Haven’t heard Vancouver lawyers complaining lately that their fair city needs more corporate headquarters and head offices?

There’s a good reason. With a real estate boom that made the last year’s M&A boom look staid, and a frenzy of work around the ramp-up to the 2010 Olympic Winter Games, life’s been good — if busy and hectic, but then, whose isn’t these days — on the West Coast.

A nice source of work is the public private partnerships being developed to build the infrastructure needed to move Olympic visitors. Ongoing P3s include the $1.8-billion Canada Line that will connect the Olympic site in Richmond, the airport and Vancouver, and the $1.1-billion Golden Ears Bridge project. And there will be more.

“P3 work is just getting started in B.C.,” says Christopher Holmes, a partner with Vancouver’s Farris Vaugh Wills & Murphy.

“It is extremely labour intensive work. Milestones and timelines are often imposed by external considerations. You have political deadlines imposed on top of actual deadlines.”

For Vancouver lawyers, this is sweet, sweet news. Labour intensive means lucrative. And there’s never just your client and the other guy. It’s multi-party work.

“There are more players and, as a result, more levels, more relationships and more documentation,” says Douglas Sanders, a partner with the Vancouver office of Borden Ladner Gervais.

Take the Golden Ears project, the current darling of Vancouver’s P3 craze. Well, not just Vancouver’s. It was chosen by the Canadian Council for Public-Private Partnerships to receive the Gold Award for Project Finance.

Some people believe it is just the first in a long string of awards this baby will win.

“It’s the second-largest privately financed public infrastructure project in Canada after the Confederation Bridge,” says Doug Buchanan, national managing partner of Davis & Co.

“We expect that New York’s Project Finance Magazine and U.K.’s PFI Magazine will give it similar international status.”

Awards are nice, but the real reason lawyers love P3s is that mandates abound. Davis snagged one of the lead mandates on the project representing the Bilfinger Berger BOT Inc., the company responsible for the design, construction, financing and operation of the six-lane Fraser River bridge and attached roads.

The design-builder part of the project is a joint venture between Bilfinger Berger and CH2M Hill Canada Ltd. — enter a team led by Mr. Sanders from BLG.

Then there’s the “public” part of the P3, the Greater Vancouver Transportation Authority, and its small army of Farris lawyers led by Mr. Holmes. And then there are all the lenders and financiers who need lawyers.

Financing for the project was out of the U.K., led by international lenders Depfa Bank PLC and Dexia Credit Local, and Computershare Trust Company of Canada as security trustee. The London office of Norton Rose snagged most of the work (and fees) there, but they needed Canadian legal agents and the Vancouver office of McCarthy Tetrault was happy to step up.

Capilano Highway Services Co., the project’s operator, is represented by Digby Leigh & Company. And, because the project threads through the turf of several municipalities, additional smaller mandates will crop up.

Also, no matter how well a P3 is structured, projects of this size will have some conflicts, difference about interpretation of contracts, and thus, litigation.

Plus, there are the legal reps of all the unsuccessful bidders. Of course, it is unquestionably better to represent the successful bidder. And the successful bidder’s competitiveness depends in part on how little in various fees — legal included — it spends in the early stages of the process.

“There is a very distinct tension between competitiveness of bid proposal and overall competitiveness of the bid,” notes Ian Bendall, a foreign legal consultant with Davis’s Toronto office.

“That tension often requires law firms to take a risk position in relation to its fees. Generally speaking the consortia bidding for these projects expect law firms to take a degree of risk in the period running up to the selection of preferred proponent and that risk is rewarded with a success fee.”

But there is also another form of reward, at least that’s the hope: The next mandate for the next project. Mr. Buchanan points out that Davis has closed five P3 projects in the past 18 months representing the successful bidder, SNC-Lavalin Inc.

The legal teams at Davis and BLG that papered Golden Ears are now working on a project in Norway because, says Mr. Bendall (who joined Davis from U.K. law firm), even though Canadian lawyers are relatively new to the game, their rates “are very competitive.”

P3s may be very young in British Columbia, and in Canada, but a select cadre of P3 lawyers is already emerging.

The million (billion?) question is whether P3 expertise may become one of the sought-after differentiators that give some Canadian law firms global relevance — and, whether the head start some law firms are now getting will pay off in the long run.

“There is no doubt that the firms that have the capability now have an early start or advantage on the firms that have no capability or experience in the area,” says Mr. Bendall. “But whether that will act as a differentiator depends on the size of market. Right now, we are still counting fewer than 10 deals a year. At that level of deal flow, there is no call for every law firm in Canada to develop P3 expertise.”

But if Canada takes the U.K. market as its example — and in the P3 world, it’s all about the U.K. — everyone’s in for a hypercompetitive ride.

“If deal flow increases, we will see what happened in U.K.,” says Mr. Bendall. “The firms with first mover advantage will find very quickly other law firms developing that expertise and being very competitive.”

Here’s a last lesson from the U.K.: When the dust settled, the advantage went to local players, the lower cost base and lower fees allowed them to be more competitive while still making oodles of cash on the P3 projects.

Can’t wait to see how that plays out in Canada.

(Copyright National Post 2007)