Hilary Thorpe, senior corporate lawyer at AGL Energy, talks to Adam Majeed about challenges in the upstream industry and the uncertain regulatory landscape in New South Wales
The first thing I want to ask is how long have you been working in the energy industry?
I’ve been working in the energy industry since 2003. I’m originally from New Zealand and worked for Simpson Grierson before moving to Clayton Utz in Australia. I worked at Freshfields Bruckhaus Deringer and Norton Rose Fulbright in London and then moved in-house in London before joining AGL Energy in 2012.
How did you make the transition to your current role at AGL Energy?
While working in private practice I completed a number of company secondments at investment banks and energy companies. While at Norton Rose Fulbright, I was seconded to The Crown Estate where I was responsible for acting for the Crown in respect of offshore electricity generation - wind farms and electricity wave and tidal devices. While on secondment at The Crown Estate an opportunity came up to join the team and so I made the transition in-house.
But why did you decide to make the transition in-house?
Part of the transition was to achieve a better work-life balance. However, the primary driver was the desire to become more embedded within a company and to have a greater understanding about the strategy and commercial drivers behind a project or transaction. Working in-house means that I have the opportunity to see a project through from its inception to its implementation, something that I often missed out on while working on discrete parts of projects in private practice.
Please describe your role at AGL Energy?
The AGL legal team comprises of approximately 15 lawyers that provide legal advice to the various AGL business units. I head up the legal function for AGL’s upstream gas business. AGL is an integrated energy company which retails gas to customers. AGL sources its gas in two key ways: it buys gas from gas producers; and it explores for, and produces, its own gas. I support the business function which does the latter.
Can you briefly outline AGL Energy’s objectives in Australia?
AGL was established in 1837 and is one of Australia’s largest energy companies. AGL is a fully integrated energy company generating electricity and producing gas and supplying electricity and gas to its customers. AGL is the largest private owner, operator and developer of renewable generation assets in Australia.
How has your in-house role evolved during your years in practice?
My first role at AGL was as a corporate lawyer working as part of the legal team supporting AGL’s upstream gas business. In 2013 I was promoted to senior corporate lawyer – upstream gas, and became responsible for managing the upstream gas legal team.
The upstream Industry has traditionally experienced a high number of mergers, acquisitions and divestitures, does this ring true in your role?
AGL has been disciplined in its approach to acquiring new assets and will continue to consider opportunities on their merits. For many companies, it appears to be a time of consolidation. A general observation is that M&A transactions seem to be taking a lot longer to complete than they have in the past.
Will the recent New South Wales state election have an impact on your work?
Over the last few years there has been a fair degree of regulatory uncertainty in New South Wales, particularly in relation to the development of coal seam gas and other gas projects. As always, AGL will continue to work with the New South Wales government to allow for the development of coal seam gas projects in a safe way.
Since CEO Andy Vesey took the helm in February, it’s expected that there will be a fresh drive on costs and efficiency as part of a radical shake-up of senior management. How will this impact you?
Andy Vesey, AGL’s new CEO, recently announced a restructure of AGL’s leadership team in light of challenges facing the energy industry and to capitalise on opportunities in the years ahead. The AGL upstream gas business is also currently under operational review. It is unclear at this stage as to what will happen, but like any responsible company AGL will look to manage its cost base and ensure that it is optimising its returns to shareholders.
Are there any recurring problems that you face when carrying out your work as a lawyer at AGL? Do you come across any regulatory complications?
The regulatory landscape in New South Wales around the development of coal seam gas projects has been the subject of substantial change over the past few years. New exclusion zones precluding the development of coal seam gas projects in certain areas were introduced in 2013 as were new codes of practice that developers must comply with. We have also seen the rise of social media and the ability of activist groups to have their voices heard quickly and loudly through a range of mediums.
At what point in your experience would you decide to look for external legal counsel?
We might brief work out because of the degree of specialist knowledge required, where we have competing commitments within our legal team or because of the scale of the task—the duration of the job or the resources required. We usually brief out work when we are engaged in a big M&A transaction or in litigation matters. In these cases the AGL Group legal team will, in consultation with the business, engage external lawyers to assist with the matter. AGL has a panel of law firms who provide us with external legal advice when it is required. The firms currently on our panel are Allens/Linklaters, Ashurst, Herbert Smith Freehills and Minter Ellison.
What qualities do you look for in external legal counsel?
I look for counsel that provides sound commercial legal advice; who understands and takes into account the commercial drivers behind a transaction. I need a lawyer who is responsive to emails and phone calls and treats you like you are their only client. I also need a lawyer that is personable and easy to get along with.
How much of your work is done in-house and how much is outsourced?
We are a busy, high calibre legal team and provide advice on all aspects of our business. However, we will brief out work where it makes sense to do so—because the legal team is too busy, because the advice required is specialist advice and where the work is too time consuming and would preclude us from providing other advice to the business.
How do you structure your fees? Do you prefer fixed rates or hourly rates?
On major deals and big transactions we often ask for fixed fees. For smaller jobs or jobs where it is uncertain as to the amount of work required, we will agree to pay hourly rates. We require our law firms to provide us with quotes and engagement letters before commencing work and we hold our law firms accountable to those quotes.
Finally, are there any challenges in your role that you foresee in the short to mid-term?
Regulatory uncertainty in New South Wales will continue to be a challenge in the short to mid-term.
Senior corporate lawyer – upstream gas
Hilary Thorpe is currently a senior corporate lawyer at AGL Energy. Hilary has over 12 years’ experience in the energy sector (representing clients in both electricity and gas matters), having commenced her career at Simpson Grierson in New Zealand and later working at Clayton Utz in Sydney and Freshfields Bruckhaus Deringer and Norton Rose Fulbright in London she moved inhouse to work for The Crown Estate in London. Hilary joined AGL in January 2012. Hilary has an LLB (First Class Honours) and a BA (History) from Victoria University of Wellington, New Zealand.