In Canada, the US, the UK, Europe, the Far East, and Latin America, pensions are in crisis. At the same time, given their control of massive capital pools, pension funds are corporate powerhouses of importance to practically every level of government, infrastructure financing for example. They are of equal importance to major corporations, either as liabilities or as sources of capital. They are, without question, important clients to a number of Canada's leading law firms. They have moved centre stage in the political, corporate and legal corridors of power.
In late January of this year Justice James Farley of the Superior Court of Justice granted Stelco Inc., Canada's largest steelmaker with 5.1 million tons of production and 8,400 employees, protection under the Companies' Creditors Arrangement Act (CCAA). And the biggest challenge facing Stelco? According to Courtney Pratt, the company's president and chief executive officer, Stelco must bring its runaway pension plan costs under control. A tall order.
Stelco's pension plan deficit is $1.25 billion, more than five times the company's estimated losses of $225 million for 2003. Almost one-quarter of that amount can be traced to the $57 million the company spent to finance its pension plan in 2003. By 2008, the annual corporate contribution to the plan is expected to increase to $98 million.
Cvr607- Gregory Winfield- McCarthy
And this is where Ontario comes in. Fortunately, or unfortunately, the provincial government's Pension Benefits Guarantee Fund (PBGF), the only such fund in Canada, covers $773 million of Stelco's pension liability. But the fund is arguably worse off than Stelco. The PBGF has only $222 million in assets after recently paying out approximately $300 million in the Algoma Steel Inc. restructuring.
Hence the $500 million contingency announced by Sorbara, which does not take into account other pension shortfalls that may be forced to call on the PBGF. The situation at Stelco is not a one-off; it extends throughout Corporate Canada.
A recent study by three consulting firms (Mercer Human Resource Consulting, Watson Wyatt Worldwide and Towers Perrin) estimates that Canada's 1,205 pension plans, with assets totalling approximately $1 trillion, face a combined funding deficit of $225 billion. The Office of the Superintendent of Financial Institutions (OSFI), the federal regulator, reports that more than 50 per cent of these funds have deficits and that the underfunding exceeds 10 per cent in 55 per cent of the plans.
And this is why pensions have moved centre stage. They have become such massive pools of capital that doubts as to their financial integrity threaten the viability of major corporations such as Stelco. No transaction of significance can now take place without examination of the pension plan aspects. Pensions are no longer the preserve of pension lawyers. Pensions have gone corporate.
Acting for Stelco on the CCAA restructuring is McCarthy Tétrault LLP. At the heart of the restructuring is the pension shortfall. Leading the team from McCarthys is Blair Cowper-Smith, a senior corporate lawyer. On the insolvency side is James Gage, national co-chair of McCarthys' restructuring practice, who helped mastermind the Algoma restructuring. Cowper-Smith and Gage readily acknowledge that their task would be impossible without Gregory Winfield, the firm's senior pension partner.
"The skills of the corporate and commercial lawyers will continue to drive the deals forward, but the pension specialists are the ones who do the real work without which there would be nothing to drive forward," says Cowper-Smith. "A strong pension capability is invaluable to the corporate law firm nowadays. In fact, we got the Stelco brief precisely because of our experience in Algoma."
According to Winfield, briefs like Algoma and Stelco involve "a unique combination of the skills sets of insolvency and pension lawyers." Creativity is particularly important, Gage adds, because the pension elements add a requirement to "satisfy multiple stakeholders, including different groups of pension beneficiaries."
Although frequently in the background, pension specialists like Winfield are now key players on corporate deal or corporate restructuring teams, such as the one at McCarthys for Stelco. "Pensions and the potential exposure to unfunded liabilities are the subject of tremendous debate in the boardroom nowadays," says Cowper-Smith. "Pension lawyers no longer live in a little world exclusively of their own making." As noted by Gage, "Compared to other amounts on the balance sheets, pension numbers are frequently huge and require intensive investigation."
The importance of pension expertise is not limited to corporate restructuring. It extends to mergers and acquisitions and corporate finance generally. Looming on the horizon is a major roll for pension funds as funding vehicles for public/private partnerships (P3s).
It is no surprise, given their economic power, that the pensions themselves have entered the corridors of corporate power. The Ontario Teachers' Pension Plan (Teachers') co-founded the Canadian Coalition for Good Governance (CCGG), which now includes 23 pension and mutual funds, to bring about corporate governance changes at publicly traded companies.
It is becoming clear that given their control of massive pools of capital, pension funds are a current and future engine of Canadian economic well-being. As such they are involved in many of the large corporate transactions over which the major law firms compete so furiously-and this does not take into account pension class action litigation, regarded by many observers as about to undergo exponential growth. "Pension funds are the banks of the twenty-first century," says Cowper-Smith.
Arguably, Cowper-Smith understates the situation. The future role of pensions may even be greater than that of the banks. Banks, after all, are primarily intermediaries between borrowers and lenders. Pension funds buy hard assets and invest in the stock market.
Cvr 607- Susan Rowland- Goodmans
Canada's major law firms increasingly see pension funds as economic powerhouses. Arguably, the shift is seismic. "Until quite recently, pension law was viewed as a regulatory backwater by many law firms, a subset of labour relations," explains Susan Rowland of Goodmans LLP in Toronto. "Today, a pension fund can be an important element of a client's business problems and senior executives are looking for legal advice that gets them up to speed on the issues quickly and efficiently."
There is little doubt as to the direct, and indirect, financial importance of pension-related work to major law firms. Rob Collins of Blake, Cassels & Graydon LLP in Toronto is recognized as one of the leading pension fund-related asset investment counsel. Collins estimates that more than 5 per cent of the billings of the five hundred-plus lawyers at Blakes is connected to pension funds and pension-related work. The 20-lawyer pension group at Blakes, headed by John Solursh, is a valuable asset.
Blakes shares leadership with the similarly sized group at Osler, Hoskin & Harcourt LLP, led by Ian McSweeney. Senior corporate partners at Oslers, such as Christopher Portner, acknowledge the importance of the pension group to the firm's success. "I have a number of clients whose CEO is just as focused on pensions as they are on M&A activity," McSweeney points out.
The pension group at Borden Ladner Gervais LLP (BLG) provides Blakes and Oslers with stiff competition-across the board. Again, it is the growing corporate aspect that is centre stage. As noted by Andrew Harrison of BLG, "My pension practice is continually growing on all fronts including increased involvement in mergers and acquisitions and investment compliance."
In Calgary, home to the second-largest number of major head offices in the country, only Bennett Jones LLP has a dedicated pension practice. Douglas Ast and Christopher Brown head up the group, which have become a significant resource for the firm. "For example, we do a significant amount of work with our restructuring partners in Toronto," says Brown.
The legal market, however, is changing. Firms are moving to acquire the necessary pension depth now required in restructuring and corporate work. Susan Rowland, a veteran of high-profile pension-related insolvencies like Eaton's, was recently recruited by Goodmans, well-known for its top corporate and corporate restructuring work. The move immediately paid dividends for the firm when the Superintendent of Pensions retained Rowland for the Stelco restructuring.
Cvr 607- Ian McSweeney- Oslers
In 2002, Torys LLP recruited David Vincent from Fasken Martineau DuMoulin LLP. Vincent is a pension specialist who has worked on major insolvencies representing clients such as the provincial Minister of Finance in the Algoma restructuring. In less than two years the pension group at Torys has gone from two to five lawyers, a significant shift in strategy for a major corporate firm that had previously regarded pensions as little more than a peripheral specialization. "Mergers and insolvencies and class action litigation provide the bread and butter growth areas for our pension group," says Vincent.
At Stikeman Elliott LLP Gary Nachshen's pension group, instrumental in the firm's representation of Air Canada in the ongoing CCAA proceedings, has grown over the last year to three full-time lawyers and two partners who spend one-third to one-half of their time in the field. At McCarthys, Cowper-Smith and Gage can also count on three full-time pension lawyers, as well as considerable pension-related expertise in the firm's tax and corporate finance groups.
Blakes, Oslers and BLG are also aggressively adding depth. In Montreal Oslers, for example, recruited the pensions practice of Desjardins Ducharme Stein Monast, headed by Michel Benoit. The Desjardins Ducharme group had long dominated the practice area in Quebec.
Any cursory examination of the economics of pensions today plainly illustrates that the demand for pension lawyers is not transitory. "Pensions never hit the horizon for corporate clients because they never had to pay attention to the issues," says Rowland. "Now they do."
Witness the restructuring of Eaton's, Algoma, Air Canada and Stelco. They are all corporate icons that faced or are facing insolvency. And in each restructuring pensions played or are playing a central role.
"Now, when we see industries that are under pressure for business reasons, pensions are almost invariably a significant complicating factor, if not the sole cause of the problem," says Malcolm Hamilton, an actuary with Mercer Human Resources Consulting in Toronto.
In the Eaton's restructuring a creative application of a pension surplus allowed the national retailer to continue for two years before it finally closed. Algoma survived only because Hap Stephens, the company's chief restructuring officer, tapped the PBGF for hundreds of millions of dollars. James Gage of McCarthys and the actuaries came up with a creative restructuring of Algoma's pension regime-much as the parties will have to do in order for Stelco to survive.
As this issue of Lexpert goes to press, Air Canada's fate hinges on a possible deal between Trinity Time Investments Ltd. (the equity investor), the unions and the OSFI regarding funding for the airline's $1.5 billion pension deficit. Victor Li, who heads Trinity Time, has threatened to withdraw his proposed $650 million investment unless a satisfactory deal can be reached. Gary Nachshen and his team at Stikemans have been involved from the outset.
"There's a ton of legal work involved for pension lawyers in these kinds of insolvencies," says Kathryn Bush of Blakes. "The company, the unions, the creditors and the potential investors all need legal advice that requires pension expertise."
Apart from the labour firms retained by unions, Canada's corporate law firms are providing most of that advice. "I moved to Goodmans because I wanted to be where the pensions action is," says Rowland. "My experience is that it's in the large corporate law firms where the issues revolve around managing and restructuring pension funds for their clients. It's not unions that fix pension plans. Insolvency and pension practitioners do." The numbers bear Rowland out.
The statistics are alarming. Pensions are and will continue to be significant drivers in insolvency and restructuring. Underfunding of corporate pensions in Canada reached $225 billion in 2003, ie, approximately 20 per cent of the country's gross domestic product (GDP). According to the Mercer/Watson Wyatt/Towers Perrin study, it would take 2 per cent of the GDP for the next 15 years to eliminate that deficit. A 2003 study by UBS suggests that unrealistic assumptions about discount rates and returns mean that even these deficit numbers are optimistic.
With at least three hundred of Canada's pension funds underfunded by more than 10 per cent, largely due to the unusual confluence of underperforming stock markets and low interest rates, pensions are going to be a huge balance sheet item in almost any major Canadian restructuring. Eight of the companies on the S&P/TSX 60 stock index that use defined benefits plans have a total shortfall that averages almost $1.5 billion.
Even Canadian Pacific Railway Ltd., which has recently enjoyed strong returns, transferred $300 million from its cash account to its $5 billion employee pension plan in 2003, supplementing current service costs of $55 million and reducing its 2002 deficit of $721 million. The meltdown transcends industry sectors. The University of Toronto had a $400 million pension shortfall at the close of 2003. Standard & Poor promptly cut the university's debt and credit ratings.
It is unlikely the situation will improve. A new study by Watson Wyatt, shows that recent stock market gains exceeding 20 per cent have not ameliorated the pension deficit problem. Canadian corporate pension plans were 13.6 per cent underfunded at the end of 2003, a slight improvement from the 15 per cent deficit that existed a year earlier. What this means, according to AON Consulting, is that a typical plan had returns of approximately 1 per cent over the past three years to counter liabilities growing at a rate of 7 per cent.
Over the long term the deterioration may be even more dramatic. By 2030 a greater portion of the population will not be working, causing old age dependancy to increase by 93 per cent. And the increasingly globalized and Canada/US cross-border nature of our economy magnifies the problem. Pension deficits have become front page business news.
Everywhere you look alarm bells are going off. In the United States the total pension deficit comes in at approximately $500 billion. The Pension Benefit Guaranty Corp., which insures America's private, defined-benefit company pension plans, itself has a pension deficit of $7.6 billion. According to Steve Kandarian, who heads the corporation, that's a mere fraction of the $95 billion in total deficits found in the most fragile US corporations.
Greenwich Associates reports that between 2000 and 2002 assets of corporate and public pension funds in the United States fell by $1.3 trillion. Some corporate funds lost as much as $4 billion and 30 per cent were in a deficit position at the start of 2002. General Motors' (GM) pension fund shortfall is $25 billion, the same size as its market capitalization. GM, which has two and a half pensioners for every employee, estimates that pension benefits add $1,000 to the cost of every car it manufactures. Even so, Goldman Sachs reports that the automotive industry has understated deficits because their accounts assume there will be no future increase in pension benefits.
A Watson Wyatt study reveals a similar situation in the UK, where between 2000 and 2002 corporate pension funds lost approximately $150 billion. Seven of the largest companies have pension fund liabilities that exceed one-half of their market capitalization. Sainsbury's, the large UK supermarket chain, has pension fund assets worth only 65 per cent of its liabilities. Even the Law Society's pension fund has a $125 million deficit. John Hayes, chairman of the fund's trustee board, recently wrote to Janet Paraskeva, the Law Society's chief executive, seeking a $50 million cash injection and security for the remaining shortfall.
In the European Union (EU) one-third of the largest listed companies have pension fund deficits totalling $290 billion. France, Germany and Italy spend between 12 and 14 per cent of their GDP to fund their pension programs. These figures are expected to rise as the population ages. Yet all three countries, as well as Austria, have experienced public protests ignited by government attempts to make the pension systems less generous.
In Asia the Daiwa Institute of Research estimates that Japan's largest three hundred corporations have pension shortfalls totalling $325 billion, or 5 per cent of the GDP. To make matters worse, the government is ill-equipped to bail them out. In 2000 the public pension plan's liabilities exceeded its assets by $5.5 trillion, an amount practically equal to Japan's GDP for that year. Emphasizing the importance of pension issues to domestic fiscal health, commentators have pointed to the shaky pension situation as strong evidence that Japan's current economic rally is unlikely to be sustained.
The spotlight is on pensions everywhere. As Malcolm Hamilton at Mercer points out: "One of the most unusual features of pension plans is that they are simultaneously an asset and a liability of corporation. Companies have pension fund liabilities, but pension funds are major shareholders in many corporations. When the stock market goes down companies take an earnings hit because they have to fund the pension plan. That drives the stock down even further, which decreases the value of the pension fund's assets."
The hard choice presented to many corporations is whether to fund their business or fund their pension plan. In either case the corporate and insolvency lawyers will be busy, with their pension colleagues in tow. "Pensions issues are a pervasive, macroeconomic problem," says lawyer Jordan Solway, Canadian specialty claims manager for Chubb Insurance Company of Canada. "Law firms should be paying a great deal of attention to them."
They are. Particularly on the investment side. Deficits notwithstanding, pension funds are and will continue to be a huge source of capital. Their enormous cash flow has led to increasingly complex transactions as plans search for appropriate investment vehicles in which to profitably park their wealth.
Pension funds already dominate commercial real estate. "Virtually every real estate player of importance is a pension fund," says Pierre-André Themens of Davies Ward Phillips & Vineberg LLP in Montreal. "Because there are so few players they constitute their own market. Funds are frequently looking to trade or securitize portfolios."
Pension funds have also entered the income trust market. Teachers', for example, partnered with Kohlberg Kravis Roberts & Co. to acquire BCE's telephone directories business for $3 billion in 2002. Teachers' and Kohlberg were paid back in spades by spinning off their investment through a series of public income trust offerings. In June 2003 Teachers' also invested $100 million in WestJet. As Susan Rowland points out, "The large funds like OMERS, Teachers' and the Caisse are becoming true partners with Corporate Canada."
And then there are P3s. Early this year Prime Minister Paul Martin announced that Ottawa's $3 billion infrastructure fund would kick off the government's privatization initiative. John McKay, Martin's parliamentary secretary for P3, has already listed large pension funds as important potential partners for highways, bridges, public buildings, health care facilities, and water and sewer conduits. As pointed out by Blair Cowper-Smith of McCarthys, "Infrastructure investments are of great interest to pension plans because they feature long-term assets and stable income that the funds can match with their long-term liabilities. Conversely, the primary interest on the part of banks is bridge and financing construction. So pensions are where P3s will find their long-term financing."
Pensions will be both significant lenders/investors and significant borrowers. They are themselves accessing financial markets. McCarthys recently acted on transactions involving $1.6 billion in guaranteed AAA paper issued by OMERS and Teachers'. "Apart from being a wonderful source of innovative transactions on the investment side, pension funds are great capital markets clients," says Cowper-Smith. "But you can only do the work if you have an integrated team with a strong pension expertise component."
Even when pension funds are not acquiring assets or accessing markets, the fund itself has become a significant consideration in mergers and acquisitions. "In a lot of deals, there are more assets in the pension plan than the value of the acquisition," notes Christopher Brown of Bennett Jones.
Stand-alone corporate decisions are also impacted. As pointed out by John Solursh of Blakes, "Strategic moves like downsizing, plant closure and competitive restructuring can trigger a lot of pension issues." The celebrated Monsanto case, which deals with the impact of "partial wind-ups," illustrates Solursh's point well. Currently on reserve in the Supreme Court of Canada, Monsanto also demonstrates, as a host of litigation in the 1990s proved, that pension surpluses can generate as much legal work as pension deficits.
Pension considerations play an important role in practically every acquisition influencing the basic terms of the transaction. "Anytime we're acting for a buyer who is taking over part of a workforce that has a pension fund, we're faced with a host of pension issues," says Cowper-Smith. "Do we create a wrap pension? What assumptions are behind the funding numbers? How do past service credits impact on funding liability? And these are only a few of the complications that engage our pension specialists. What they and the actuaries tell us can very much affect the core negotiations about price, financing and conditions of sale."
The acquiring party is no longer satisfied with the latest actuarial reports and updates on the pension fund. They want to hear about discount and investment assumptions. Only the pension lawyers and the actuaries can supply the comfort they seek. "Our pension lawyers educate our M&A lawyers right from the get-go," says Sean Weir, national managing partner of BLG. "They know how to challenge actuarial assumptions and how to put the finger on the real problems in the deal."
The ability of corporate lawyers to "pierce" assumptions and, as Weir phrases it, "put the finger on the real problems" is vital. Pension fund accounting is a minefield. Bloomberg recently reported that nine of the largest publicly traded US companies, including General Electric Co., Verizon, IBM and Lockheed Martin Corp., used mandatory pension accounting standards rules to "smooth" out $40 billion in real 2002 losses into pre-tax gains of $10.5 billion. They managed to do this because the Federal Accounting Standards Advisory Board regulations require them to report expected gains in pension fund returns even when losses occur. The intent is to reduce volatility. Warren Buffett responded to the news by warning that pension accounting rules provide people with an "incentive to cheat."
Recent case law has complicated matters further. In Aegon Canada v. ING, Justice Dennis Lane of the Superior Court of Justice found ING liable for breach of a warranty that a merged pension plan had been fully funded when the defendant sold shares that it owned to the plaintiff's corporate predecessor. "Pension due diligence is going to take much more review and much greater scrutiny of historical documents both for vendors' and for purchasers' lawyers," notes Kathryn Bush.
According to Gary Nachshen, it has already started. "Corporate lawyers are more sensitive to the importance of getting pension lawyers and actuaries involved early in the due diligence process. Pensions have become institutionalized in M&A deals. The role of pension lawyers has moved from peripheral involvement to urgent and timely involvement."
There is little question that the funds themselves play in the big leagues. When the Economist advertised its 2004 annual General Counsel Roundtable on Corporate Governance, Ted White, director of corporate governance at the $200 billion California Public Employees' Retirement System (CalPERS) fund, was one of seven high-profile speakers. Other speakers included senior executives from AIG Inc., AT&T, Coca-Cola Co., General Electric Co., Viacom International Inc. and the US Securities and Exchange Commission.
Cvr 607- Gary Nachshen- Stikeman
In Canada in February of this year Teachers' announced that it was seeking a corporate governance and proxy voting manager to help oversee the more than seven hundred companies in which it has invested. As such developments multiply legal advice on corporate governance matters will be critical. Indeed, Cowper-Smith was dealing with governance issues for Stelco when he was retained for the restructuring.
The corporate power of pension funds became crystal clear in September 2003. CalPERS played a central role in the resignation of Richard Grasso, chairman of NYSE, after an uproar involving his $180 million compensation package. In Canada, the influence of the CCGG is readily apparent. The Toronto-Dominion Bank, for example, saw fit to consult closely with the organization when reviewing its own governance structure. Most recently, the CCGG has targeted securities law and the protection of minority shareholders' rights as areas where reform is required.
OMERS in particular has not been shy about protecting its interests. In the early 1990s the fund demonstrated its power to influence corporate behaviour by successfully objecting to a change in the capital structure of XEROX Canada. Later OMERS took on Ford Motor Company of Canada's American parent when it decided that Ford's offer for the shares of its Canadian subsidiary was inadequate. In early 2000 shares of Talisman Energy Inc. rose 15 per cent immediately after OMERS dropped its threat to divest its $156 million stake in the company if there was corroboration of human rights violations in Sudan, where Talisman had invested $760 million in a lucrative oil project.
For its part, the Caisse de dépôt et placement du Québec has never been reticent about taking a public position designed to maximize the value of its holdings. In 1998, the Caisse won an enriched bid and a "buy Quebec produce" guarantee from Loblaws when the Ontario-based grocer acquired Quebec supermarket chain Provigo.
Ironically, the funds themselves face serious internal corporate governance issues. When Torys held a one-hour breakfast seminar this February entitled "Hot Topics in Canadian and US Pension Plan Governance," it attracted an audience of more than one hundred executives. "Pension governance is a very difficult area," says Freya Kristjanson of BLG. "Corporations with pensions funds wear many hats and sorting out their roles as pension trustees, administrators and employers are difficult governance issues that have been neglected over time."
Failures of corporate governance, of course, are dear to the heart of class action lawyers. So are deficits in defined benefit plans and bad investments in defined contribution plans. In the new world which pension plans must navigate lawyers are mandatory. As Kathryn Bush of Blakes points out, "With this new reality comes even greater risk of litigation against not only employers, administrators and sponsors, but also actuaries, trustees, custodians, investment advisors, directors, and other participants in the pension industry."
It cuts both ways. Either as a client (through asset acquisitions, accessing financing, providing financing, corporate governance or litigation), or because of their importance in the acquisition, restructuring or downsizing of corporations where employees are fund members, pension funds generate and will increasingly generate significant work and fees for major law firms. So, who's best positioned to get the work?
In-house counsel at the funds are adamant about the good sense of spreading work around, similar to most financial institutions. And because some of the large funds, like Teachers', take a strict approach to lawyers acting for more than one party, conflicts play an important part in spreading transactional pension work around.
Nevertheless, Blakes and Oslers are generally viewed as the market frontrunners. Their depth of expertise, their contacts and their pension-related client lists place both firms in an ideal position to benefit from market developments. Both offer full service pension departments which includes the "plan" side where the "pure" pension law expertise resides, the "investment" or "asset" side, and pension-related litigation expertise.
"Pensions are a core stand-alone business for us," says Ian McSweeney at Oslers. "From a credibility perspective, from a profitability perspective, and from a recruitment perspective, it's an advantage to be able to say that pensions are a core business as opposed to merely having a few support lawyers."
By contrast BLG, which has done well in the market, does not have a single lawyer who practises pension law exclusively. But the size of the firm's pension group, which includes corporate, tax and litigation lawyers, rivals that of Blakes and Oslers. Sean Weir concedes that the full-time pension practices at Blakes and Oslers may give those firms a marketing advantage. However, Weir quickly goes on to point out that a varied practice provides more than adequate compensation in attracting clients. By way of example, Weir's partner Anne Corbett is a primary advisor to the huge Hospitals of Ontario Pension Plan, which ranks among Canada's five largest funds. Senior real estate partner Morton Gross, Q.C., acted for Teachers' when it acquired the assets of Cadillac Fairview Corporation Ltd. Gross acknowledges that Weir and partner Harrison in the pension group were instrumental in the complex transaction.
Notwithstanding the position enjoyed by Blakes, Oslers and BLG, it is clear that competitors are mounting a determined assault. The corporate stakes are simply too high not to. David Vincent of Torys has served notice that his firm intends to compete with Blakes and Oslers. "Pensions are a growth area for us and we intend to build a practice group substantial enough to rival the operations at Blakes and Oslers by providing a full scale pension service." Gary Nachshen of Stikeman Elliott underlines why firms are prepared to make this significant involvement. "There's no doubt that clients are recognizing pension law as an important area that is only going to become more important."
This much is clear. Pensions and pension-related work will only grow in importance. As noted at the outset of this article, an important factor in the retaining of McCarthys in the Stelco restructuring was the firm's involvement in the Algoma restructuring, which also had huge pension deficit problems.
Pensions are and will become massive and important pools of capital. However, while acknowledging the premium now attached to top-ranked pension lawyers, no one is suggesting that pension lawyers will lead the legal teams on major corporate transactions involving pensions. "In the end, it is rare that pensions are the rationale for what the deal is about," says Andrew Harrison of BLG. "The corporate commercial lawyer will remain in the front seat negotiating the business end of the deal." And that is why Blair Cowper-Smith leads the McCarthy Tétrault corporate restructuring team on Stelco. Pensions have gone corporate.