Climate change is a reality and savvy law firms are developing expertise to stay ahead of the curve. ALB investigates the evolution of the climate change practice

Copenhagen was host to the United Nations Climate Change Conference (COP15) last December, and beyond the throngs of protestors calling for immediate action to reduce greenhouse gas emissions laid a battle between the world’s nations.

The tension between developed and developing nations was clear as emerging economies, such as China, displayed their growing influence on international negotiations. Reaching agreement between 193 countries was never going to be easy and in the end the Copenhagen Accord was developed as a high-level statement of intention, rather than a binding agreement. However, such compromise should not necessarily be viewed as a climatic failure.

COP15 highlighted the immediate reality of climate change and demonstrated the willingness of international members to come together to enact a global solution. “It’s a minor breakthrough in the international climate-change regime,” says Paul Curnow, a partner at Baker & McKenzie. “It is, of course, a non-binding agreement but governments don’t make political statements in an international forum without thinking that they are going to do something to try and stick to that.”

While there may not yet be certainty about the Copenhagen Accord and its application at a national level, the issue is one which will only intensify as time passes. Business is already feeling the pressure to operate in an environmentally sustainable manner, and many businesses are developing their operations with this in mind. “It is business-driven not regulation-driven at the moment,” says Susan de Silva, a partner at ATMD Bird & Bird. “At the end of the day it is about businesses being competitive and responsive to customers’ demands that [they] are environmentally conscious.”

Practicing climate change

Climate change can cut across a number of legal disciplines, from litigation to project finance and IP. Many different clients require climate-change advice, hence the vast potential of this practice group. The commercial opportunities created by climate change initiatives have translated into opportunities for legal work – and climate-change practices are emerging in law firms as clients demand new information.

“The clients in that particular space will want their legal advisors to have good domain knowledge, just like in any other industry sector that you specialise in. It’s not just about the law, it’s also about a good understanding of the business of the client in that domain,” says de Silva.

Larger international firms such as Baker & McKenzie and Norton Rose have well-established climate-change practices, comprising lawyers who have developed expertise in both global and regional climate-change policies and regulatory matters. It is this expertise which adds value when clientele are looking to make investments in clean technology, renewable energy projects or the carbon market.

“What really counts is legal certainty to make investment decisions,” says Tim Baines, an associate at Norton Rose. “There are only a few law firms that have a really dedicated international climate-change practice. For our clients that are particularly focused in this area and do a lot of carbon trading, it is essential for them to keep abreast of the regulatory environment. They look for detailed advice on exactly what is going on and they expect us to be on top of it.”

However, the concept of a climate-change practice in firms is still relatively new in some jurisdictions. “There are only three international law firms with climate-change teams in China,” says Ding Ying, an associate at Norton Rose focusing on carbon finance and renewable energy projects in China. “We are really taking advantage of being able to advise clients on [these] issues.”

Although China and India capture a lot of attention on the world stage there is also a growing interest in renewable energy projects in South-East Asia. “There is a lot of potential that has not yet been tapped,” says Bakers’ Curnow. “Many countries like Thailand and the Philippines are establishing attractive regulatory frameworks, so there is a real focus in these countries. “It is not just in terms of wind and solar projects but also waste-to-energy, bio-mass and bio-energy. Renewable energy is certainly going to be the focus of my practice this year,” he said.

Climate change represents a growing market for legal services, particularly in Asia. Full-service law firms will inevitably need to address their capabilities in this area if they want to keep up with their competitors. “Climate change is an issue which is affecting a lot of clients,” says Curnow. “Even if there are law firms which are not as proactive as Bakers in developing a climate change practice they will be forced to respond to this issue because their clients will come to them [for answers]. “Our aim is to make sure that we continue be at the front, picking up new clients who have those sorts of questions.” ALB