Legal market overview in Brazil

2022 was a challenging period for dealmakers around the world, and Brazil was no exception. Following a record-setting year marked by the highest annual value and volume of capital markets and M&A transactions, the country’s economic growth slowed in line with global and local macroeconomic uncertainties, mounting geopolitical tensions and a hotly contested election, which saw the return of Luiz Inácio Lula da Silva to the presidency twelve years after he vacated the seat.

Despite the slowdown in transactional activity, overall deal values remained above pre-pandemic levels and GDP reached 2.9%, surpassing expectations. The energy, natural resources, technology, financial services, consumer goods and industrial sectors topped the M&A charts, while the nation’s sluggish capital markets failed to attract IPOs, and were instead characterised by the prevalence of follow-on offerings.

Evoking his previous time in office, Lula da Silva, leader of the left-leaning Worker’s Party, beat populist right-winger Jair Bolsonaro with 50.9% of the votes, the narrowest margin in Brazil’s modern history. Pledging to eradicate hunger, increase wages, social benefits and public works, Lula inherited a deeply divided country battling strained public finances, rising poverty, international isolation, rampant deforestation and a multibillion-dollar accounting scandal surrounding Americanas, the nationwide retail chain. His resilience was to be tested the week following his inauguration in January 2023 when rioters stormed federal government buildings in a failed insurrection, provoked (in part) by false fraud claims by the defeated Bolsonaro – who has since been banned from running for office for eight years – about the nation’s electronic voting system.

Despite the expected apprehension in the lead-up to the 2022 presidential election, Lula’s victory and subsequent appointment of finance minister Fernando Haddad were welcomed by investors, who increasingly look to Brazil as a more geopolitically stable market than many jurisdictions in Asia.

The country’s new fiscal framework – the president’s first legislative win – paved the way for a major public works programme underpinned by R$370bn of federal funds over four years. Energy, transport, water and sewage, healthcare, education and internet access are all priority areas under the new scheme, which will count on key engagement from both state-owned enterprises and private sector players through infrastructure concessions and public-private partnerships (PPPs). Public and development banks, including the BNDES, are expected to have a bigger involvement in the financing of projects, according to market commentators. In light of the current government’s interventionist approach, lawyers also foresee a deceleration of the wave of privatisations started during the Bolsonaro administration, which included the privatisation of Eletrobras, Latin America’s largest utility, in June 2022.

In his first year in office, Lula has also unveiled an ambitious green transition plan. Putting environmental protection at the forefront of the political agenda, the initiative aims to curtail deforestation – which decreased by more than 33% in the first six months of 2023 compared with the same period the previous year – and foster ESG-driven commercial opportunities, including a vast market for voluntary carbon credits covering more than 400m hectares in the Amazon biome. In addition, the plan also envisages the redistribution of public funds for the development of renewable energy projects, both solar and wind, in Northeast Brazil.

Long awaited by companies, investors and the public alike, a historic tax reform, which had been in the making for over thirty years, was approved by Congress in August to simplify a complex and opaque web of duties and levies. Companies and investors will continue to rely on sophisticated tax advice to navigate the ever-changing Brazilian tax regime.

In other developments, the Fake News Bill approved in May 2023, aiming to fight online misinformation and regulate digital markets, has drawn criticism from media platforms and content-hosting websites which will now face stricter requirements in the management and reporting of illegal material, as well as hefty fines for failures to do so. Technology companies were already experiencing a tough period, plagued by rising interest rates, a liquidity crisis and a risk-averse investment environment. The resultant shift in the venture capital market has given prominence to local investors and corporate venture capital structures.

Lula’s win also heralds a shift in foreign policy. A strong supporter of a participative and interventionist government, the president is looking to reverse course on his predecessor’s nationalist policies by reinvigorating multilateral organisations and reestablishing connections between Brazil and key trading partners, such as China, the US and Europe. This could bring about a rise in foreign investment as the nation becomes more business friendly to international players.

Brazil’s legal market hosts a large number of full-service firms. These include BMA Advogados; Cescon Barrieu; Demarest Advogados; Lefosse Advogados; Machado Meyer Sendacz e Opice Advogados; Mattos Filho; Pinheiro Neto Advogados; TozziniFreire Advogados; and Veirano Advogados.

The Brazilian Bar Association restricts close collaboration between Brazilian and international law firms. Despite this, a number of successful international associations do exist, including Trench Rossi Watanabe, which is associated with Baker McKenzieTauil & Chequer Advogados, which benefits from its ties with Mayer Brown; Campos Mello Advogados in cooperation with DLA Piper; Vella Pugliese Buosi e Guidoni Advogados, which maintains a strategic alliance with Dentons; and more recently FAS Advogados, in cooperation with CMS, which entered into a cooperation agreement with CMS in October 2023.

Strong boutiques remain key players in the Brazilian legal landscape. Among the best are those that specialise in dispute resolution, IP, labour, white-collar crime, antitrust and environmental law. Ferro, Castro Neves, Daltro & Gomide Advogados, Sergio Bermudes Advogados, Dannemann Siemsen Advogados, Kasznar Leonardos Intellectual Property, Gusmão & Labrunie, Davi Tangerino Advogados, Iokoi Advogados, Grinberg Cordovil Advogados (GCA), and Milaré Advogados are a few examples.

Brazil’s dynamic legal market sees regular change, as smaller players spin off from traditional and well-established firms to create new outfits. Recently established firms include HRSA Sociedade de Advogados, set up by former Huck, Otranto, Camargo Advogados’ lawyers; dispute resolution boutique Xavier Gagliardi Inglez Verona Schaffer, founded by highly regarded partners who were previously at Demarest Advogados; Gandelman & Costa Dias Advogados, created by former Souto Correa Advogados‘ practitioners; VAK Advogados, set up by former members of Vella Pugliese Buosi e Guidoni Advogados; Souza Okawa Advogados, formed by lawyers who were previously at Madrona Advogados; international trade boutique MW Trade, established by a team of former Mundie e Advogados‘ practitioners; and Martins Villac Advogados, founded by attorneys who were previously at Peixoto e Cury Advogados.

In other market developments, Madrona Advogados merged with Belo Horizonte-headquartered Fialho Salles Advogados in February 2023 to create Madrona Fialho Advogados, while insurance powerhouse DR&A Advogados and CAL – Costa & Albino Sociedade de Advogados combined in May 2023, forming Costa, Albino & Rocha Sociedade de Advogados (CAR).

Beyond these, several international firms maintain offices in the country, including Cleary Gottlieb Steen & Hamilton, A&O Shearman, 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, the hub of its growing Latin America practice.

Practice Areas