What You Need to Know
- Data centers are representing a multidisciplinary growth engine for law firms as lawyer expertise is needed across numerous practice areas and disciplines.
- Some larger law firms are creating dedicated, cross-disciplined data center teams to handle the workload.
- A recent executive order pertaining to new data center projects signed by Pennsylvania Gov. Josh Shapiro Tuesday will likely lead to more legal work from regional law firms.
The data center boom has led to lucrative opportunities for Big Law attorneys specializing in everything from real estate development, energy and zoning to corporate, finance and environmental, and a newly signed executive order by Gov. Josh Shapiro in Pennsylvania aimed at limiting their development may paradoxically mean even more work for lawyers specializing in this growing area of the law. [...]
'A Million Emails On It'
“I got a million emails on it,” Duane Morris partner Robert Montejo said on client outreach following Tuesday’s executive order signing.
Montejo, who is based in Washington, D.C., and focuses his practice on data centers, clean energy and real estate, said it’s not just Pennsylvania that has a heightened focus on data centers—the issue is cropping up across other states as well, keeping clients on their toes, and leading to more work for lawyers.
Duane Morris has a tracker that keeps tabs of data center changes in different states, Montejo said. In New York, for example, Gov. Kathy Hochul last month signed an executive order to create the nation’s first moratorium on new hyperscale data centers, establishing what the state claims are the strongest standards for data center development out there today.
The term hyperscale refers to data center design and architecture built for extreme scalability, massive computing power and vast data storage, and these facilities are typically run by large cloud providers such as Amazon Web Services, Microsoft Azure and Google Cloud.
“The market’s been crazy in general the last few years if you’re a data center lawyer,” Montejo said. “It was kind of a sleepy industry that was very niche 10 years ago, where we were doing much smaller projects. So, just the scale has grown tremendously.”
The biggest change for data center clients nowadays, Montejo said, is that part of their due diligence now must be regulatory risk. Previously, he noted, they could assume that these projects could be developed by right, or following conversations at the local or county level aimed at changing zoning.
“You must go into these projects knowing that it’s not just power, it’s not just water, it’s not just land availability,” he said. “You actually have to think about how, if regulations change, what happens to this project. Can we still build? What happens if they take away tax incentives?" [...]
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