By Patrick Connelly, originally published in Buffalo Law Journal, Buffalo Business First on Fri, 17 May 2019 04:47:00 EDT.

Economic flow from Canada to Buffalo creates business – and legal – opportunity

Western New York’s nearness to Toronto, the city that contributes most to Canada’s economy, continues to make cross-border business and the legal needs that go along with it an area that Buffalo attorneys keep an eye on.

They work in the corridor often and stay up to date on business and political news that has an impact on their practice areas.

“It’s interesting,” said Britta McKenna, a partner at Hodgson Russ LLP. “You are accessing file matters that are far beyond what you would typically see if your practice was just in Buffalo.

“At this point, the majority of my practice is out of Canada. And just (from) the size of files we’re working on and the complexity and the interest, it … exposes you to different issues and matters that you probably wouldn’t see if you were focused on local and domestic (work).”

McKenna leads the international trusts and estates team at the Buffalo law firm. Another attorney, partner Lura Bechtel, worked on the labor and employment practice team at Hodgson Russ early in her career before transitioning to a general counsel role in the banking industry.

Bechtel returned to the law firm in 2017 and set out to expand her scope. Her focus now is Canadian clients with U.S. employees. She assists U.S. employers, too.

“The economy in Southern Ontario and Toronto in particular is growing very rapidly,” she said. “It’s very diverse and dynamic, so it presents a lot of opportunity for professional development and expansion and the opportunity to build a client base that’s not just limited to (here).”

Economic growth in technology, software and highly engineered products is booming in the corridor, while other industries are stagnant such as manufactured and consumer goods, said David Murray, partner at Phillips Lytle LLP.

In his cross-border business practice, he has noticed that roughly 75 percent of investment in the region in recent years flowed from Canadian companies into U.S. markets. How much flows at any time tends to fluctuate on the political climate and the value of the Canadian dollar compared to U.S. currency.

“(Canadian businesses) are looking to tap into what they see as the much larger, much more fragmented U.S. markets,” Murray said. “More often than not, (Western New York is) a gateway to even larger markets.”

With its proximity, the Buffalo area serves as a good test market for how Canadian goods and services may play nationally, he said.

Bechtel and McKenna agreed.

“Most Canadian businesses of any size ultimately want access to the U.S. market if they’re going to grow,” Bechtel said. “That’s where we come in, to help facilitate in-bound business expansion.”

With more companies expanding from Canada, other legal doors may open, McKenna said.

“As Canada gets bigger, there are businesses expanding into the U.S. They are sending their people (here) and you have a lot of wealthy Canadian families and business who have (family) living in the U.S. … and that brings up more (legal needs),” she said. “It increases the fluidity between the borders.”

From a political standpoint, Murray said a roadblock for some companies has come from tiptoeing around what to do until the United States-Mexico-Canada Agreement is ratified. The deal would replace the North American Free Trade Agreement.

“We’re sort of in limbo in that (the) treaty has been signed but none of the three countries has ratified it yet,” Murray said. “That uncertainty has a little bit of a chilling effect (on business).”

On the horizon for what may stimulate more of a cross-border business boost could be the cannabis industry.

Murray forecasts New York state will do what it can to maximize the economic impact here if cannabis is made legal for recreational consumption.

That could lead to international trade if allowances on the federal level are eventually given.
 
“Canada was ahead of the markets on a regulator basis,” he said. “The infrastructure is already there. … It all depends on how the regulations play out and whether importation is permitted.”