Becoming a project finance lawyer – the view from Milbank

Solar farm

From desert solar projects you can see from space to the world's largest cheese factory – Milbank's globe-trotting lawyers take you through their complex project finance practice.

What is project finance?

Dan Michalchuk, partner: Project finance involves the development and financing of infrastructure  and spans many different and diverse industries and countries around the world. It focuses on the financing of a specific asset (it could be a solar power plant or an offshore wind farm, a fiber optic cable network, a port, a pipeline, or any number of different assets) in which lenders or investors look principally to the revenues generated by that asset for the repayment of the loans that are provided by banks or other financial institutions for the asset’s development. This type of structured finance is deployed most commonly in the development of large infrastructure projects and the exploitation of power, energy and natural resources.

Our clients are very diverse, ranging from international organizations like the World Bank, government institutions like  The Export-Import Bank of the United States, private equity players like KKR, Blackstone and Blackrock, energy and technology companies like Google and General Electric as well as traditional banking institutions like Citibank, Credit Suisse and Goldman Sachs.  We also represent or represent institutions lending to more startup developers in the renewable energy space that may have new technology.


What do associates do?

Fernando Capellão, special counsel: Associates perform similar kinds of activities as in other finance practices, such as managing and, depending on seniority, negotiating financing and security documents, but our focus on projects, as opposed to specific financing structures, provides exposure to a wider range of engagements, often involving other practices in our firm, including project development, export credit agency, multilateral and commercial bank financings, private placements, project bonds, M&A and restructurings. Our work requires a deep understanding of the industries and types of assets we work on, and associates are often involved in due diligence and/or negotiation of commercial contracts and other project-specific matters, which typically provide frequent opportunity for client exposure for associates. A significant part of our practice involves cross-border matters, where associates might also be tasked with coordinating the work of local counsel in multiple jurisdictions and working with them to understand and address jurisdiction-specific challenges. 

DM: Given the cross-border nature of our practice, associates will be involved in not only the negotiation and drafting of the New York law governed documentation but will also be expected to review and comment upon the documentation being drafted by attorneys located in each other jurisdiction applicable to the transaction. We don’t just deal in paper, however. We are also advocates, even though we’re not litigators. In-person meetings are a common feature of our deals as, even in a world where videoconferencing is a widely used tool, our clients often prefer to get together to hash out deals. Associates might find themselves in a large conference room in many different locations around the world assisting in that process.


What do partners do?

DM: Partners usually lead a team involving a senior and/or mid-level associate, and a junior. Our partners are typically hands-on, but delegate responsibility to associates depending on the associates’ experience level. Associates learn a lot of what they need to know on the job, so it’s not unusual for associates to be taking the lead on calls or meetings – whether it’s leading negotiations for more senior associates or running a checklist call for more junior associates. Partners are also entrepreneurial in our practice group, and often lead the charge on client development – whether it’s putting together pitches for new work or socializing or meeting with clients outside the office – but we usually always involve associates in those activities.


What are the highs and lows of working in this practice area?

Timothy Fitzpatrick, special counsel: One of the highs is that every day is different. In the morning, I may be working on a construction financing of a solar project in California as and, in the afternoon, I may be working on an airport expansion project in Latin America. This is becoming even more evident in connection with energy transition projects – as new technologies emerge, so too do innovative deal structures, new financing parties and opportunities for cutting edge work.


What factors are driving the sector?

DM: There are many different factors that affect our work. One key factor is the price of commodities. For example, when prices for natural resources such as gold, copper, silver or other commodities are high, we usually see an influx of mining projects around the world.  Conversely, when the price of natural gas is low, we see larger numbers of projects that need cheap natural gas, such as gas-fired power plants, petrochemical facilities and liquefied natural gas export terminals, where natural gas is super-cooled to allow it to be loaded onto massive ships and sent around the world. Currently, commodities are rising again.  As examples, we are now very much seeing a significant increase in demand for mines that produce products – such as lithium for batteries – that are key in the energy transition.  Additionally, due to the war in Ukraine, there has been an increased focus on developing new LNG import terminals in Europe (and export terminals in the United States) to reduce Europe’s reliance on Russian natural gas.

Legislation also shapes our practice. Due to government incentives over the past ten years, there has been an explosion of renewable energy projects, and we have developed one of the most prominent renewable energy practices in the world, including massive utility-scale solar projects in the desert that are so large that they can be seen from space, $20 billion dollar offshore wind projects, and utility scale battery projects that can provide power charged by renewable energy when the wind isn’t blowing and the sun isn’t shining.  New energy transition technologies are now a key part of our growing practice as well, including hydrogen and carbon capture projects, all driven by government incentives such as the recently passed Inflation Reduction Act.  .

TF: One interesting development is the diversity of capital sources funding projects. While commercial bank debt was traditionally the main source of financing in this market (and continues to play a major role), we are seeing the increased involvement of institutional investors seeking long-term, low-risk, fixed-income products to match the long-term nature of their liabilities. Private equity has also recently raised significant funds to invest in the power and energy sector.


“A project finance attorney trains on the job, and the learning curve is steep but exhilarating.”


How is the increase in renewable and clean energy affecting the projects market?

TF: It is a very exciting time to be a projects lawyer practicing in renewable energy. Technological innovation, tax subsidies, consumer demand and evolving clean energy standards have been major drivers in the market. While tax reform has created headwinds for the renewables sector in the past, it is likely the sector will adapt most quickly to any future changes in tax law by developing new financing structures that will support the industry’s substantial capital requirements.


How can students and junior associates keep up-to-date with the market and industry trends?

FC: There are a number of specialized publications and project finance-focused events and conferences. As an associate, the opportunity to join client meetings and business development efforts, including pitches, also allows you to be exposed to the ‘behind the scenes’ discussions about future business trends and areas of concern.


 “We once were even involved in the construction and financing of the world’s largest cheese factory!”


Chelsea Minuche, associate: There are a lot of great resources for this. To name a few: Project Finance International is a great resource that reports on global transportation, energy and infrastructure deals and provides insights on global industry trends. Latin Finance is another great resource for those interested in learning about or staying up to date with what is happening in the Latin American project finance space in particular. Additionally, SparkSpread puts out daily blasts that highlight some of the bigger deals and players in energy finance.


CA: Where can new associates expect to be in five years?

DM: Although law school helps to teach a young lawyer how to think, a project finance attorney trains on the job, and the learning curve is steep but exhilarating. From starting fresh as a first year, an associate will gain knowledge, responsibility and expertise quickly, and by the fifth year will be leading major transactions and regularly interacting with clients and opposing counsel (although this direct interaction starts almost immediately). Our teams are lean at Milbank – a structure that lends itself to everyone having responsibility for a piece of the puzzle that is a transaction, and quick learning.


What opportunities are unique to Milbank?

DM: We are a very diverse practice group and in order to stay nimble and flexible – regardless of what the economy is doing – we practice in a wide variety of industries. These range from power projects powered by conventional means, like natural gas, to a cutting-edge renewables practice where we regularly work on a wide range of wind, solar and biomass power plants. Occasionally, we also are asked to apply project finance principles to other industries such as the construction of new satellite constellations, massive data centers to power the servers used by companies such as Amazon and Google, and huge semi-conductor factories being constructed in the US now to have a domestic source of computer chips. We once were even involved in the construction and financing of the world’s largest cheese factory!

The international part of project finance is another reason why it’s such an interesting discipline. We regularly work on infrastructure projects around the world, and often in less developed economies, as those are often the places where additional infrastructure is most needed. As a result of our international projects, there is often travel involved – associates never know when they may need to travel to Brazil, Chile, Colombia or somewhere else for last-minute meetings!  It is also such an interesting part of the practice to see how different cultures interact and negotiate with each other – often it’s our role as lawyers in the middle to bring those parties together.


“Associates never know when they may need to travel to Brazil, Chile, Colombia or somewhere else for last-minute meetings!”


What is your advice to students interested in this area?

DM: In law school the only relevant course for our practice (probably) is secured transactions, so you should take that, but otherwise in your search for firms make sure you are looking at the firms with top project finance practices, but also ones with a diverse practice just in case you find out that your interests are elsewhere. Project finance attracts people who are interested in international work, who may have some language skills (although I don’t!), and who have some interest also in infrastructure, development and energy – these are things to stress when you are interviewing.

CM: I recommend that students read up on industry trends and check law firm websites to see what transactions firms are working on. There is no better way to learn project finance than by practicing it, and first-year associates are not expected to have a working knowledge of the field before joining the group. What makes junior associates stand out is often attention to detail, a drive to learn, a good attitude and the ability to take ownership over discrete tasks.