With the International Relations Committee of the Brazilian Bar Association (OAB) due to vote on suggested changes to the country’s Bar rules, LB has obtained a copy of the proposals up for discussion.
Drafted by attorney Carlos Roberto Siqueira Castro, partner in Rio de Janeiro-headquartered litigation outfit Siqueira Castro Advogados, the report pushes for a major reinforcement of the existing rules governing international law firms practising in the country.
‘Everybody in the market is waiting for this decision, they are all very worried,’ said a local partner in Brazil. ‘A procedure has already been initiated against all members of alliance firms, including former members who have since moved on to new firms. Lawyers are being asked: “why join a foreign law firm if you knew it wasn’t actually permitted for you to advise on local law there?” There is a climate of fear and junior lawyers, in particular, are very afraid.’
Reforms proposed to combat the perceived abuse of the Bar rules include tightening up the restrictions applying to foreign associations.
Legally, foreign lawyers are only permitted to provide advice on foreign law matters, they must call themselves ‘foreign legal consultants’, and they are prohibited from working alongside local lawyers. To add to the bureaucratic headache, Bar rules are subject to a complex parallel system of federal and local implementation, with the São Paulo chapter of the OAB often seen as trying to assert its authority over the federal Bar.
The São Paulo Bar attempted to set the national agenda in February 2011 by confirming its earlier decision that any formal alliances between foreign qualified and local lawyers violated its rules. The matter is now being decided by the OAB in Brasília, the country’s capital, and could set the stage for a power struggle if it disagrees. However, the consensus is that the proposed changes will go through.
The sweep of the new proposals is extensive, with the following expected to be banned: the use of common headquarters, even separate floors of the same building; confusion of brands through the use of expressions like ‘in co-operation with’ and ‘associated with’; shared use of work tools, such as websites or common advertising; and the promotion of legal events and joint promotional activities in the Brazilian legal market–even if such events deal with foreign law and foreign investment in Brazil.
‘There are many different ways that you can practise international law in Brazil.’
Claudette Christian, Hogan Lovells
Currently, a number of high-profile international firms maintain associations in the market, including Linklaters, which entered into a co-operation agreement with Lefosse Advogados in 2001; Mayer Brown, which has been active in the country since a tie-up with Tauil & Chequer Advogados in 2009; and DLA Piper, which operates as a foreign law consultancy in São Paulo but recently launched in Rio de Janeiro through an association with local firm Campos Mello Advogados.
‘The decision will probably be announced at the end of July and firms will know that the alliances will not survive,’ added another local partner. ‘Linklaters is set to announce that its association with Lefosse will downgrade to a “best friends” relationship.’
However, a spokesperson for Lefosse Advogados denied that the firm is dissolving its alliance prior to any new regulations being issued by the Brazilian Bar: ‘Lefosse Advogados has been in co-operation with Linklaters since 2001 in compliance with the Brazilian Bar rules currently in force. We are, of course, monitoring the proposed changes that are under review by the Brazilian Bar, and intend to comply with any new rules that may be issued.’
Despite the growing uncertainty clouding the regulation of the legal market, the buoyant Latin American economy continues to generate big business for clients that foreign firms can’t afford to miss out on. According to figures just released by mergermarket, Central and South America accounted for 4.6% of the value of deals done globally in Q1 of 2012 – substantially higher than the 2% recorded by Africa and the Middle East, the 2.5% recorded by Japan and even the 3.9% recorded by South and Central Asia. However, the tough proposals are encouraging firms to tread carefully before planning their entry into the market.
Hogan Lovells is among the most recent firms to have announced plans to open an office in the country. It is expected to open its doors in Rio de Janeiro before the end of the year, choosing to launch in the former Brazilian capital over the main business centre of São Paulo due to the city’s strong energy links.
‘The firm has been active in Brazil for some time,’ said Claudette Christian, the finance partner selected to spearhead the launch of the new office. ‘We’ve chosen to launch in Rio de Janeiro because of the work we have done there over the years.’
Most notably, legacy firm Hogan & Hartson advised Rio de Janeiro-based energy giant Petrobras on the development of the $2.7bn Bolivia-Brazil gas pipeline project.
Significantly, the firm has decided to launch under its own banner rather than through an association with a domestic firm and Christian, who was co-chair of the Hogan Lovells board until 30 April, is confident about the opportunities that remain for foreign firms who comply with the rules.
‘There is a lot of foreign interest in Brazil and there are many different ways that you can practise international law in Brazil, whether it is structuring a finance deal through English law or any other foreign jurisdiction,’ she said.