Brazil’s political and economic crisis kept it in the global headlines throughout 2015 and the first half of 2016. The ongoing Lava Jato (“Car Wash”) scandal, the impeachment proceedings against President Rousseff and the decline of the economy (which shrank by 3.8% in 2015) have given the newspapers – and of course the citizens of the country themselves – much to talk about.
The depreciation of the Brazilian real and the comparatively low prices of Brazilian assets have attracted significant foreign interest, contributing to a surprisingly active M&A market. Distressed M&A has been keeping law firms busy, with cash-strapped companies – particularly those affected by the Petrobras scandal – turning to restructuring proceedings and selling off distressed assets as a means of staying afloat.
At the same time, contractual breaches and disputes between venture partners have been on the rise in recent years, and numerous new dispute resolution boutiques have been established. Examples are Atelier Jurídico, which was founded by well-known arbitrator Luiz Olavo Baptista, who previously worked at L.O. Baptista, Schmidt, Valois, Miranda, Ferreira, Agel; Pimentel, Bastos & Vega Advogados (PBV Advogados), founded by Felipe Bastos Esteves after he left Veirano Advogados; APH Araujo Sociedade de Advogados; and Lopes Domingues Advogados.
On the tax side, meanwhile, the high demand for legal advice and representation in a traditionally litigious environment looks unlikely to decrease any time soon; the latest PwC report which assesses the ease of paying taxes in countries across the world ranked Brazil 178 out of 189 countries, finding that an average medium-sized company might spend some 2,600 hours on tax compliance.
Compliance is another booming area of the legal market, and law firms are increasingly bolstering their capabilities in this space, as more and more companies seek assistance in relation to anti-corruption and other programmes. Firms leading the way in this area include TozziniFreire Advogados and Trench, Rossi e Watanabe Advogados, associated with Baker & McKenzie.
Labour law practices have also benefitted from the current climate, with the market seeing the establishment of boutiques such as Pessoa & Pessoa Advogados Associados S/C (founded by former BMA – Barbosa, Müssnich, Aragão lawyer Maurício Pessoa) and Cahen & Mingrone Advogados (founded by former Leite, Tosto e Barros Advogados Associados practice heads Marcus Vinicius Mingrone and Arthur Cahen).
While many tax, M&A, restructuring, dispute resolution, labour law and compliance lawyers have been busy, it has been a different story on the real estate side, with the market having cooled significantly after a period of substantial growth. Traditional players in the property market have been quieter, and the slowdown in major development projects has meant the focus for many lawyers has been advice on regularisation and the real estate components of corporate transactions. In a significant move, a nine-lawyer team including José Paulo Marzagão left KLA – Koury Lopes Advogados for Tauil & Chequer Advogados in association with Mayer Brown in 2015.
Indeed Tauil & Chequer Advogados in association with Mayer Brown has been investing heavily, adding lawyers in other areas such as dispute resolution, anti-corruption and compliance, and tax litigation as well as reinforcing its signature oil-and-gas practice with its absorption of boutique firm Almeida Lopes & Pitta Pinheiro Advogados.
Close cooperation between foreign and local firms is kept to a minimum by the regulations laid out by the Brazilian Bar Association, though Trench, Rossi e Watanabe Advogados, associated with Baker & McKenzie and Tauil & Chequer Advogados in association with Mayer Brown are two examples of successful international associations. Paul Hastings LLP established a São Paulo office in April 2016, in a year which also saw the departure of Baker Botts from Rio de Janeiro; the firm cited local market conditions as a primary reason for its exit.
A recent spin-off from De Vivo, Whitaker e Castro Advogados, Inglez, Werneck, Ramos, Cury e Françolin Advogados was founded as a full-service firm in February 2015. While spin-offs remain a common feature of the market, it is also home to a number of large, stable players, with key names including BMA – Barbosa, Müssnich, Aragão, Machado Meyer Sendacz e Opice Advogados, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados, Pinheiro Neto Advogados, TozziniFreire Advogados and Veirano Advogados.