Climate change is crossing over into more and more aspects of traditional legal work and firms expect the amount of climate work to grow as the ramifications of global warming increasingly affect business activity.

Climate-related work draws in experts from a host of legal practices: banking and finance lawyers advise on climate and carbon market transactions, particularly on green bonds and sustainability loans; corporate and governance lawyers are needed for issues relating to climate change risk and climate-related disclosures; litigation partners get involved when developments with significant greenhouse emissions face court challenges; and project lawyers work on renewable energy developments.

Ilona Millar, head of the global climate change practice at Baker McKenzie, expects climate law to "grow incredibly in the next few years" thanks to emissions reductions efforts, where trillions of dollars in investment is needed. Additionally, climate work will gain extra impetus if international carbon markets get underway again, she said.

"From a transactional perspective, we're only going to see more and more projects that facilitate emission reductions, be it in the energy space, in natural solutions, and in new and emerging transitional technologies, including carbon capture and storage and hydrogen," said Millar, who is based in Sydney. "I would also expect more regulatory work, more transactional work and increasingly more work around risk management and disclosure from a corporate governance perspective."

Like other firms that have climate practices and undertake climate-related work, Baker McKenzie struggles to put a figure on how many lawyers work in the area because it crosses over so many different practice areas. Even so, Millar says the firm has a "go-to person" for climate transactions in each of its 76 offices around the world.

Climate-related work intersects with other expertise

Some firms are holding back in establishing a specific climate practice because the work crosses over many different practice areas.

Norton Rose Fulbright says it can't quantify the revenue its climate practice generates as it encompasses work across so many of the firm's existing business lines. The practice was established in the late 1990s with an emphasis on carbon markets and renewable energy, but in recent years it has expanded to cover taxation, insurance, real estate, agribusiness and transport.

"We are anticipating new areas of work to increase, in particular, climate change litigation and climate risk. There is also likely to be increased transactional and project work as the low carbon transition ramps up – particularly in the energy, transport and resources sectors," said Elisa de Wit, the firm's head of climate change in Australia.

"Land use, agriculture and food production are also likely to experience change, which will have associated legal implications and generate new workflow," she added.

Several other firms started advising on climate change issues in the late 1990s, but it wasn't until the following decade that the work really picked up.

Baker McKenzie's climate practice was very busy when international carbon markets were at their height in the mid-2000s following the Kyoto Protocol to reduce emissions. However, much of that work dried up when nations failed to agree on a new target at the 2009 Copenhagen climate meeting and as emissions fell during the global financial crisis as a result of reduced economic activity.

In the United States, several firms set up what they called climate practices when it looked as if Congress would pass comprehensive climate legislation around 2008 and 2009. When the legislation died, many of these groups disappeared.

Nonetheless, climate-related work globally has increased, although it has shifted to emphasise the regulatory and advisory work related to climate change, particularly with the development of new emissions trading schemes in a number of jurisdictions. Some 50 jurisdictions either have introduced or are contemplating introducing carbon pricing and emissions trading schemes. Some states in the U.S., as well as Canada, the EU and China, already have some sort of scheme.

But not all of the climate-related work is generated by government requirements. Millar said companies are also introducing their own voluntary carbon offset schemes as they strive to meet sustainability targets and corporate social responsibility obligations and prepare for the next phase of the international carbon market.

"In recent years particularly, we have seen climate become more normalised as a business issue, and integrated by our clients into their strategic thinking and general business management"

That next phase could come soon if nations reach an agreement on rules for Article 6 of the Paris Agreement, which Baker McKenzie expects will provide a framework for cooperation and allow nations to transfer climate mitigation efforts to other nations via a global carbon trading scheme.

Much of Ashurst's climate-related work is driven by proactive client demand. "In recent years particularly, we have seen climate become more normalised as a business issue, and integrated by our clients into their strategic thinking and general business management," the firm said in written comments.

"In this regard, we're seeing these questions more frequently, be it clients who own and/or operate assets that may be climate exposed; responding to the regulatory responses of various governments, which creates both risk and opportunity; and also navigating changing industries for our clients, and helping them to respond to and anticipate the evolution of the market for their business."

Client demand

Dutch firm Houthoff identified climate change as a key focus for 2019 as its clients became increasingly focused on climate change-related matters. It expects its climate change practice to expand beyond "traditional" climate-related areas such as renewable energy, environment and planning and real estate into areas of law such as finance, financial supervision, private equity and competition law.

"We expect the climate change practice to grow significantly in the next five years, with most of our practices – directly or indirectly – involved in climate change-related matters, and accompanying overall revenues," said Marloes Brans, head of climate change at Houthoff.

Despite the fact that more corporations are taking climate change into account in their operations, not all law firms are bullish on how much extra work that will create for them. White & Case doesn't expect climate change to form a significant part of the firm's revenues, reflecting the firm's comparatively small environmental practice.

However, the firm says climate change issues play an increasingly central role in its work on cross-border transactions and advising global clients on the environmental regulations relevant to their operations, including developing and financing renewable energy projects.

"More recently, we are seeing clients with assets in coastal jurisdictions or jurisdictions with greater risks associated with severe weather events keeping us busy," said Seth Kerschner, a partner in the firm's environment and climate change practice in New York.

"Also, climate change litigation is keeping us very busy as clients are concerned and seeking advice in terms of monitoring the high-profile cases against Exxon in New York and Boston," he added, referring to lawsuits in the U.S. alleging the company lied to shareholders and to the public about the costs and consequences of climate change.

In California, which has relatively strict environmental regulations, many lawyers represent industrial, energy and real estate development companies and the financial institutions that finance them, said Michael Gerrard, director of the Sabin Center for Climate Change Law at Columbia Law School. Likewise, many specialist lawyers in Washington, D.C., do work on climate-related regulatory issues, often for the same kinds of companies and their trade associations, as well as for NGOs.

"The most important steps that can be taken to fight climate change are the transition from fossil fuels to renewable energy, and the construction of renewable energy facilities (and associated storage and transmission). There is a very large amount of work in this area, but it is not labelled as climate change work; it is project development work, and mostly transactional," Gerrard said.

"Going forward, as the climate continues to grow warmer and extreme weather events become more severe and frequent, there will be an increasing amount of work in dealing with disasters that have occurred, such as flooding and wildfires (insurance, contract claims, real estate disputes), and in preparing for future disasters," he added.

Allen & Overy, which has been advising on climate-related matters since the late 1990s and has 65 experts around the world, is seeing a pickup in work within its global environmental law group.

"Today, as [environmental, social and corporate governance factors] and concern about carbon and climate issues are rising to become top boardroom priorities, the pace of new engagements advising corporates, financial institutions, multilaterals and funds is rapidly accelerating," said New York-based Ken Rivlin, the head of the group.

"We are advising many clients on carbon and… sustainability issues, both to help them understand evolving market standards, to provide training, to update compliance policies and provide related strategic advice," Rivlin said.

The firm's climate work includes support for 'green bonds' and other green financings, work on renewables and other sustainable energy projects; advice to corporations, financial institutions and funds on sustainability products, services and processes; and litigation when so-called 'green' promises turn out not be as good as advertised. Its key clients include General Electric, Shell, Xerox, Citibank, the World Bank, Tag Heuer, Korea Electric Power Corp., and the U.S. Department of Energy.

While billings from the climate practice are not likely to be material to the firm for a while, Rivlin noted that climate issues are increasingly material to the firm's clients and to the firm's global offering.

There is an evolving consensus, he said, that in M&A, project finance, debt and equity capital markets, real estate, and other transactions, climate, carbon and other sustainability issues must be taken into account.