The firms that chase prestige risk growing themselves out of profitability, say lawyers
Mid-sized law firms occupy a unique space in legal markets – agile enough to offer personal service yet broad enough to handle complex legal needs. But standing between boutique specialists and national powerhouses comes with its own set of risks.
These firms can survive – and thrive – only if they stay focused on who their customers are, remain disciplined in their offerings, check their egos at the door, collaborate, and resist the fear of missing out (FOMO).
That is according to Peter Saad, managing partner of Loopstra Nixon LLP, and Luca Citton, president of Boughton Law in Vancouver and chair of the global legal alliance Meritas.
The reason mid-sized firms are often viewed as vulnerable is that boutiques succeed through deep specialization and long-standing client relationships, while large firms lean on brand recognition, resources, and deep benches.
Legal consultant Warren Smith previously told Canadian Lawyer that mid-sized firms that lack focus on who they are trying to serve can end up as the “Hudson’s Bay of law” – trying to sell everything to everyone and ultimately selling nothing to anyone.
“The firms that will succeed in the mid-market are the ones that know who their client is,” says Saad, adding that a mid-market law firm leader must have the discipline to recognize when a client or a deal is too big for the firm’s capabilities.
Without that self-awareness, he says firms risk stretching beyond their means. The risk, he adds, is even greater now when many mid-sized law firms are in the middle of successions for which they didn’t plan, at least not sufficiently.
“When you put those two together, you are on a collision course.”
Citton says that mid-sized law firms face an uncertain future if they cannot tap into resources beyond their local markets.
Still, he says, there is “tremendous opportunity” for small and mid-sized firms in Canada – especially if they collaborate internationally on cross-border disputes and complex transactions.
“We [at Meritas] have the resources and capabilities of a large firm because of the size, but we can also, because we're smaller, independent firms, pair that with more personal attention and responsiveness.”
Citton adds that while large firms have bigger teams and more funds dedicated to innovation and automation, formal and informal alliances allow independent firms to share knowledge without the massive overhead costs.
One area where collaboration proves invaluable is in evaluating AI tools. Citton says his firm has benefited greatly from tapping into the network's global expertise: international contacts regularly share insights about which products have been tested and proven effective.
That shared knowledge, he says, has saved his firm significant time and resources. “If you don’t have a resource like that, it becomes very time-consuming,” he says. “In today’s legal market, speed is the word of the day," he adds.
Saad cautions that mid-market firms often fall into the trap of overestimating their capabilities and chasing prestige clients. He warns that chasing deals too large for a firm’s structure can backfire.
“If you ask me to do a billion-dollar deal as a firm, I would probably tell you that we may not be the right fit for you – but we're comfortable saying that. However, if you need to do a $50 million deal, we can absolutely do it, and way more efficiently than any other team on the streets. That honesty goes a long way.”
He says growth must be intentional – driven by client demand, not by hiring and hoping work will materialize.
He says that Loopstra Nixon has expanded by adding specialists in areas like tax, cross-border issues, estate planning, litigation, and employment to meet evolving client needs, doubling in size without a significant change in its client base.
Saad cautions against getting distracted by inflated numbers in the legal marketplace and adds that those numbers are often just rumours that create a misleading picture of firms’ health.
“Revenue is not profit… Growing for the sake of growth is disastrous,” he says.
While Citton emphasizes the security of collective strength in an alliance, Saad predicts that mergers and consolidation are inevitable for many mid-sized firms.
He points out that bringing firms together under one roof leads to efficiencies – from better use of office space to eliminating redundant roles like CFOs and CEOs. He also says concerns about conflicts of interest are largely irrelevant for the mid-market, explaining that conflicts usually only become significant when dealing with the top tier of Canada’s corporate landscape.
Saad also notes that in some cases, clients choose top-tier firms not necessarily for better advice but for the reputational insurance that comes with a major brand’s letterhead.
He sometimes advises clients to engage bigger firms to send a stronger message. "That's social currency," he says, adding that despite some changes in the market, Canada's dominant “Seven Sisters” law firms largely retained their position of influence.
They also have the reputation and resources. When mid-sized firms with 100 to 150 lawyers try to chase the work of those with 800 lawyers, you can only call it “foolish growth,” Saad says.
“What happens is that you grow yourself out of profitability.”
