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Legal market overview
Despite the impact of the global recession, Brazil's steady economic growth over recent years was clearly signalled in early 2012 when it overtook the UK to become the sixth-largest economy in the world. As other regions, particularly Europe and the US, have struggled economically, an increasing number of foreign businesses have looked to Brazil for investment opportunities. The country's federal capital Brasilia is of key national importance, particularly in administrative issues, but it is Sao Paulo and Rio de Janeiro which form the key hubs for international business. Over the past decade, the arrival of many major financial institutions has helped Sao Paulo's BM&FBOVESPA to emerge as a global trading platform dealing directly with other stock exchanges in the US, Europe and Asia. Ahead of hosting the FIFA World Cup and Summer Olympics in 2014 and 2016, respectively, Brazil is making a significant drive to upgrade infrastructure and improve security, adding further impetus to both business and legal activity. Certainly the nation is set to emerge fully onto the global stage over the next five years.
As a result of the sustained upturn, law firms are dealing with a slew of work across all sectors: the corporate and M&A market, in particular, is experiencing a protracted boom in both domestic and cross-border transactions. While international firms continue to advise on those deals which have non-Brazilian legal aspects, they have been blocked from entering the market further by the Brazilian Bar Association's decision to adopt a protectionist stance regarding the local legal market. As a result, the most established firms – such as Barbosa, Müssnich & Aragão, Machado, Meyer, Sendacz e Opice – Advogados, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados, Pinheiro Neto Advogados, and TozziniFreire Advogados – have prospered as never before, maintaining their traditions, size and market profile with little challenge. Other key full-service firms include Souza, Cescon, Barrieu & Flesch Advogados, Demarest & Almeida Advogados and Veirano e Advogados Associados. Exceptions to the rule of associated practices, Lefosse Advogados, Tauil & Chequer Advogados in association with Mayer Brown LLP and Trench, Rossi e Watanabe Advogados, associated with Baker & McKenzie, also have a strong presence in the corporate and financial arenas, alongside key Brazilian finance firm Pinheiro Guimarães – Advogados.
Reflecting the extent of economic activity, Brazil's capital markets have generally remained very buoyant. While this trend continues, the knock-on effect of global difficulties has impacted upon the Brazilian markets, with a reduction in the number of equity offerings and IPOs. In the competition field, where the market is split between full-service firms and several very strong, specialist boutiques, new legislation introducing a pre-merger notification requirement came into effect in 2012, bringing the country into closer alignment with other international competition regimes.
Brazil is the tenth largest energy consumer in the world and a major global energy producer, particularly on the oil and gas side. The acquisitive nature of energy corporates ensures that the sector's transactional market remains particularly buoyant and one recent headline transaction saw the Korea-based SK Energy sell its Brazilian assets to Maersk for $2.4bn. In the legal market, the 2011 merger of oil and gas specialists L.O. Baptista Advogados Associados and Schmidt, Valois, Miranda, Ferreira e Agel to create L.O. Baptista, Schmidt, Valois, Miranda, Ferreira & Agel, puts Tauil & Chequer Advogados in association with Mayer Brown LLP's traditional dominance in this sector under threat. Environmental law has gradually crept up the country's corporate agenda, desperately trying to keep pace with Brazil's booming agribusiness industries. Ambiguous legislation, coupled with stricter enforcement ensures that there is ever more legal activity in the sector. In particular, firms are seeing a significant uptick in instructions from lenders looking to avoid potential environmental scandals arising from projects that they have helped to finance. Reforms to the Forest Code in May 2012 should also keep lawyers busy.
On the IP side, sports-related matters are on the increase ahead of the country's planned sporting events. The break-up of IP giant Momsen, Leonardos & Cia, which split into two firms, Kasznar Leonardos and Luiz Leonardos & Cia, was headline news in the sector in 2012. Elsewhere, real estate work continues apace, not only on major infrastructure projects but, in a reflection of the growth of a Brazilian middle-class, the number of shopping malls and retail developments emerging across the country. Again, the planned sports events have required new projects across several states, and foreign companies and law firms remain in hot competition for office space in the major cities of Brazil.