Lexpert Magazine

LEXPERT MAGAZINE | SEPTEMBER / OCTOBER 2018 43 | BOUTIQUES | outside counsel on a file in Eastern Canada. en came the big slide in oil prices. "When the downturn hit," says Todesco, "the first thing we did (at Nexen) was re- negotiate with our outside counsel to cut their fees by at least 20%. en we stopped using outside counsel and started keeping everything in-house because we were just trying to survive on very small budgets." e next phase was to trim in-house departments. Todesco was among those who found himself without a job. He and a friend who had also been unexpectedly downsized realized they had significant ex- perience in outbound international energy law, as well as servicing the day-to-day legal needs of a major oil companies. "We looked around Calgary and no one even at the big firms was advertising that they do interna- tional Oil & Gas," whether incoming or outbound, he says. e first idea was to talk to a major firm about becoming a lower-cost bolt onto its energy practice. ey talked to five major law firms in Calgary and said, "we've identified an area you're not servicing, or not servicing well, and we have a different cost model and operating model. You don't have to put us in your offices in downtown Calgary, you can put us in a satellite office, we don't need expensive space and a library or research fa- cilities. We'll be a small, nimble, inexpen- sive operation you can sell to your clients." "WE LOOKED AROUND CALGARY AND NO ONE EVEN AT THE BIG FIRMS WAS ADVERTISING THAT THEY DO INTERNATIONAL OIL & GAS." – Jay Todesco; Cito Energy Law LLP Surprisingly, he says, every firm turned them down. "ey thought we would can- nibalize their operation." Cioni saw their pitch while he was at To- rys and felt a bolt-on was not a great idea. "I kept saying to them you should just do this on your own." It was around that time he decided to call Todesco and the other lawyer, saying: "Shove over, I'm joining you." ey started working on a boutique concept instead. e other lawyer, who Cioni says "shall remain nameless, but who I plan to steal," opted to join a major firm rather than go the boutique route. "I call him every month and bug him, asking: 'Do you hate it yet? lawyers will be senior people let go from an oil company, in-house counsel who are heading towards retirement or who have a young family and may only want to work three days a week — in other words, experi- enced counsel looking for flexibility. While they may bring in some work, they'll also be fed work. Cito says the boutique can cover for in- house counsel on parental leave, off due to illness, or even be retained to do specific piece work. In today's harsh environment — for law firms if not the oil patch — it seems Cito has carved out a niche. Brown Mills Klinck Prezioso LLP LAWYERS: Seven OFFICE: Toronto FOCUS: Pension, Benefits and Executive Compensation Elizabeth Brown, Lisa Mills and two other partners were part of the pensions and ben- efits team at Hicks Morley Hamilton Stew- art Storie LLP, a Labour and Employment firm, when they realized there was a strong business argument for breaking away and operating as a stand-alone boutique. e argument, says Brown, one of the boutique's founding partners, is that de- signing a new pension plan or restructuring an old one these days increasingly involves shared risk between the company and its employees. To make it work requires an ele- ment of trust between the two sides. But unions or other employees' repre- sentatives who are across the table with lawyers from a firm that also practices em- ployer-side Employment Law may have had an unhappy dealing with the firm in the past, albeit in a completely different area. She says that can create mistrust right off the bat. "It's best if you're not as identified with one side or the other," says Brown. Even as a boutique, she says, "we'll never be viewed as neutrals" because the firm acts for the employers who are responsible for the plan. But because it doesn't practice Labour and Employment Law, the hope is the employ- ees' representatives will come in without previous baggage "instead of literally being on the opposite side of the table, maybe the ey focus so much on M&A and Finance, they don't even know what you do.' " Meanwhile, he and Todesco rented about 1,200 square feet in downtown Cal- gary and hung out their shingle as equal partners, taking on two more lawyers, one of whom was formerly in-house at Talis- man (now Repsol). eir business plan? Low-cost, highly specialized advice. eir eyes on the bottom line help make low pricing possible. Cito Energy Law saves money by us- ing an off-site CFO who is a chartered ac- countant, Microso Office instead of an IT department, and has just three offices and a good-size boardroom, which is where Cioni usually works, as its space. "It's a bit like hoteling. But for international work in particular, Jay and I are used to being told: 'Here's your laptop, here's your passport. Don't get arrested.' " It helps that Todesco has been seconded to Suncor on an open- ended retainer — "a good source of income for the partnership," he says — and an ar- rangement that still gives him the freedom to take time if a large transaction comes his firm's way, as it did over Christmas when French oil giant Total wanted to enter into agreements for two exploration licenses offshore Guyana. e very small boutique acts for some very big names in the energy world, doing both day-to-day and transactional work. When Cito needs advice in areas such as securities or competition, Todesco says they just pick up the phone. "We're not affiliated with anybody so I don't look for firms, I look for the best person to do the job." Since they've been up and running, a number of firms have asked if they could be Cito's affiliate and provide their tax advice and securities advice. And Cito po- litely turns them down. If Cito needs tax advice on a deal, for example, Todesco says "we'll look around and see who did the last one, who did a great one, who knows what they're doing, and who would be a good fit with the client." Both partners say they're mulling over expanding. But their model will not in- volve traditional partners and associates. While the firm could conceivably take another partner (profits would then be split evenly in three, Cioni says), the other

• Cover
• Big