Legal Market Overview
The social and economic crisis triggered by the Covid-19 pandemic had devastating effects in Brazil, leading to a 4.1% GDP decline in 2020, followed by a partial recovery in 2021. Unemployment remains above pre-pandemic levels, while the poorest and most vulnerable continue to be the hardest hit.
Double-digit inflation, major disruption in global supply chains, higher commodity prices, rising interest rates and climate change’s impact on domestic farmland were among the key challenges Latin America’s biggest democracy was facing, as it entered a tremendously contested and polarised presidential election, its most consequential in decades.
Brazil’s 2022 elections saw familiar faces on the ballot. Following a heated showdown, former president and leader of the Worker’s Party Luiz Inácio Lula da Silva, who was cleared of corruption charges last year, beat far-right incumbent Jair Bolsonaro with 50.9% of the votes in a second round run-off on October 31. Lula, whose key priorities include helping the 100 million Brazilians living in poverty, building affordable housing and lowering deforestation by at least 83%, was welcomed by world leaders and conservationists alike. Despite his efforts to unite a divided Brazil, Lula is still likely to face stiff opposition when he takes office in January 2023, as lawmakers close to Bolsonaro make up the majority of the seats in Congress.
Looking back at 2021, law firms reported a substantial uptick in capital markets and M&A activity. The country set a record for primary and secondary offerings, and M&A transactions reached a 10-year peak.
While IT, healthcare and energy topped the M&A charts, the retail, industrial, agribusiness, oil and gas, and education segments also experienced increased movement and consolidation. The mid-market space was dominated by deals in the technology sector, which have doubled in count since 2016. Brazil’s buoyant start-up and technology environment has led law firms to strategically create venture capital-focused teams to address the pressing needs of clients in this space.
Transactional activity wasn’t solely driven by private players. In fact, the government’s aggressive sale of public assets and state-owned businesses attracted major interest from investors looking to pursue longer-term investments in the infrastructure sector.
New projects, transport and water treatment concessions, and privatisations – including that of power company Eletrobrás – have opened the door for different private actors, including private equity funds and international investors, to enter the domestic market. Petrobras’s divestment of assets and companies, which will ultimately reshape the Brazilian oil and gas sector, and the approval of a new regulatory framework for the water supply and sanitation sector are also likely to draw the attention of a diverse group of local and foreign investors.
Supporting the transition to a greener growth model remains a unique challenge for the country, which is home to more than 60% of the Amazon rainforest. Renewables make up almost 80% of Brazil’s national grid, but high exposure to climate risks, deforestation and a history of environmental disasters, coupled with Bolsonaro’s rollback of environmental protections, call for a stronger reform agenda.
Turning to Brazil’s legal scene, the market is dominated by full-service firms, including BMA – Barbosa, Müssnich, Aragão; Cescon Barrieu; Demarest Advogados; Lefosse Advogados; Machado Meyer Sendacz e Opice Advogados; Mattos Filho; Pinheiro Neto Advogados; TozziniFreire Advogados; and Veirano Advogados, all sizeable outfits that combine bench strength with broad practice area expertise.
Well-known boutique firms also remain key players in the legal landscape, especially in the areas of dispute resolution, competition and antitrust, white-collar crime and intellectual property.
Though international law firms are prohibited from providing advice on Brazilian law, a number of successful international associations do exist. These include Trench Rossi Watanabe, which is associated with Baker McKenzie; Tauil & Chequer Advogados, which maintains a strategic alliance with Mayer Brown; Vella Pugliese Buosi e Guidoni Advogados, which cooperates with Dentons; and Campos Mello Advogados in cooperation with DLA Piper, which benefits from its ties to DLA Piper LLP (US).
Beyond these, an entire swathe of international firms maintain offices in the jurisdiction, including Cleary Gottlieb Steen & Hamilton, Allen & Overy LLP – Consultores em Direito, Norton Rose Fulbright, Simpson Thacher & Bartlett LLP, Jones Day and Paul Hastings LLP, among others (see: Latin America: International firms). The most recent arrival is West Coast technology and venture capital specialist firm Gunderson Dettmer LLP, which opened a São Paulo office in July 2022, which will become the hub of its growing Latin America practice.