The Federal Government's decision to delay the emissions trading scheme (ETS) until mid-2011 has been greeted with frustration by the business world, but it may provide a golden opportunity for law firms.

With the proposed legislation imposing personal liability on directors and setting penalties of $1.1 million for corporate bodies, businesses will be keen to understand how the ETS will impact on them and how they can ensure compliance. The delayed start date gives lawyers a chance to offer comprehensive advice as the scheme passes through Parliament, providing law firms with extensive new revenue opportunities.

Climate change - a growing practice area

With the international focus on reducing greenhouse gas emissions, we have seen an increase in regulatory control. Climate change legislation is becoming a growing practice area and subsequent business opportunity for law firms. Currently, a significant focus for lawyers is the National Greenhouse & Energy Reporting Act 2007, which came into effect on 1 July 2008. This legislation can carry criminal charges, so it is no surprise that many companies have big concerns about compliance.

However, the recent Garnaut report and the proposed ETS are prompting an even greater focus on climate change legislation. Heralded by Brad Wylynko of Clayton Utz as "the most significant piece of [environmental] legislation ever to be brought forward in Australian history" the planned scheme has already led many firms to obtain professional legal advice. Once the legislation is in place, there will continue to be a large volume of legal work involved as businesses seek to ensure compliance.

In stark contrast to traditional mergers and acquisitions work, which has been heavily affected by the downturn, climate change practice is expected to be a growth area, bringing in a substantial chunk of revenue even while the economy remains unstable. It is time for law firms to decide how best to utilise this opportunity and review what kind of resources should be invested into climate change practice.

One option is the creation of a specialised climate change practice area. This department would be charged with providing advice around existing and impending legislation as well as contributing climate change advice to larger deals. Another option is to expand on a firm's existing environmental or energy and resources practice area to incorporate climate change work.

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However, we should not rule out the emergence of niche climate change law firms. The highly specialised subject area is one that lends itself well to small firms with a singular focus.

Recruit or retrain?

Given the current focus on climate change legislation, practitioners with strong experience in this area will be in demand. Some law firms will look to recruit lawyers with relevant expertise to bolster their teams. However, given the current economic climate, it may prove more cost-effective to build on internal resources, giving existing staff the chance to obtain training in climate change law. With many firms already offering an environmental law practice, it would be a natural and valuable progression for these departments to get up to speed with climate change regulation.

In accordance with international obligations, it is clear that the Australian Commonwealth Government is committed to implementing legislation to reduce carbon emissions. Whatever the shape of the final ETS that comes into force, businesses need to start planning now to understand how much carbon they emit so they can implement a cost management strategy. This will inevitably involve legal consultation.

Law firms need to make sure that they have on board the employee base and expertise to deal with the increase in climate change work. This new revenue stream is especially important given how the downturn has impacted on traditional high revenue areas such as M&A and financial services. Whether it is through recruitment or training, law firms must evolve to capitalise on the opportunity that climate change legislation provides.

TJ Viljoen is the CEO of LexisNexis Pacific and an admitted attorney of the Supreme Court of South Africa