Mintz Levin setting up shop in Toronto

[C_Terror]

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.reuters.com/legal/legalindustry/us-law-firm-mintz-launches-canada-with-toronto-office-2023-03-20/&ved=2ahUKEwiN06Sr7_D9AhWHmmoFHcRhDJIQ0PADKAB6BAgHEAE&usg=AOvVaw01_c9sqfbJR-k8hn9M0UF8

 

Surprised this wasn't brought up already. What are your thoughts on this? Hopefully this starts a trend where more US firms set up shop and light a fire under Canadian big law's asses to keep up with comp to retain associates.

[easttowest]

Five partners get together and open up shop. How does this help associate salaries? 

[C_Terror]

Just think ahead a few steps.

MintzLevin is a US Big law firm, and recruiters are reaching out to current Toronto associates offering Davies +10K, practicing Canadian law. These partners are also rainmakers at their respective practices, and presumably have brought along a lot of clients. 

Now, the street has the base line scale, a Davies/BJ scale and a Mintz Levin scale. If Mintz can prove that it can succeed in Toronto, this may get other US firms to consider setting up shop here, creating more competition and demand for associates. 

Even in the short term, Mintz already poached about 10 or so top associates from Torys and they're actively poaching other associates at the sisters. There aren't that many good jr/mid corporate associates out there. 

[BlockedQuebecois]

A few thoughts: 

1. Bennett Jones and Davies don’t pay the same. Bennett Jones pays 20k less per year at the outset, with the gap widening in later years. 
2. Is there anything to suggest Mintz is paying 10k more than Davies? I haven’t seen that, and it’s not clear to me if that’s a hypothetical or not in your post. 
3. More broadly, the issue with Canadian firms is that the market won’t support higher rates. The two most likely ways the new Mintz office could support higher base salaries is if: (i) partners took less; or (ii) the Canadian office was being subsidized by the American one. Both of those are not particularly good and make the firm less attractive, and as a result mean there is not likely to be a shift in the market. If true, the most likely outcome would be a 10k bump at Davies while the other firms shrug. 

Edited March 23, 2023 by BlockedQuebecois

[C_Terror]

34 minutes ago, BlockedQuebecois said:

A few thoughts: 

1. Bennett Jones and Davies don’t pay the same. Bennett Jones pays 20k less per year at the outset, with the gap widening in later years. 
2. Is there anything to suggest Mintz is paying 10k more than Davies? I haven’t seen that, and it’s not clear to me if that’s a hypothetical or not in your post. 
3. More broadly, the issue with Canadian firms is that the market won’t support higher rates. The two most likely ways the new Mintz office could support higher base salaries is if: (i) partners took less; or (ii) the Canadian office was being subsidized by the American one. Both of those are not particularly good and make the firm less attractive, and as a result mean there is not likely to be a shift in the market. If true, the most likely outcome would be a 10k bump at Davies while the other firms shrug. 

1. You're correct, I mispoke. There's also a BJ scale, since they pay $140,000 from the outset and Davies pays $150,000 from the outset. 

2. Yes. Recruiters have started making the rounds to associates across the street. Pay is confirmed, but only for a specific year of call.

3. I believe there might be a push to break away from the cartel like pricing, so that firms that actually earn significantly more will actually pay more. The issue is that I believe  Canadian partners are taking a much bigger piece of the associate pie than the US partners. There's a reason why PPP has gone up quite a bit over the years (obviously don't have the facts to support this, other than a few partners mentioning it to me) while associate base salary hasn't even matched inflation from 2008. $100K in 2008 would be $140K in 2023.  This US piece is anecdotal and extrapolation, but US associates get paid at about a 5-6 to 1 of their total billable targets to base, while Canadian associates get paid about 7.5 to one. Where's the other 25% going? Assuming all expenses are the same in terms of percentage (i.e. NY offices as a % cost the same as Toronto offices), they go to Canadian partners. This to me suggests that Canadian associates are underpaid not just because the market "can't" support higher pay, but that we're getting the short end of the stick. There's also not enough "good" Canadian firms for us to vote with our feet. The best associates that want more pay end up going to US instead, so Canadian firms aren't actually punished for underpaying their associates (other than in 2021 when they were bleeding so many associates they were dragged kicking and screaming to increase to 130K, FINALLY matching inflation).

[easttowest]

I wasn’t aware they are already offering Davies plus $10k. That’s nice! 

[Rashabon]

I don't think your point 3 is based in fact. The profits per partner at US firms are significantly higher than Canadian firms. The rates are also significantly higher. I can't charge $1.5K an hour for my work in Canada, but that's what a senior associate would charge in the US. It's a different market and that kind of pricing does not work here. We've had this debate constantly and there just isn't the same market for legal services as there is in the U.S. I also think your math is off. Billable targets in New York are like 2000 hours and they charge out at higher rates. I did some rough guestimate math which could be off to be fair, but based on it I think New York associates take home less of a percentage than Canadian ones.

I'll wait and see what happens with curiosity but let's be honest. This isn't a top shop setting up. None of the top tier firms from New York have set up shop here, and there's a reason for that.

New York office space is also wildly more expensive than Canadian office space and they need more of it. I wouldn't be surprised if New York firms had much larger overhead than Canadian ones, in any event.

[BlockedQuebecois]

31 minutes ago, C_Terror said:

1. You're correct, I mispoke. There's also a BJ scale, since they pay $140,000 from the outset and Davies pays $150,000 from the outset. 

2. Yes. Recruiters have started making the rounds to associates across the street. Pay is confirmed, but only for a specific year of call.

Davies pays their first years 160k. For Bennett Jones, I’m not really sure I would call paying above market rates for first years before falling into lockstep a “scale”. It’s just an attempt to maintain the reputation for paying above market rates that it got when it used to pay substantially above market rates. 

When you say “Davies plus 10k”, do you mean they are offering 170k starting, or are they offering 160k and you just thought Davies paid less? 

[ramoj]

Adding a point to think about:

What if Mintz leverages their US client base that also happen to operate in Canada and charges them NYC as do Skadden/Paul Weiss/Sherman in Toronto, justifying $215USD for 1PQE in Toronto? Ie. a blend of NYC/Canadian law practice strategy? On that basis, pay that looks like Davis + $10K would be well justified at just about any level of call.

[JurisPrudent]

U.S. firms making forays into the Canadian market isn't something new. Firms like Skadden, Paul Weiss and Dickinson Wright all have Toronto offices and in many cases pay their associates at rates that exceed those paid by the major Canadian firms. I don't think any of the big Toronto firms are overly concerned with what Mintz Levin is going to pay (how many of you had heard of Mintz Levin before this announcement? I certainly hadn't).

[C_Terror]

19 minutes ago, BlockedQuebecois said:

Davies pays their first years 160k. For Bennett Jones, I’m not really sure I would call paying above market rates for first years before falling into lockstep a “scale”. It’s just an attempt to maintain the reputation for paying above market rates that it got when it used to pay substantially above market rates. 

When you say “Davies plus 10k”, do you mean they are offering 170k starting, or are they offering 160k and you just thought Davies paid less? 

Huh, I always thought Davies paid 150K. Makes sense, they're paying Davies scale then. I thought Davies paid less, my apologies.

 

13 minutes ago, JurisPrudent said:

U.S. firms making forays into the Canadian market isn't something new. Firms like Skadden, Paul Weiss and Dickinson Wright all have Toronto offices and in many cases pay their associates at rates that exceed those paid by the major Canadian firms. I don't think any of the big Toronto firms are overly concerned with what Mintz Levin is going to pay (how many of you had heard of Mintz Levin before this announcement? I certainly hadn't).

 The last time any US firms came up north was years ago. In your example, Paul and Skadden only practices NY law and hires NY qualified attorneys, and Dickinson Wright pays their first years 130K practicing Canadian law. What I'm getting at is that this may start a trend of more US firms opening up shop here doing Canadian law but paying more than the other firms on the street (other than Davies).

[BlockedQuebecois]

If they’re paying Davies rates, the street isn’t going to care. They’re essentially just doing what Bennett Jones did years ago, and nobody cared then. 

If someone else moves in an attempt to prevent associates from leaving, then the street might consider doing something. 

[Jaggers]

8 minutes ago, C_Terror said:

The last time any US firms came up north was years ago. In your example, Paul and Skadden only practices NY law and hires NY qualified attorneys, and Dickinson Wright pays their first years 130K practicing Canadian law. What I'm getting at is that this may start a trend of more US firms opening up shop here doing Canadian law but paying more than the other firms on the street (other than Davies).

Littler, which is the world's biggest employment firm, opened in Toronto in around 2015 to do Canadian employment law. It never took off, and currently has 10 lawyers, none of whom are remotely big names.

[JurisPrudent]

11 minutes ago, C_Terror said:

 The last time any US firms came up north was years ago. In your example, Paul and Skadden only practices NY law and hires NY qualified attorneys, and Dickinson Wright pays their first years 130K practicing Canadian law. What I'm getting at is that this may start a trend of more US firms opening up shop here doing Canadian law but paying more than the other firms on the street (other than Davies).

Certainly possible and I wouldn't complain if my paycheck went up. I'm just skeptical that this move on its own moves the needle at all. Be interesting to see if this prompts any other U.S. firms to consider the move. 

[Jaggers]

American firms have spent 50 years consistently looking at the Canadian market and mostly saying "no thanks" so I doubt this heralds a big shift.

And obviously to the extent that the big international firms have a presence in Canada, they have always just rebadged some Canadian firm and changed essentially nothing.

[C_Terror]

22 minutes ago, Jaggers said:

American firms have spent 50 years consistently looking at the Canadian market and mostly saying "no thanks" so I doubt this heralds a big shift.

And obviously to the extent that the big international firms have a presence in Canada, they have always just rebadged some Canadian firm and changed essentially nothing.

A man can dream, okay!

[Rashabon]

I think the news says more about Torys than it does anything about the Canadian legal market. PE is the current hot topic so that's a good get for them, but this firm is not going to have any meaningful capital markets work or top end blue chip clients (outside perhaps PE) which is going to hamper it.

[Jaggers]

They brought a top pension guy, so they probably will find a niche advising pension funds, which is a good niche to be in here because we have a bunch of large funds, but it's not going to support a big firm full of high-paid associates.

[JurisPrudent]

8 minutes ago, Rashabon said:

I think the news says more about Torys than it does anything about the Canadian legal market. PE is the current hot topic so that's a good get for them, but this firm is not going to have any meaningful capital markets work or top end blue chip clients (outside perhaps PE) which is going to hamper it.

I also expect that the group's emphasis will be more on the life sciences/bio tech side (which seems to align with an area of strength for Mintz in the US) than PE. I'd be surprised if there was a meaningful shift in blue chip PE client.

[KOMODO]

2 hours ago, C_Terror said:

...

This US piece is anecdotal and extrapolation, but US associates get paid at about a 5-6 to 1 of their total billable targets to base, while Canadian associates get paid about 7.5 to one. Where's the other 25% going? 

...

Where are these numbers coming from? Are you saying that US associate comp is 16-20% of the associate's total collections and Canadian associate comp is 13% of the associate's total collections? Those numbers both seem low to me. In addition to Rashabon's point regarding market and rates which I think is correct, the leverage ratios in the States vs. Canada are quite different. Here it's not uncommon to find associate:partner ratios of 1:1 or 2:1, and my understanding is that in the US they have much higher ratios of associates to partners. Obviously this will be a significant driver of PPP in addition to the fees the market can permit.

[Rashabon]

25 minutes ago, Jaggers said:

They brought a top pension guy, so they probably will find a niche advising pension funds, which is a good niche to be in here because we have a bunch of large funds, but it's not going to support a big firm full of high-paid associates.

Yeah. I expect that dovetails with the PE work. Pension funds invest a ton of money in PE funds. I do more annoying advisory work relating to that than I would like, and I don't even have as big a practice in it as a number of others. So you kind of need to have a pension lawyer if you want to do PE work because that's a ton of the client base negotiating the side letters, etc.

[WhoKnows]

40 minutes ago, Rashabon said:

I think the news says more about Torys than it does anything about the Canadian legal market.

Bingo.

[BlockedQuebecois]

I’m surprised people are saying bad things about Tory’s.

All the social science research shows people are happier but less productive if they work in an environment where everyone looks like them and comes from the same background. Given Tory’s firm profiles resemble a Ryman painting, you would think they’d all be loving it over there. 

[C_Terror]

42 minutes ago, KOMODO said:

Where are these numbers coming from? Are you saying that US associate comp is 16-20% of the associate's total collections and Canadian associate comp is 13% of the associate's total collections? Those numbers both seem low to me. In addition to Rashabon's point regarding market and rates which I think is correct, the leverage ratios in the States vs. Canada are quite different. Here it's not uncommon to find associate:partner ratios of 1:1 or 2:1, and my understanding is that in the US they have much higher ratios of associates to partners. Obviously this will be a significant driver of PPP in addition to the fees the market can permit.

Again, take this with dead sea level grains of salt, but what I've been seeing online and on Fishbowl is that 1st/2nd years in the US are billing out at 500-600 per hour, and their compensation is 215-225K. Canadian big law associates bill anywhere between 400-600 CAD per hour and they get paid 130-160K CAD.

I understand that the associate to partner ratio is skewed in Canada vs US, which just means that either (a) Canadian associates are much more productive than the US associates, or (b) a lot of Canadian big law partners are just  glorified senior associates. Either way you cut it, the partner level as a whole takes a bigger piece of the pie than the associates level in Canada. 

2 hours ago, Rashabon said:

I don't think your point 3 is based in fact. The profits per partner at US firms are significantly higher than Canadian firms. The rates are also significantly higher. I can't charge $1.5K an hour for my work in Canada, but that's what a senior associate would charge in the US. It's a different market and that kind of pricing does not work here. We've had this debate constantly and there just isn't the same market for legal services as there is in the U.S. I also think your math is off. Billable targets in New York are like 2000 hours and they charge out at higher rates. I did some rough guestimate math which could be off to be fair, but based on it I think New York associates take home less of a percentage than Canadian ones.

I'll wait and see what happens with curiosity but let's be honest. This isn't a top shop setting up. None of the top tier firms from New York have set up shop here, and there's a reason for that.

New York office space is also wildly more expensive than Canadian office space and they need more of it. I wouldn't be surprised if New York firms had much larger overhead than Canadian ones, in any event.

I don't doubt the PPP at US firms are significantly higher. My point was that PPP in Canada has gone up quite a bit (again, we have no hard data, but just based on the increase of revenue at the top firms), while associate base salaries hasn't even kept up with inflation since 2008. I understand the pricing structure is different, which is why I took out the $ and used ratios. My math should be correct, but my assumptions may be off, but shouldn't be by that much. Let's say a 3rd year US associate gets billed out at $650 USD an hour, and hits the target of 2000; that's $1,300,000 in revenue. 3rd year salary is $250,000 so the ratio is 5.2. Let's say an equivalent 2nd year Canadian associate (articling) gets billed out at $575 CAD and hits the target of 1800; that's $1,035,000 in revenue. 2nd year CA salary (non Davies/BJ) is $150,000, so the ratio is about 6.9.

I may be a little conservative here, but my ratio still stands. Let me know where you disagree on the rate assumptions. Also with regards to NY office space, if it's wildly more expensive than Canada, then that means that Canadian big law partners eat even more of the associate's salary share.

[helloall]

I don't think this thread is giving Mintz enough credit. Littler, Cozen, and Dickinson all pay under the US market, and don't have the same level of clients as Mintz. Also, they poached some pretty big names - losing Cheryl Reicin is absolutely going to hurt Torys.