As investor confidence skyrockets in Australia's energy and resources sector, top quality lawyers have never been more in demand - and client demands have never been greater. Claire Chaffey reports

WHAT THE EXPERTS SAY

"The practice of law is getting tougher in this area. The quality of advice required, the speed, and the level of commitment is certainly increasing. Deals are moving faster"

Michael Ryan, partner, Addisons

“India is going to be a very big story for the energy and resources sector in Australia in the next few years”

Rory Moriarty, partner, Clayton Utz

"It will be a very solid and diverse year in terms of work opportunities, and when we review individual sectors … they are all looking strong”

Stuart Barrymore, partner, Freehills

Ask any energy and resources lawyer and they'll tell you that the post-global financial crisis cloud has lifted in Australia.

While 2010 wasn't necessarily a bad year for the sector, it still had its fair share of setbacks - most notably the attempted introduction of the Mining and Resources Rent Tax (MRRT) - which rattled investor confidence and stalled deal activity.

However, the early indications are that 2011 will be a good year for energy and resources lawyers.

"I am much more confident, as I sit here today, than I was in February last year," says Freehills partner Stuart Barrymore.

"It will be a very solid and diverse year in terms of work opportunities, and when we review individual sectors … they are all looking strong. There is still some uncertainty, but what we have seen over the past two or three months is a real escalation in deal flow … it has probably been the busiest December and January that we have seen in recent memory, certainly the last four or five years."

Making hay while the sun shines

A shining example of the life which has been injected into the energy and resources sector is the signing, in January, of the final investment decision (FID) for the $US16 billion ($16.1 billion) Gladstone Liquid Natural Gas Project (GLNG), whose main parties are Australian gas producer Santos, Malaysia's Petronas, French company Total and South Korea's Kogas.

And while the finalising of the deal is a credit to all involved, the journey involved in reaching the FID demonstrates that clients are expecting more from their lawyers than ever before.

Freehills partner Sharon Wilson, who was part of the team advising Santos, says that working on the deal was a hard slog at times, especially given the scale of the team involved.

"We had a fairly large team advising on all aspects from construction, land, equity and debt funding, the entry of project investors … as well as the key project documents," she says.

"It was a great opportunity to work with such a large team … [and] it is certainly one of the deals on my CV that I look back on with a lot of pleasure. There were a lot of sleepless nights, but it was a fantastic deal and a great outcome for Santos."

Michael Ryan, a partner at boutique firm Addisons which advised Petronas throughout the process, says working on the deal was demanding, often due to the numerous compressed deadlines which he believes are being enabled by top-tier capabilities.

"The practice of law is getting tougher in this area. The quality of advice required, the speed, and the level of commitment is certainly increasing. Deals are moving faster," he says.

"[The large firms] put big teams on and clients start to expect that law firms can produce a 24-hour performance. In this transaction we have had so many overnighters … if the transaction requires that sort of performance, then you just have to do it. It's not easy. After you have done two nights without sleep, you do start to worry about whether you might start to make mistakes."

But in the end, Addisons and Freehills - along with Allens Arthur Robinson and Blake Dawson - got their clients over the line, two years after negotiations began.

And while small firms in particular might find working on such deals tougher than their weightier colleagues, the satisfaction of achieving a good outcome is not at all diminished, and Ryan feels that Addisons is an attractive option for new foreign investors looking to engage Australian law firms.

"[Working on these sorts of deals] is certainly nothing to complain about," says Ryan.

"If you did this every day it would be murder, but to do it on a transaction such as this and have teams going hard at it and achieving a good result is very satisfying and stimulating for a lawyer."

The foreign legions

According to Rory Moriarty, energy and resources partner at Clayton Utz, there is no doubt that China is still the heavyweight player in Australian energy and resources projects. But new players are beginning to emerge. Traditional investors such as the US and Europe are starting to show renewed interest; and Japan, Malaysia and Vietnam are beginning to make their mark.

However, energy and resources lawyers across the industry agree that there is one player in particular which is starting to loom large on the horizon: India.

"China is still absolutely at the forefront and is critical to Australia moving forward due to the sheer volume of supply," says Moriarty. "But I think India is going to be a very big story for the energy and resources sector in Australia in the next few years."

Ryan and Wilson agree, though Wilson sees India's progress as being much slower than that of China.

"The Indians are slowly moving. They are a fair way behind the Chinese in terms of their ability to move quickly on a deal and commit to the price that project proponents are looking for," she says.

"We'll continue to see growth for them over the next two to five years, but in the short term I'd be surprised if they were making material inroads in the oil and gas area."

According to Barrymore, many of India's current issues lay with the heavily bureaucratic nature of Indian companies and the country's relative inexperience in doing business outside of India.

"For every significant [Indian] transaction … we are seeing a dozen or more Chinese-influenced transactions," he says.

No human resources boom

Even amidst the energy and resources boom, a problem is plaguing both clients and lawyers: lack of resources. Clients are reaching the stage where their projects are actionable, but finding employees to meet their massive human resources demands is difficult. And legal service providers say that finding quality, well-trained energy and resources lawyers is challenging.

"You can't ignore the fact that firms are looking at this region and bolstering their teams … and there is no doubt that energy and resources lawyers are in short supply," says Barrymore.

"Demand for expertise is not just coming from the law firms but also in-house. The competition is very much across the board right now."

Ryan agrees, and says that attracting lawyers with experience and expertise in the energy and resources area is not an easy task.

"As you grow, keeping the quality of your employees up is a challenge. It is a specific area, so your associates become valuable. It's quite hard to attract good people," he says.

But the good news for those working in the area is that 2011 is set to be a bumper year. And while some elements of the sector remain unclear - such as the impact of the MRRT and the reach of government regulation - energy and resources lawyers are, like their clients, definitely having a good run.

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