Law in Quebec

While De Grandpré Chait expects to offer legal services dealing with intellectual property, immigration, and litigation, most will likely be devoted to business, tax and real estate law as the majority members of the Guild are start-ups and medium-sized firms, said partner David Dropsy, a business lawyer.

“The challenges are really that in in the gaming industry you’re dealing with very creative and imaginative people, and we’re highly Cartesian,” explained Dropsy, a former member of the Barreau de Paris. “There’s a lot of explaining to do, and educating these clients about the law. And how it applies to their company and how to place their relationships and their agreements with contracts, and get them organized. We haven’t had a ton of files with the Guild, but we have provided guidance on mostly corporate and tax issues.”

The head of the Guild, Jean Jacques Hermans, views the alliance as a win-win situation for both parties. Guild members benefit from much-needed legal services at a lesser cost while De Grandpré Chait benefits from the visibility provided by the burgeoning industry through word-of-mouth and events such as conferences, roundtables, webinars and the like, said Hermans. “Our collaboration with De Grandpré is focused on smaller and medium-sized members who may not have or often do not have the infrastructure in-house,” said Hermans, former senior vice-president, corporate relations and services at the Canadian Chamber of Commerce. “Our major international members already have their own infrastructure, already have their own internal legal services.”

The video game industry is big business in Quebec, thanks to generous tax credits of up to 37.5 per cent for eligible expenses and salaries. Ever since Paris-headquartered Ubisoft entered the market in the 1990s, other gaming giants followed suit, including EA, Eidos, and Bethesda, and that’s aside from all the smaller players hoping to make it big. All told, approximately 19,000 people work in the sector, generating more than $1.5 billion, making it the fifth largest video game development hub in the world and a global leader in new video game niches such as VR and gamification in fields such as health care and education, according to a report by Montreal International.

The future appears to be just as bright as Montreal is making a name for itself in the artificial intelligence and deep learning hub, added the report. On top of that, a rich talent pool is waiting in the wings, with close to 18,000 university students enrolled in IT related programs, over 2,200 in arts related programs and more than 3,400 college students enrolled in technical programs related to video games.

It’s no wonder then that the Montreal law firm successfully sought to pierce the lucrative market. It all began when some of De Grandpré Chait’s lawyers had an interest in developing new lines of business, particularly in the digital realm, such as crypto assets, NFTs (non-fungible tokens) and gaming, explained Dropsy. Some of the members of the Guild reached out to De Grandpré seeking advice over tax and corporate agreements, and as a business relationship began emerging, the Guild then “said it would be convenient for our members to have a one-stop shop that we can refer to when they need legal advice, added Dropsy.

But it is somewhat surprising that the Guild opted to ally itself with a law firm principally renown for real estate and tax law, said the lawyer. It’s not uncommon for law firms or practices within law firms to seek to establish alliances with industry sectors or segments of the economy, but they almost always do it in areas that they are doing business in and for which they are recognized, added the lawyer. BCF Business Law, for instance, launched the BCG Imagine one-year program, targeted at SMEs. The program offers five hours of free strategic consulting, free standard contracts and legal documents, and a 15 per cent discount on accumulated legal fees up to $20,000. “De Grandpré is not known in the sector,” said the lawyer. “They are not a big player in business or IP law. They are known for real estate and tax law. Montreal is recognized for being a hub in all things digital such as video games. It makes total sense to have partnerships in this sector but it’s surprising that the Guild chose De Grandpré.”

Hermans, while acknowledging that De Grandpré is not renown for its IP or gaming expertise, counters that the law firm exhibited a strong willingness to invest in the ecosystem and in the industry. “We thought it was only appropriate to open the door and to give them the opportunity to make their mark and offer their services in the industry because they really had a desire to join the Guild in this process,” said Hermans. “Sometimes you have large firms that have value, that already interact with clients in the ecosystem. But they have other priorities and it can be a challenge for them to meet the last minute or interactive needs of young entrepreneurs and young studios.”

Hand-holding is exactly what Dropsy expects to take place, particularly over the nitty-gritty of business and tax law, be it negotiating subscription agreements with new investors, explaining the type of shares that exist, shedding light on control and shareholder accords, and spelling out the ins and outs of subcontracting or consulting agreements. While intellectual property legal issues surface, especially over copyrights or trademarks, this is an area where Guild members are well versed in, said Dropsy. “They’re not so much aware of the corporate stuff, but they’re very aware of their main asset, which is intellectual property.”

Hermans concurs. He said that a lot of the new players in the industry who have opened up a wave of smaller studios are often run by people who left the bigger outfits. They are first-rate creators, innovators, and technologists, said Hermans. “But they don’t necessarily have the business expertise to make their dream come true so it’s important for the Guild to foster partnerships that they can turn to in order to help them in this period of start-up and growth of their studio,” added Hermans.

Since chances are few will be able to fulfil their dream of becoming the next Ubisoft or EA, most small players hope to be bought out and sell their IP assets to the big players, noted Dropsy. “That’s probably the end game for most of these guys,” remarked Dropsy.