Friday, 13th April 2012 by Clare Bolton

BRAZIL BLOG: Globalisation and its complexities with relation to the legal profession bob back to the surface, finds Clare Bolton

Sitting with President Barack Obama in Washington this week, President Dilma Rousseff embodied well the opportunities and challenges that the globalisation of Brazil’s economy is bringing. Perfectly aware of how much the faltering US recovery needs a big, stable, growing economy of consumers to the south, Rousseff openly criticised parts of US policy, particularly the ‘currency wars’, which, she says, negatively affect Brazil’s growth – showing just how far Brazil has come in developing its role on the international stage. However, the very nature of her concerns, and the ‘safeguards’ her government is placing on the Brazilian economy, show that a primary compulsion in policy making remains to retrench and protect the economy and its industries from global pressures.

Brazil’s legal profession is having similar issues with globalisation. Opinions vary widely on the effect of the trend on the community as a whole, with some insisting that the impact is overstated, and that at best a tiny proportion of Brazil’s hundreds of thousands of lawyers will see any difference to their daily lives at all. Others note that the impact goes well beyond the Big Six - even very small law firms in São Paulo and Rio de Janeiro are seeing an uptick in business from the wave of gringos moving in, while a raft of law firms in the Northeast have significant numbers of European investors as clients, for example. Moreover, they say, while those with an international practice may be a small proportion in terms of numbers of lawyers, when one considers proportional revenue of the legal profession as a whole, internationally-focused work has considerably more relevance.

José Roberto Opice, co-founder of Machado, Meyer, Sendacz e Opice Advogados and winner of Latin Lawyer’s Lifetime Achievement Award in 2012, sees these struggles with the concept of globalisation as a natural process for the legal market of his country. “There are so many foreign law firms here, and there has been a lot of difficulty for Brazilians in accepting these very rapid changes. It has been perplexing for some to accept globalisation and the other players in the market,” he says. “However, the market will be very different here, it will change, there is no doubt about that – although that will take some time, as it did in Europe.” The young lawyers at his firm, and at all others in the marketplace, he says, will face a very different reality and type of legal service, and must prepare themselves for a wholly different type of competition.

Other voices in the industry are opening the discussion on globalisation. Harvard Law School has a worldwide project looking at just this issue, and they have partnered with GV Law in Brazil to help them discover the extent of local issues. At a recent project meeting in São Paulo, Harvard’s David Wilkins was open about how controversial the research is. “There is no universal language or culture...[the discussion] is heated, and the reason for that is that there is much at stake for lawyers and those who depend on them.”

Even the concept of a global lawyer was up for debate – José Luis de Salles Freire of TozziniFreire Advogados, for example, does not believe that globalisation should be changing the way universities teach: “Only a small part of the profession [is affected by globalisation], and the vast majority act within the national boundary. Law schools should have to primarily focus on national subjects, with some cross-border training for those that choose that.” From the perspective of an in-house at a multinational, Daniela Sampaio Doria, general counsel of Rabobank Brazil, does see a global trend, but also that it can have positive and negative effects: a global lawyer, she says, has to know “how to analyse cultures, differences, and how to integrate cross-border transactions”. Relations with law firms are different – “in a global world, we have global fee arrangements, which can mean requiring the local GC to use the global firm. That can cause friction, as sometimes they don’t want to, or they see it as more expensive, or the global counsel don’t get local issues. But the cost pressure means the trend is there.”

These changes in how multinationals use law firms, says Pinheiro Neto Advogados’s Henry Sztutman, will mean that in a globalised world four types of law firms will survive: global firms, especially for sophisticated transactions; leading local full service firms, with whom global firms will struggle to compete on local work; boutiques; and commodity or mass-provision firms, of which there are already very prominent, and profitable, examples in Brazil. Showing the willingness of the project to take the bull by the horns, Harvard and GV Law also invited a Brazilian lawyer who represents a global firm to take part – Ivan Tauil of Tauil & Chequer Advogados - affiliated with Mayer Brown LLP. “A global firm is a community, not an entity; Mayer Brown is a global brand and a joint venture of four independent entities – US, UK, Hong Kong and Brazil,” he explained. “We share technological tools, vision, universal values such as integrity and efficiency (including economic efficiency), and we learn to better manage ourselves....that’s very very attractive for global clients.” Tauil also backed the current OAB regulation on foreign firms. “Our vision is that Brazilian regulation is perfect. It allows global firms in, and they can then make the choice, to make alliances or not – an individual business decision for each one.”

By saying this, and by discussing the “freedom of Brazilian firms to associate”, Tauil is of course referring to the recent proposal by the OAB to significantly tighten the regulation of foreign firms, rigorously restricting any physical, financial, administrative and promotional connection between Brazilian and international firms. A public hearing on the matter has now been set for 7 May, but even before that something of a backlash is in evidence. A number of the association firms in Brazil have told Latin Lawyer that they believe the new proposal to be frankly unconstitutional, and that they will vigorously oppose any attempt by the OAB to regulate the profession on such a basis. Moreover, public opinion is setting against the tighter rules: “The protectionism of the OAB is incompatible with an open economy such as Brazil’s,” trumpeted a recent editorial in newspaper Estado de São Paulo. “If multinational companies can do business in Brazil, and Brazilian groups can do business across the world, how can the ban on foreign law firms be justified?”

Yet to complicate matters further, it seems foreign firms themselves are among those least willing to fight for what Estado de São Paulo might call their right to do business here. No-one wants to be the one with their heads above the parapet – undoubtedly sensible, given the local climate of opinion on the matter – and moreover the association model itself is looking to be on ever-shakier business grounds, as rumours persist of the imminent dissolution of one of the few remaining affiliations in Brazil. Even if the new proposal is shot down on 7 May, how many firms will want to go down the association path? The diplomatic and commercial globalisation of Brazil as a whole continues unchecked, but a healthy dose of caution from both international and local firms might mean that the legal profession will be evolving for some time yet.

(Latin Lawyer 13.04.2012)

(Notícia na Íntegra)