Canadian Law Firm Data: Six Month Update

Reviewing growth, leverage, retention, and gender-based data.

About six months ago I published my first review of the Pirical data on the top twenty nine largest law firms in Canada (the 30th firm’s data is not yet on Pirical’s radar). I recently updated the data to see what is happening in the market as we approach the busy fall season. All numbers referred to in this article are twelve month rolling figures.

As mentioned in the last review, Pirical assembles data on law firms internationally by pulling information from publicly available law firm websites, LinkedIn and similar sources. It is not perfect data, as it is not reviewed or confirmed by the law firms, but it is the most accessible data that I have been able to find (and pay a few thousand dollars to access). The data referred to in this article was accessed and downloaded on August 27, 2024 and our analysis can be viewed online here.

I usually publish articles analyzing data behind a paywall so that I can recoup some of the expense. However, I made this update public in hopes that it is widely read and motivates others to write independently and critically about the Canadian legal market. I have long been jealous of the sheer volume of publicly available information about US law firms and I think that better data in Canada would benefit the market. If you wish to obtain more information about the Canadian legal market and support my writing, consider subscribing to this newsletter. The monthly cost is less than a fancy coffee.

Growth and Leverage

In March I ignored available data related to firm growth and leverage. As an admitted feminist troublemaker, I looked at the data primarily to understand what was happening in terms of the retention of women in the profession. However, most law firm leaders and former leaders who reviewed the raw data for me were interested in the growth and leverage numbers. Accordingly, I have added those two metrics to those that I am tracking.

Unlike other markets, Canadian law firms are not typically public about their revenue or profits per equity partner number and very few publications request the data for public consumption - even behind a pay wall. It can be challenging to know which firms are growing unless you are paying very close attention. Pirical tracks one growth metric: percentage change in lawyer headcount.

Across the twenty nine firm sample the average headcount growth in March 2024 over the 12 moths prior was 6%. In March, the fastest growing firms by lawyer headcount were Bennett Jones (12%), Cassels (12%), Osler (11%), DLA Piper (11%), Lawson Lundell (11%) and Aird & Berlis (11%). Many of the same players are still adding headcount at a higher than average rate in August with the top growth coming from Aird & Berlis (11%), Cassels (10%), Bennett Jones (9%), McMillan (8%), and Lawson Lundell (7%). However, overall headcount growth has slowed to only 2.45%.

On the other end of the spectrum are the firms that have reduced their lawyer headcount either from departures, terminations or retirements. In March, Lerners (-6%), BLG (-6%), Cox & Palmer (-4%), Dentons (-3%) and Miller Thompson (-2%) had the largest headcount reductions. In August, that group had changed somewhat with Cain Lamarre (-5%), Dentons (-5%), Norton Rose Fulbright (-4%), Miller Thompson (-4%), and BLG (-4%) losing headcount.

For the August 2024 data, I drilled down into the numbers to see just where the movement is happening geographically. There seems to be quite a bit of movement in the Montreal and Calgary legal markets in particular. I found the following information noteworthy:

• Bennett Jones saw significant growth in Alberta including headcount increases of 18% and 11% in Edmonton and Calgary.

• At Norton Rose, headcount decreased by 7% in Calgary and by 6% in Toronto.

• Cassels had significant headcount growth in Calgary at 18% and Toronto at 10%. Cassels also recently hired back all 23 articling students into their Toronto office - those numbers would not have been captured by this dataset.

• At Dentons, their headcount decreases were primarily in Alberta with 12% headcount reductions in both Edmonton and Calgary followed by a 9% decrease in Montreal and 8% in Vancouver.

• The BLG Montreal’s office had an headcount reduction of 11% of its lawyer headcount including 42% of their women lawyers and 38% of their associates. The Ottawa office lost 7% of its headcount including 23% of the partners (Ottawa is their smallest office, had a few retirements, and recently eliminated their family law department - including a former regional managing partner).

• Osler saw healthy increases in headcount in Calgary at 12% and Montreal at 7%. They also brought in 3 new lawyers in their very small Ottawa office for a 16% increase.

Leverage

Before I dive into the leverage numbers, I pause to wonder how useful these numbers actually are. The Pirical leverage numbers include all partners in their definition of partner, not just equity partners. This differs to how leverage is typically measured since the advent of different tiers of partnership. It also means that it is not possible to do a fair comparison across firms as many of the firms on the list - including the smaller firms, Bennett Jones and DLA Piper - do not have an income partner tier. ALM /Law.com and American Lawyer track leverage data of US law firms. According to ALM/Law.com:

Overall, Am Law 100 firms in 2023 increased their leverage. The metric—defined as total lawyers (excluding equity partners) divided by the number of equity partners—is often tracked to help understand a firm’s equity partner ratio as law firms grow in head count and partnerships. Leverage for the Am Law 100 as a whole rose about 3.5% from 4.26 in 2022 to 4.41 in 2023, according to American Lawyer data.

The Canadian leverage data from Pirical suggests Canadian firms have significantly less leverage than their American cousins. That can possibly be explained by income partners being included on the partner side of the ledger. I am not aware of leverage per equity partner numbers for Canada being available elsewhere.

All that being said, Torys had the best leverage of a Canadian firm in August 2024 at 1.8 associates to every one partner. Stikeman Elliott and DLA Piper were next at 1.5 associates per partner, Blakes had 1.5 associates per partner and Norton Rose was 1.4 associates per partner. On the other end of the spectrum, Gowling WLG’s leverage was 0.7, Miller Thomson was 0.7, Goodmans was 0.6, Fogler Rubinoff was 0.5, Aird & Berlis and Lerners were at 0.4.

Departures

Based on the August Pirical numbers, the average firm turnover among all lawyers (including partners) was 10.9% and is 18% when partners are excluded (this number aligns with NALP’s 2023 associate survey research). The NALP survey of US law firms also concluded that associate turnover was at 18%.

The firms with the lowest turnover among non-partner lawyers are Torys at 8%, Aird & Berlis at 11%, McInnis Cooper at 12%, Lawson Lundell at 13% and Cassels at 13%. The firms with the highest turnover were Davies at 27%, Lavery at 26%, Lerners at 24%, and BLG, Dentons and Miller Thomson all at 23%. For partners, the firms with the highest turnover were Dentons (10%), BLG (9%), Norton Rose (9%), BCF (9%) and Cain Lamarre (7%). Various firms had very low turnover among partners including McInnes Cooper, Goodmans, Lawson Lundell, Stikeman Elliott, MLT Aikins, Lerners, Torys, Stewart McKelvey and Lavery all having less than 2% partner departures.

Gender Data

An area where there is significant differences in the market is turnover rates among women lawyers and advancement of women into the partnership. This has been a hobby horse of mine for sometime and there is both positive and negative news to report.

I was pleasantly surprised by the number of firms that are retaining women and men at the same, or close to the same, rate. Bennett Jones, Stewart McKelvey, Norton Rose, McMillan, Torys and Aird & Berlis all have 1% or less of a difference between their departing male and female lawyers. As I noted back in March, I expect this is a significant improvement over historic numbers. The Law Society of Ontario data and data from other law societies all confirm that, historically, women leave the profession at greater numbers than men. It is very nice to see many firms having more success in making their businesses a place where more women want to stay.

The average turnover rate for all women lawyers (including partners) was 13.2% compared to 8.8% for men. Firms that can improve in this area include Cox & Palmer (21% women, 8% men), DLA Piper (18% women, 6% men), Cain Lamarre (19% women, 7% men), Fogler (16% women and 6% men) and Miller Thomson (18% women and 9% men). In addition to those firms, BLG (21% women, 14% men) and Dentons (18% women, 16% men) also have higher departure rates for women than most of their competitors.

There is less positive news when it comes to women advancing into partnership roles at most firms. The average firm make up is 42% women and 57% men and only 31.7% women and 68.3% men at the partnership level.* These partner numbers include income and equity partners. Based on informal discussions with people in my network, it seems that many firms still have around 20 - 25% of women in the equity partnership - and some may be worse than 20%. That estimate seems in line with the most recent data I was able to find out of the US by NALP which reported in January 2024 that women make up on average 23.7% of the equity partnership in firms included in their study.

I am not surprised by this lack of progress in the equity partner ranks as the vast majority of women in my professional network have left law firms over issues surrounding advancement into the partnership. Among the 10 women that I consider friends who work(ed) at various of the above firms, all but 2 of them left their firm primarily over partnership admission and advancement issues. Most left to enter the partnership in other firms, were hired to lead in-house teams or started their own businesses. These are not women leaving for “family reasons” or to “slow down” and are women who are extremely motivated and ambitious. The general mood of the women lawyer group chats is that collectively women have had enough of the slow progress and are content to build their own firms instead (myself included).

Only two firms, Field Law (43%) and Lerners (41%) (two of the smallest firms in the group) have more than 40% of women in their partnerships. Some of you may recall that Lerners had previously reached 50% of women in their partnership back in 2015. Although their numbers have regressed since then, they remain a leader in this area compared to their peers. Also standing out are Lavery (38%) and McCarthy Tetrault (36%). The vast majority of firms have between 30 and 35% of women in their partnership including BCF (35%), BLG, Gowlings, Dentons, Cox & Palmer, Blakes (all at 34%), Lawson Lundell, Torys, McMillan and Davies (33%), Osler, Cassels, McInnis Cooper, Stewart McKelvey and Miller Thomson (31%) and Aird & Berlis (30%).

Firms that have not yet maintained over 30% women in their partnership include: Norton Rose, Fasken, Goodmans (all at 29%), Stikeman, Bennett Jones, MLT Aikins, Fogler Rubinoff (all at 27%), Cain Lamarre and DLA Piper (both at 23%).

A Spotlight on Torys

One reason I have embarked on these research projects is to identify with data which firms are excelling in certain areas so that we can all learn what they are doing right.

I continue to be fascinated by Torys numbers. As was the case 6 months ago, they are a leader in retention generally, retaining women associates at nearly identical rates as men and they do it despite a fairly long path to partnership when compared to their peer groups. For my last article, I was able to get an inside perspective on the firm from an anonymous source. This time, I went straight to the top and emailed their national managing partner Matthew Cockburn to ask if I could interview a member of their leadership team to discuss this research. He graciously connected me with Deborah Dalfen, their Chief Professional Resources Officer (and gave her team credit in the process).

I asked Deborah various questions about their work environment to try and get a sense of how they are doing things differently. I took away three main themes from our discussion: the culture, the support structure and the programs/policies.

In terms of the culture at Torys, I learned three things that have a positive impact on the work environment. First, during recruitment they are looking for low-ego individuals who will fit into their very team-based culture. They will quickly pass over candidates with big egos and scan closely for it during the student recruitment process. If students do not act like a team and respect their peer group, they may well not be hired back. Second, for as long as Deborah can remember, the firm has had as its “North Star” the underlying goal that they want Torys to be the best place to work. Decisions at the highest level, and all levels, are made with consideration of how it will impact their people and work environment. They believe as a firm that if they can be the best place to work, they will attract the best lawyers who will attract the best clients. Third, Torys has a culture of men taking parental leave. She let me know that taking parental leave is the expectation and that most parents take it. I asked how long male lawyers take for their parental leaves, expecting an answer of a few weeks. I was surprised to hear that they most frequently take longer leaves lasting months, not weeks.

Torys also has an interesting structure for supporting their lawyers that many firms do not. At many firms there is a human resources department that manages issues related to the non-lawyer staff and practicing lawyer managers who handle most of the matters related to the legal professionals. Some firms, particularly the largest ones, have professional resources teams which assist the lawyers in the firm with their career development. The Torys professional resources team has been in place for a long time and are more involved in providing human resources-type assistance to the lawyers than I have seen or heard about elsewhere. For example, I asked what would happen if a lawyer was off work on a medical leave and was preparing for a return. She described very active professional resources involvement throughout the leave and return to work process. It seems that they have done a good job at dividing the labour between the lawyer-managers and professionals trained in managing and supporting people. I expect this both takes stress and work off the shoulders of lawyer managers and also provides a higher standard of HR experience and expertise for those requiring assistance.

Third, Torys has a few programs and practices that seem to differ from their peers. First, they do 360 evaluations. Any lawyer - junior, senior or peer - can submit feedback into a system about partners and counsels that is managed by a third party consultant. The consultant prepares a report with all the feedback which then gets delivered to each partner and counsel in an anonymized form. A 360 feedback system has been in place for as long as Deborah can remember and it seems like they are well ahead when it comes to their partners embracing this kind of feedback. I asked Deborah how the partners respond to negative feedback. She stated that although nobody likes criticism, their partners tend to be “low ego” and, for the most part, wish to improve their working styles so that they continue to attract the best people to work with them. Second, Deborah describes a “free market” among students and young associates who are encouraged to work for anyone and everyone in various practice areas. She stated that if a partner or counsel was bad to work for, they would not have any associate help as the associates would choose to work elsewhere. It does not sound like a very siloed model. Third, Torys has a centralized work distribution system for their students where everyone is given equal opportunity to work on a task or file. She stated that this has proven to be a fair way of dividing the work, ensuring more equal distribution of work and ensuring that students are getting experience in areas that are of interest to them. These systems generally have been shown to help prevent overwork of star performers. They also ditched a formal rotation system some time ago. Finally, Deborah advised that they have generous parental leave policies which involves ramp up periods upon return to work so that new parents are not expected to be billing at 100% capacity immediately.

More Research is Needed

As mentioned earlier in this article, there is very little information publicly available about the Canadian legal market. This information is of interest to both the labour market and the client market. If you stay in this profession long enough, you start to learn about various firms in more detail and get a general sense of where the good places to work are and which firms are thriving. However, a lot of that information is gained from having large peer networks and friends across firms. A lot remains a mystery for law students, internationally trained lawyers, and those of us that do not come from families in the legal or business world.

I am not a journalist or someone that loves doing this research - although I do enjoy looking at the numbers when the work is done. I hope my articles give others a sense of what information is available and of interest. I may run these numbers again in another six months, but I would also be thrilled to hand this project over to someone else.

Let me know in the comments if you have any other observations.

* When comparing gender based data across firms there were many examples where the totals do not equal one hundred percent. In reviewing the Pirical website and their methodology, my best guess as to the reason is that gender is not always identifiable from a firm’s publicly facing website if a lawyer does not use pronouns in their biographies.