Practice Area Insights: Project Finance

Attorneys practicing in the area of Project Finance assist in just that—the financing of large construction projects, often in the energy sector (dams, power plants, wind farms) or infrastructure (railroads, airports, canals). Because the projects are large and complex, they are document intensive and can take a long time to close. Project finance attorneys deal with the negotiation and drafting of financing documents, generally involving many companies and often government entities partnering on one deal. The practice often has a significant international bent to it and can be a good area of law for international or multilingual attorneys and those who enjoy international travel. Attorneys regularly interact with multinational corporations, sources of private equity, large banks, and international government agencies and the ability to negotiate with these disparate actors is key to this practice.

In our guide, Practice Perspectives: Vault’s Guide to Legal Practice Areas, attorneys from law firms with top-ranked Project Finance practices share insights about their practice, including what types of deals they work on as well as what classes and training they recommend for those interested in working in this field. Keep reading for their insights!

What types of cases/deals do you work on?

Marcela Varela, Associate—Allen & Overy LLP: The best part about being a project finance attorney is that I get to work on deals that are at the early stages of development (such as the initial green-light for a project to be built or acquired) all the way to projects that are fully constructed and operational (such as connecting the project to the grid and actually selling power or credits). As a member of the PENRI group, my deal load stays varied enough that I continue to learn from different partners and clients so that I can become a better associate.

My primary focus over the last couple of years, however, has been in the “tax equity investment” area of project finance. Tax equity investments are transactions where a passive
capital investment is made by an investor (such as a private equity firm, bank, or other corporate entity) in a renewable energy project, with the investor in turn expecting to receive an internal rate of return based on certain federal tax credits (such as ITC or PTC). It’s a niche area that many lawyers do not even know about, so it has been a great opportunity for me to become well versed in the different ways the deal can be structured, risks and benefits of each project, and negotiating the best deal for our clients.

Carolina Walther-Meade and Roland Estevez, Partners—Milbank: Our clients are involved in high-profile projects involving some of the largest transactions in the energy and infrastructure sectors across the globe. Over the last few years, we have acted as legal advisor in more than 300 transactions that have raised almost $200 billion of limited and non-recourse debt for a wide variety of renewables and conventional power, energy, metals and mining, and other large-scale infrastructure projects. Our expertise extends to asset acquisition, restructuring, portfolio securitization, and political risk mitigation techniques, making for a very interdisciplinary practice and a vital component of the global energy transition we are experiencing.

Daniel Gonzalez, Associate—Morrison & Foerster: Most deals involve my clients providing debt facilities to earlystage companies in the life sciences and tech spaces. These credit facilities are often in the form of a term loan and/or revolving line of credit based upon the borrower’s accounts receivable, recurring revenue, and/or inventory.

What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?

Marcela Varela: I would recommend taking corporate transaction classes, such
as negotiation and general drafting courses. Law schools often offer courses that are taught by lawyers or cross listed with the business school—to the extent someone is able to sign up
for those, I think they provide such a real-world experience of what it’s like to be a corporate lawyer. To the extent someone is interested in the renewables sphere, I would also recommend a Federal Income Tax class as almost everything a project finance attorney does touches tax laws in some way.

Carolina Walther-Meade: Fortunately, junior associates are not expected to know how to structure a project finance deal—this is the kind of expertise you will acquire “on the job”! That said, a class on secured transactions, capital markets, and perhaps restructuring can be helpful in teaching you the general framework and terminology in these areas of the law. More holistically, a junior associate would benefit from having a detail-oriented focus, good communication skills, and a willingness to ask questions.

Daniel Gonzalez: For law students, I would suggest Contract Drafting, Secured Transactions, Negotiations, and Bankruptcy classes. I also participated in a clinic during law school, which I found to be very helpful in learning to manage client expectations and balance many projects at once.