customers' needs.

Editor: Please tell us about the New York office. Can you share with us some of the factors that went into the decision to open an office in New York?

Elder: A motivating factor in establishing a New York representative office was recognition of the north-south orientation of activity affecting clients and potential clients. There are a large number of parent-subsidiary relationships that exist across the Canada-U.S. border, and close to 85 percent of Canadian trade is with the U.S.Our New York office is meant to serve as a gateway to Canada.

In just over two years that the office has been opened, we have seen a tenfold increase in our U.S. contacts. We are in the process of establishing what we believe to be a significant footprint in New York and the international community. On an executive committee level, we have become active in the ABA and the NYSBA, and we work closely with the Canadian Consulate in a variety of projects. Opening a New York office has had a significant impact, we believe, on our name recognition among the international legal and business community.

Editor: Are there particular practice areas that you are trying to project to the audience that you seek to reach through New York?

Elder: Our strongest representation in New York is in the business and corporate area. However, since FMC has strong specialty groups and practices, such as energy, entertainment, antitrust, banking, litigation and tax, senior partners from these areas are also involved with the New York project. Proof of our success is that our referral work is beginning to spread across a variety of disciplines. Also, there is an increasing volume of finance and mergers and acquisition work relative to the energy sector that derives from our New York presence.

Editor: Who are the clients you are attempting to reach in your respective practice areas?

Mahmud: Calgary is in the process of becoming a world energy capital. Increasingly, large oil and gas companies are establishing bases in Calgary and looking overseas for new investment - that is on the inbound side - while, at the same time, they explore opportunities for diversification - on the outbound side. FMC provides a wealth of talent in a variety of disciplines relating to the oil and gas sector, and this includes very specialized construction, financing, cross-border tax, joint venture, and related services. We have developed an international natural resources practice group that, in effect, translates the skills we have utilized successfully in a Canadian context to the international arena, which is of immense value to our clients as they move overseas.

These skills also service an international clientele, including The World Bank and other international financial institutions. These organizations are looking to FMC to help in sharing the Canadian experience - the management of our natural resources in a legal context - with a number of foreign governments. I just completed a project in Sri Lanka where we were advising the government in setting up a new downstream oil and gas regulatory system to manage refineries. In light of our many years of experience, we understand the technologies involved and the commercial underpinnings that are necessary to bring those technologies to fruition. We are also - as Canadians - comfortable working across a variety of cultures. And finally, we have a cost structure that compares very favorably with that of the London and New York firms. All of this adds up to the Canadian advantage: the ability to offer excellent service that is culturally sensitive at a competitive price.

Hughes: On merger transactions, we are involved in large cross-border acquisitions that require regulatory approval in Canada both from the Competition Bureau and from Investment Canada, which regulates foreign investment or the acquisition of Canadian businesses by non-Canadians. We recently acted for Bayer in its worldwide acquisition of the Aventis CropScience business. That required antitrust regulatory approval in a number of jurisdictions around the world, including the U.S. and Canada. We were able to coordinate the various review proceedings in this transaction in order for it to be completed in accordance with compliance objectives and the client's timing needs. This project is an excellent example of the FMC ability to serve clients in multijurisdictional proceedings that are underway simultaneously.

Houston: On the litigation side of antitrust and competition law practice, we are engaged in multijurisdictional litigation on an ongoing basis. In addition to appearing in the courts and the Competition Tribunal in Canada, we work with attorneys in the U.S., Europe and Asia, at the same time addressing, for example, related allegations of conspiracies to fix prices.

Kesler: Our trade and commodity tax clients are both Canadian and international. Many of my international clients are U.S. companies, which have branch operations or subsidiaries in Canada or are considering setting up operations in Canada. In Canada some of the most significant issues that clients encounter have to do with the taxability of electronic commerce.

Carr: There is a strong international dimension to my tax practice as well.The Canadian mining industry is unusual in that it consists of large corporations that have significant assets offshore.

Canada is also of interest to China because resource sectors - forestry and mining in particular - are attractive to an economy that is resource-poor in many ways. China must seek an assured supply of certain resources in order to keep its manufacturing capabilities in ascendancy.At the same time, the nascent resource sector in China represents an investment opportunity for Canadians. China is also anxious for technology and the export of engineering services by Canada to China. This activity is a real measure of Canada's importance in this sector of the world's economy. FMC is fully engaged in this process.

Editor: What are the implications for world trade of a China that is fully integrated into the world's economy?

Elder: A more confident China, one that takes a more dominant posture in trade negotiations, is likely to be at least one result of China fully joining the global economy. However, the country still has a way to go in this regard.

Kesler: Two significant issues that China is going to have to address if it is to become fully integrated into the global economy concern the protection of IP and the question of government subsidies for certain manufactured goods, which includes the dumping of those goods. The test, I think, will rely on how the domestic courts in China deal with these two issues over the next few years. There is a process underway, and I think that corporate governance, professional legal standards, the rule of law and the ways in which China's legal system interfaces with other systems are among the things that the Chinese are scrutinizing when attempting to deal with these two overriding issues.

Editor: The fact that the World Bank consults Fraser Milner Casgrain in infrastructure projects must have a very dramatic impact on the firm's public image in many areas of the world.

Mahmud: It does, and I think it is a great credit to the leadership that assembled FMC's national platform. We are the only firm in the energy sector with a national platform, practicing both common and civil law by virtue of our Montreal office, ranking among the top three by Chambers .The civil law capability constitutes a strategic advantage for us in certain jurisdictions in North Africa, West Africa, Latin America and Eastern Europe.

Editor: You all have multifaceted practices that cut across a number of disciplines. How do you marshal the resources of the firm?

Elder: There are several national practice groups that cut across the different offices. We can draw together a variety of disciplines from within an office or across all of the offices quickly and efficiently in order to put together a team for a specific project or transaction.

Hughes: Our competition people constitute a national practice group. We are spread out among the Montreal, Ottawa, Toronto, Edmonton and Calgary offices, and we draw upon and coordinate the expertise resident in those offices on a regular basis. We also have significant relationships with a number of U.S. law firms in this area.

Editor: Does each office have a core strength that may not be duplicated elsewhere?

Elder: There is no hard and fast rule here. Nevertheless, there is, for example, an oil and gas practice that is specific to the Calgary office and to being in Alberta. Our Vancouver office is known for its film and television financing work, but a considerable amount of this type of work is done in Montreal and Toronto as well. On a number of corporate matters, including mergers and acquisitions and financing activity generally, all of our offices possess the requisite expertise.

Editor: Where would you like to see the firm in, say, five years?

Elder: As a leading Canadian business law firm, I would like to see us continue to leverage our expertise and leadership in cross-border activity between the U.S. and Canada, intensifying our position as the firm of choice for international clients seeking to do business in Canada.

Kesler: Hong Kong, New York and several other strategic initiatives have coined FMC as a client-driven firm. Rather than waiting for markets to come to Canada, I would like to see the firm continue to reach out to other markets to explore mutually beneficial opportunities. I recently assisted the Canadian government in providing advice to the Indian government on the implementation of a federal manufacturing sales tax. India has the potential to become a global player, and given my recent role as advisor to the Indian government, I plan on taking a frontline role with the firm's approach into the Indian market, expanding opportunities along the same lines that FMC afforded both Canada and China some 20 years ago.

Hughes: In looking for opportunities for growth, the important area to focus on is the international side of the firm's practice. Our North American strategy is well thought out at this point, and an Asian and a European strategy are emerging.

Mahmud: As Calgary continues to evolve as an international energy center; there is increasing connection with London, New York and other global financial centers. I look forward to continuing initiatives with our energy team to build relationships with the world's leading financial institutions and energy companies to ensure we remain at the top of the energy law marketplace. This will likely involve inward investment by international energy companies in Canada and continued FMC involvement in the growth of the international LNG market and cross border pipeline networks.

With respect to international work, both China and India will continue to evolve as global players. In China, we continue to build on good relationships we have with energy companies with respect to work both in and out of China. In light of Chinese interest in the Canadian energy sector and Chinese interest in Canadian expertise, which can be used to develop the Chinese domestic energy sector, the future could be very promising in that area of practice.

In India, we have advised on financing as well as upstream and midstream oil and gas matters for energy companies. A key issue there is that import and domestic infrastructure needs to catch up with consumer demand for energy in order for India to truly realize its economic potential. This is a market that is in transition from a command economy to a free market economy, and the transition takes time and requires patience. Nevertheless, the potential is enormous, and I believe that FMC will continue to play an important role as India emerges onto the global stage.