Brian Lenihan and Nama chief Brendan McDonagh: will need the help of several large consulting firms to get Nama up and running over the next six months

Last Monday afternoon Dublin's courier firms were busy like never before. All around the capital, padded envelopes were leaving the upscale offices of Ireland's largest legal firms and making their way to Grand Canal Street, home of the National Treasury Management Agency (NTMA).

The flow of post into the office just before four o'clock must have been considerable. Anyone competing to provide legal advice to Nama had to have their expression of interest submitted by 4pm on the button. The contract is one of the biggest pieces of legal work likely to be on offer in 2009 and most likely in 2010 as well.

The turnaround time for the legal advice contract was extraordinarily tight by usual standards. The NTMA invited tenders only on 29 May. In other words the submissions had to be returned in just six working days. Legal firms were unhappy with the tight deadline, but nobody was keen to articulate this publicly, such is the scale of the contract being offered by the NTMA.

The legal contract is likely to involve a huge amount of liaison with the Department of Finance and the attorney general's office, which are ultimately responsible for drafting the Nama legislation. One caustic observer described the contract last week as a "hand-holding" exercise because the civil service has never before had to draft legislation of this complexity and scale. This may be unfair but the scale of the legal advice the NTMA is seeking suggests the contract will be very labour-intensive and involve a torrent of billable hours.

It would seem the NTMA does not even have a pre-defined idea of what kind of structure/company Nama is to be. Whatever law firm is hired will be telling the NTMA whether Nama will be a "statutory body" or a "state-owned company".

We already know that Nama will operate via a series of special purpose vehicles in the main banks and the NTMA is also seeking legal advice on how these bodies will operate.

Clearly from the scope of the tender documents, the winner of the contract is going to be a very large legal practice, which would put the "big five" in the frame, although most of them have worked with the main banks before, which might count against them when the NTMA is awarding the contract.

"Every legal firm in the city has worked at some point or other on behalf of the banks, so I don't think that is likely to be too relevant,'' said one solicitor last week.

Either way, it's hard to see the government not short-listing one of Matheson Ormsby Prentice, Arthur Cox, William Fry, McCann Fitzgerald and A&L Goodbody. The most interesting of the firms is Arthur Cox which advised the government on the nationalisation of Anglo Irish Bank. Matheson Ormsby Prentice has advised Anglo Irish itself over several years.

It also possible that an overseas law firm might emerge, but the NTMA is likely to be looking for a firm steeped in the intricacies of Irish company law. Other observers suggest that if the NTMA wants to get true value for money is should simply hire a team of lawyers of its own, considering how much excess is in the system.

Senior partners in Dublin's largest law firms were paid over €500,000 a year at the height of the boom, British publication The Lawyer estimates. While this is understood to have hugely fallen in most cases, there is no doubt that the bigger the firm, the bigger the fees tend to be.

If the government wants to step outside the five, other law firms could prosper, among them LK Shields and Mason Hayes+Curran, which both have large financial services practice areas.

If the legal contract is gigantic in scale and complexity, the search for general advisory services has not been easy either. The tender documents as published by the NTMA seem to demand a firm that is half solicitor's practice, half accountancy firm.

The advisory services the NTMA is seeking are complex, but also slightly vague. It wants advisers who can provide an "analysis" of eligible assets and then develop an appropriate valuation methodology.

In that context Pricewaterhouse­Coopers (PWC) seemed the obvious choice, in that it has already worked for the Department of Finance stress-testing the assets of Anglo Irish Bank and AIB. PWC, if it won the advisory contract, would effectively be examining existing assets and exposures once again and the NTMA might want a new perspective. Instead the NTMA opted for a fresh pair of eyes and chose HSBC International.

A huge range of firms are understood to have applied for this contract, including British stockbroking firms such as Collins Stewart and several of the large US investment banks. Merrill Lynch, which is believed to have applied, was reported to be in a strong position because it had already provided the government with banking advice during the present crisis. However, it was unsuccessful this time around.

While there are plenty of accountancy firms available to analyse the assets and their value, the second part of the "advisory" contract requires the successful firm to make sure that whatever methodology is arrived at is in line with EU Commission requirements. This would seem to be a legal function, but the other part of the contract is very much about a hard-nosed evaluation of property loans.

The final contract that was up for grabs was one to provide guidance on the tax issues involved in transferring loans to Nama. The complexity here is also huge because the assets involved are spread all over the world and the borrowers involved may be domiciled outside the state.

Grant Thornton was one of the tax consultancies believed to be interested in this contract, with Ernst & Young also in the mix. KPMG, which is already an auditor for some of the banks, must have also been a contender. However, on Friday it was announced that Pricewaterhouse­Coopers won the contract. The precise value has yet to be disclosed.

It's worth remembering that Nama will be inheriting billions of euros of assets, not liabilities, while the banks will be getting government bonds in exchange. The precise nature of this transaction could trigger a tax liability theoretically for one of the parties, so the consultants will have to design a format that removes this possibility.