The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Marcela Varela, Associate—Projects, Energy, Natural Resources and Infrastructure (2023)
Marcela Varela is an associate in the Projects, Energy, Natural Resources and Infrastructure (PENRI) practice at Allen & Overy.
Marcela assists public and private companies on a broad range of energy and infrastructure transactions, with a focus on companies engaged in the development, construction, financing, acquisition, and disposition of solar, wind, storage, and other energy projects.
She is also committed to pro bono work, including immigration, estate planning, and nonprofit regulation matters.
Marcela received her J.D. from the University of Texas at Austin.
Describe your practice area and what it entails.
I am part of A&O’s global Projects, Energy, Natural Resources and Infrastructure (PENRI) group. The PENRI group works on a wide array of transactions, from traditional infrastructure financing and acquisitions to investments in more novel renewable energy projects, such as carbon capture plants. My practice area is more focused on a subgroup of renewable energy project finance, including a mix of M&A transactions, project development, tax equity investments, debt finance, and joint ventures.
As a Houston-based attorney (Houston being the “Energy Capital of the World”), I am acutely aware of the energy legal space and how rapidly it has evolved to include more green energy sources. Not many attorneys have the privilege to work in such a fast-growing field that has such a positive impact on the world, so I count myself as one of the lucky ones.
What types of clients do you represent?
I primarily represent tax equity investors (including corporate investors, private equity firms, and banks), but my practice extends to the representation of sponsors (developers), sellers, buyers, and lenders in the renewable energy sphere.
For example, I’ve recently worked for private equity firms such as Advantage Capital Corporation, DE Shaw, and Macquarie Capital; banks such as RBC and BBVA; and developers such as Distributed Solar Development, Clearway, and Aspen Power Partners. It’s particularly exciting when I get the opportunity to work with clients traditionally focused on oil and gas, such as Repsol, Orsted, and Total, that are looking to expand their energy investments to more environmentally sustainable energy generation.
What types of cases/deals do you work on?
The best part about being a project finance attorney is that I get to work on deals that are at the early stages of development (such as the initial green-light for a project to be built or acquired) all the way to projects that are fully constructed and operational (such as connecting the project to the grid and actually selling power or credits). As a member of the PENRI group, my deal load stays varied enough that I continue to learn from different partners and clients so that I can become a better associate.
My primary focus over the last couple of years, however, has been in the “tax equity investment” area of project finance. Tax equity investments are transactions where a passive capital investment is made by an investor (such as a private equity firm, bank, or other corporate entity) in a renewable energy project, with the investor in turn expecting to receive an internal rate of return based on certain federal tax credits (such as ITC or PTC). It’s a niche area that many lawyers do not even know about, so it has been a great opportunity for me to become well versed in the different ways the deal can be structured, risks and benefits of each project, and negotiating the best deal for our clients.
How did you choose this practice area?
Attending law school in Texas, I knew from the start that I was interested in the energy legal market. I took every class and seminar that was available at my school that had to do with energy laws, projects, and development because I was interested in how energy is such an integral part of our community development.
I started out as a general energy associate and was given the opportunity to work on a variety of deals, from capital markets and investment funds to M&A and debt finance. Though I started out as a generalist, my interest in working on deals that had tangible assets and development was piqued the first time I drove by a large wind farm in West Texas. I sought out the project finance group at my firm, was staffed on my first renewable energy deal, and knew that I had found exactly the type of work I was looking for. There is something that is just unmatched about working on a deal and then being able to actually see the physical product of your work!
What is a typical day like and/or what are some common tasks you perform?
Every day in our practice is a little different from the last, but that is exactly the reason I find my job engaging! My day varies based on the status of each deal I’m working on, whether we are at the early stages of negotiating a term sheet or if we are all hands on deck for an imminent closing.
For example, when a deal is in the early stages, I may spend several hours working with partners and clients on negotiating the economic terms of a deal through the term sheet. Once the term sheet is signed, I am often tasked with getting a deal team together that has the experience and availability to take on the deal. This can take the form of having internal group calls to set timelines, establishing work product expectations, and generally ensuring that we are all on the same page to be successful and efficient advisors to our client. Throughout the life of the deal, I am then responsible for the drafting and negotiation of key documents (such as equity investment agreements or operating agreements), overseeing the deal team on a variety of tasks (such as preparing diligence reports, drafting ancillary documents, and maintaining checklists), and coordinating with the counterparty to reach a successful closing. Once a deal has closed, I ensure that post-closing items are completed and tracked for each client and debrief with each deal team to ensure that we are always improving our methods.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
I would recommend taking corporate transaction classes, such as negotiation and general drafting courses. Law schools often offer courses that are taught by lawyers or cross listed with the business school—to the extent someone is able to sign up for those, I think they provide such a real-world experience of what it’s like to be a corporate lawyer. To the extent someone is interested in the renewables sphere, I would also recommend a Federal Income Tax class as almost everything a project finance attorney does touches tax laws in some way.
What is the most challenging aspect of practicing in this area?
I often tell junior associates that joining a fast-paced and ever-innovative practice like ours is like drinking out of a fire hydrant at first. Since the recent boom in renewable energy finance, many law schools have not caught up in offering in-depth Project Finance courses, so there is definitely a learning curve for new joiners. From project-specific lingo to understanding the varied (and ever changing!) deal structures, our practice is often unfamiliar to newcomers. That being said, I think our group is particularly effective at teaching and mentoring new juniors because we know that a deliberate investment in our junior associates means success for the entire group. We always welcome anyone who has excitement and eagerness to learn!
What do you like best about your practice area?
First, I really enjoy working on project finance deals because everyone is collaborative since we are all focused on long-term relationships. Investors are happy to have found an investment opportunity, and sponsors are even happier to be receiving one. We are consistently working to a shared goal and there’s no “outsmarting” your counterparty. At the end of every deal, we are always glad when we’ve helped create a lasting relationship between the parties.
Second, as I’ve mentioned before, I think it is so unique as a project finance attorney to see the physical result of our work. When I drive by a sprawling array of solar panels or a large wind farm, I cannot help but think that someone with a similar job as mine helped make that come together.
Last, but certainly not least, I am really proud to work in an area that has such a positive impact on our environment and sustainability for the future. I think it’s a privilege to have this job and know that I’m helping create a greener planet for generations to come.
What is unique about your practice area at your firm?
Apart from the global reach of the PENRI group and the effective collaboration across offices and groups, I think the PENRI group has a unique culture to integrate every member of our deal team into every part of the deal. For example, junior associates are not only asked to update the transaction checklist, but are also encouraged to lead checklist calls and interact with clients and other counterparties. It may seem a little scary at first, but I have found that it’s an effective way to break the ice and start feeling comfortable in client-facing conversations. While each deal is staffed with varying levels of experience, the goal is to teach and empower every member to feel comfortable completing different tasks, from creating signature pages to providing feedback on legal documents. My goal as a mid-level is for every junior associate I work with to leave each deal feeling like their legal skills have improved and that they are making positive progress in their career.
What kinds of experience can summer associates gain at this practice area at your firm?
Summer associates can expect to receive a real look into our practice area because we pride ourselves in assigning real tasks. When summer associates join our offices, I take this as a perfect learning opportunity for our junior associates to learn how to delegate tasks and review work product. This means that a summer associate is going to receive real deal tasks that would have otherwise been done by the junior associate.
Apart from gaining transactional experience, our summer associates can expect to work on a variety of pro bono projects, which also highlight the diversity of interests among the attorneys in our practice. Each year, I oversee a group of summer associates in their summer pro bono case. In my case, we typically focus on immigration/U-Visa/Violence Against Women Act (VAWA) projects. It’s a great opportunity for summer associates to take ownership of a short-term project with a lasting impact on each client we represent.