The following is an excerpt from Practice Perspectives: Vault’s Guide to Legal Practice Areas.
Eric Silverman and Roland Estevez, Partners—Project, Energy and Infrastructure Finance Group
Eric Silverman is a partner in the New York office and co-chair of the firm’s Project, Energy and Infrastructure Finance group. Mr. Silverman has extensive experience in project development and financing of major energy, power, and infrastructure projects in the U.S. and overseas. His experience includes representing multinational corporations, private equity funds, and other project participants in greenfield projects and acquisitions, restructuring, and recapitalization transactions. Mr. Silverman has been recognized as a leading project finance lawyer by Chambers Global, Chambers USA, and Legal 500.
Roland Estevez is a partner in the New York office, a member of the firm’s Project, Energy and Infrastructure Finance group, and a member of the firm’s recruiting committee. Mr. Estevez’s practice is primarily focused on the representation of financial institutions, multinational corporations, and developers across a broad spectrum of sectors, including renewable and conventional power, oil and gas, infrastructure, and mining throughout the Americas and particularly in Latin America. He is recognized as a leading project finance lawyer by Chambers Latin America, Chambers USA, and Legal 500.
Describe your practice area and what it entails.
We advise clients in the structuring and execution of highly structured financings involving projects and assets in the energy and infrastructure sectors. Project finance generally focuses on the financing of a specific asset in which lenders or investors look principally to the revenues generated by the operation of the asset for the source of funds from which loans will be repaid and investments returned (e.g., revenue from the sale of power from a solar power plant, revenues from operations of mass transit infrastructure, sale of copper from a copper mine, etc.). The primary security for the loans consists of the assets of the project, including-—most notably
—the cash flow generated and the contracts that assure the stability of its costs and revenues. This type of structured finance is deployed most commonly in the development of large infrastructure projects (e.g., power generation and distribution, toll roads, airports) and the development of energy and natural resources.
What types of clients do you represent?
In our practice, we generally represent developers, private equity sponsors, investors, debtors and creditors, and other major parties in both domestic and cross-border transactions. Some are sophisticated, experienced institutions, including Google, Citibank, Goldman Sachs, and BlackRock, while others can be newly formed private equity funds or startup developers looking to develop a new or innovative energy solution.
What types of cases/deals do you work on?
A majority of 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 three years, we have acted as legal advisor in more than 200 transactions that have raised more than US$150 billion of limited and non-recourse debt for a wide variety of renewables and conventional power, pipeline, oil and gas, power, metals and mining, and other infrastructure projects. It is our ability to combine strong legal skills with deep sector knowledge that distinguishes us from the pack. Our expertise extends to asset acquisition, restructuring, portfolio securitization, and political risk mitigation techniques, making for an interdisciplinary practice that regularly draws upon other lawyers and professionals within the firm with expertise in fields such as M&A, energy regulation, tax, economics, bankruptcy, litigation, and international trade.
How did you choose this practice area?
Eric: Having worked in energy/environmental consulting prior to law school, I was looking for an opportunity to work on cutting-edge energy financings. Milbank was interested in developing its project finance practice, and it turned out that Milbank’s reputation for doing sophisticated finance transactions was a great help in attracting project sponsors and investors as clients. Today, there are great opportunities for young associates to get involved in exciting global power/energy/infrastructure/natural resources projects and develop the broad development and financing expertise that is required in this dynamic sector.
Roland: As a summer associate, I found myself working on the financing of a project that involved the construction and launch of a communications and imaging satellite for a large European country. To me, the review and allocation of the risks involved in executing such an endeavor was the ultimate challenge. Milbank puts you at the forefront of pioneering new and innovative financial technology. I constantly find myself challenged to think creatively and develop new skills. I have the pleasure of interacting daily with individuals all over the world, creating a global network of peers (and friends). The skills learned and sector expertise gained over 16 years at Milbank allow me to advise clients from Brookfield to Google to Citibank throughout the world.
What is a typical day like and/or what are some common tasks you perform?
Eric: I spend most of my time helping clients develop business and legal strategies that will enable them to achieve their goals and objectives. My work entails consultation with clients and providing advice and counsel on project development and financing transactions. Given the diverse client base that we serve, I am constantly challenged by the different types of issues that face our clients in attempting to develop large, capital-intensive projects around the world. Our work is heavily influenced by global macro-economic trends and industry-specific factors that can profoundly impact our clients’ investments. Since market volatility and economic cycles are major challenges to our clients, we spend significant time trying to mitigate economic, political, and commercial risks that can dramatically impact large-scale projects.
Roland: My work on a given day or week depends largely on the client’s needs and the stage or phase of the particular transactions I am working on. One day I could be advising a developer in the construction phase of a wind farm in the Atacama Desert of Chile or a financial institution looking to invest in residential solar portfolios for a U.S. solar company. It is also not unusual to find myself in Bogota, Rio de Janeiro, or Beijing negotiating a transaction, restructuring an existing deal, or speaking at a renewable energy conference (sometimes in the same week!).
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
Eric: Having some background in finance/business planning, accounting, and tax are all good foundations for lawyers interested in project finance. Also we have found that project finance demands lawyers with intellectual curiosity, as we are constantly challenged to learn about new types of business models, industries, and technologies.
Roland: No single path will lead you to a career in the energy and infrastructure finance practice. The group at Milbank is comprised of individuals from diverse and varied academic as well as personal backgrounds. That said, if I had to do it over again, I would seek out more academic exposure in secured transactions and bankruptcy to the extent available. Exposure to these areas would certainly provide useful tools in analyzing, negotiating, and allocating risks within a transaction. Nonetheless, associates are trained and exposed to real work experience immediately facilitating the development and strengthening of those skills.
What is the most challenging aspect of practicing in this area?
Eric: We are always striving to anticipate future market trends and developments, so we can assist our clients with cutting-edge advice and legal support. This requires interest and understanding in global economic and political developments/trends as these can have profound market impacts. Keeping abreast of market developments in distant regions and coordinating our global practice with so many talented lawyers working around the world is a major challenge. But the rewards are significant when we are able to support our clients in successfully developing/financing major global projects.
Roland: The best thing about my practice is also the most challenging. You are constantly pushed out of your comfort zone as a result of the varying nuances from project to project and client to client. Financing a hydropower plant in Peru is very different from financing a port in Brazil or an LNG terminal in Louisiana.
What misconceptions exist about your practice area?
We find that the inclusion of the word “finance” in the name of our group dissuades candidates without a business background from inquiring into our practice. In reality, on any given day, we are equally as likely to find ourselves negotiating a construction and engineering contract, a guaranty, a political risk insurance policy, or a Mexican fiduciary trust as we are a loan document. Hands-on experience and our deliberate and continued professional development programs will give you the finance tools you need to be successful.
What is unique about your practice area at your firm?
The breadth of knowledge that an energy and infrastructure finance attorney must master strays far beyond the legal aspects of a transaction. In order to make the many complicated pieces of each unique transaction come together, it is incumbent upon us to have a working knowledge of the technology, industry, and country, as well as the various parties involved in these complex transactions. Gaining this know-how supports your ability to differentiate yourself and evolve with the needs of clients.
Energy and infrastructure finance lawyers have to stay ahead of trends and keep track of many moving variables, including capital liquidity, global commodities prices, interest rates, renewables technology, geo-political change, and changes in law. The core skills of deal architecture will translate across the spaces.
The last decade has seen a significant increase in clients seeking not only our finance services but engaging us for our expertise in the energy and infrastructure sectors. As the power infrastructure around the globe experiences a generational shift to gas and renewable power and the commodity-based economies face unprecedented challenges, our clients find themselves needing to be more nimble and strategic than ever.
What are some typical tasks that a junior lawyer would perform in this practice area?
The most successful associates are those that get immediate exposure. Early in your career, you will find yourself taking control of a particular workstream for a transaction (e.g., the collateral package for a hydro project financing or review of solar panel supply arrangements). We tailor our assignments around constantly giving associates the opportunity to expand their skill sets. It is not unusual for junior associates to be the day-to-day interface with clients, keeping them apprised of relevant action items or answering questions. Finally, as a junior associate, you will find yourself taking the initial attempt at drafting the varied types of legal documentation that comprise the framework of a transaction. All of this is done within a supervised environment focused on training but also challenging associates. We benefit from the firm’s reputation and ability to attract the most complex, world-class, and largest project financings in the world, creating unique learning opportunities for junior associates.