- Associated Press - Saturday, February 1, 2014

BATON ROUGE, La. (AP) - Megaprojects springing up in Louisiana are changing the way law firms negotiate fees with those clients and even prompted one firm to form an economic development consulting affiliate.

Work on such projects probably makes up about 10 percent of the firm’s business, according to Steve Boutwell, Kean Miller’s director of client services.

“Interestingly enough, lawyers are some of the first boots on the ground for the companies looking to develop these projects in Louisiana,” Boutwell said.

Lawyers’ tasks might begin with negotiating tax, job-creation and other incentives with the Louisiana Economic Development department, involve due diligence and financial considerations, move into real estate acquisition and securing permits from the state departments of Environmental Quality and Natural Resources and their federal counterparts, and then into engineering and construction contracts.

Once the project is underway, a firm might be asked to help develop employee manuals or negotiate the contracts for feedstocks the plant will use and agreements with railroads or barge companies to ship the products.

“I guess the long story short is you’ll find lawyers and law firms involved in a lot of these big projects,” Boutwell said. “A lot of people look at a big project coming to town and how many jobs is it going to create. Well, it creates a lot of legal jobs, too.”

Kean Miller has worked on a number of projects, including Sasol’s $21 billion gas-to-liquids and ethane cracker complex in Westlake and Sempra’s $6 billion natural gas liquefaction export facility in Hackberry.

With numbers that large it’s no wonder project owners are looking to change the way lawyers bill for project-related work.

“The old formula of just billing on an hourly rate is just out the window,” said Patricia Galloway, chief executive officer of Pegasus Global, a management consulting firm with clients worldwide.

Owners aren’t looking at legal fees as 2 percent of the project costs, Galloway said. More and more, project owners seek retainer arrangements or even partnership agreements where the law firms share in profits or costs.

Some project owners want law firms to submit proposals, bidding for work the same way a construction or engineering company would, Galloway said.

Owners want to see presentations that set out who will be on the legal team and the billing arrangements. That may involve some sort of retainer, a daily rate or a blended rate for the legal team, senior partners, associates and paralegals. Clients want to know how the law firm calculates that blended rate, and they may set a limit on fees.

Bill Hines, managing partner of Jones Walker, said the firm typically gets hired in one of three ways on a megaproject.

The easiest way is when Jones Walker is already the client’s general counsel. The project comes in and the law firm is hired to handle the legal work. There’s no RFP, or request for proposal.

Other times, the project owner asks law firms to submit an RFP. In a couple of those instances, the company ended up building the project in another state but hiring Jones Walker anyway, Hines said. Those companies liked the firm’s proposal and that the law firm has offices in the state where the project was located.

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