Christian Wisskirchen, Head of International Relations of the Bar Council, and Frederico Singarajah, a member of its International Committee, look at the growing legal services market in Brazil.
The fact that the legal services market of Brazil is attracting increasing interest from law firms around the world should come as no surprise, given the country’s rapid economic growth in recent years as one of the emerging national economies (along with Russia, India, China and now South Africa, the so-called “BRICSs”).
Brazil is now the 6th largest economy in the world, overtaking the UK approximately a year ago, and predicted to become the 5th largest within the next decade. Most recently, its economy has been further boosted by the successful bids to host the World Cup in 2014 and the Olympics in 2016.
The 2014 World Cup is expected to inject c. £34bn into the Brazilian economy. There will be 12 host cities and the Brazilian government is keen to create a legacy throughout the country, such as improved transport infrastructure, stadia, training centres, etc. As well as developing the Olympic Park, Rio de Janeiro is planning to invest US$2.7 billion in transport infrastructure, in port regeneration and to increase the number of hotel rooms by 42%.
The UK is the largest European investor in Brazil and the fifth largest overall. UK exports to Brazil were up significantly by 26% last year. This in turn makes for a growing use of English law, which already is reasonably widely used in Brazil, particularly in relation to shipping, project finance, insurance/reinsurance contracts and other areas of international trade.
It is not difficult to see that, given the combination of a very rapid influx of investment and the enormous time pressure to complete all the infrastructure projects for both the World Cup and the Olympics, a considerable number of international legal disputes are likely to arise in the near future, which the English Bar is extremely well placed to help resolve.
Legal services opportunities
Brazil is Latin America’s largest country and largest economy. It therefore comes as no surprise that Brazil is home to one of the most developed legal communities on the continent. The Brazilian Bar Association (Ordem dos Advogados (OAB)) has over 700,000 practising members, the second largest number in the Americas after the United States.
In 2012 there were twenty foreign law firms registered with the Brazilian Bar Association, of which 14 are based in Sao Paulo and 6 in Rio de Janeiro. Eight of these law firms have registered in the last two years.
Yet there remains strong opposition from large numbers of Brazilian commercial lawyers to this influx and the OAB retains considerable restrictions on the work foreign law firms can undertake in Brazil. However, they do not affect the work which barristers in private practice may wish to undertake for Brazilian firms or lay clients.
From the Bar’s point of view it is good news that among the internationally operating Brazilian firms in Brazil (and this is also true for local firms in other South American jurisdictions), there appears to be no desire to enter into any exclusive arrangements with foreign firms. Many Brazilian law firms have close links with English firms, but when we visited Brazil last October, they were keen to learn what the Bar may be able to offer by way of direct supply of legal services. Now is the time for individual barristers to engage with the Brazilian profession.
As far as opportunities for the Bar are concerned, the State of Sao Paolo is highly developed in the legal areas of infrastructure, insurance/reinsurance, shipping, banking, commodities, aviation, shipping and construction, while Rio de Janeiro has as its main areas media and intellectual property, oil and gas, shipping, construction and aviation.
The Brazilian judicial system remains relatively slow, costly and somewhat unpredictable. As such, litigating in a foreign jurisdiction (where possible) and electing arbitration are central features in many types of international contracts and foreign investment. International arbitration is now established under the Brazilian Arbitration Act 1996, but is still in its infancy. There is no major international arbitration provider present, and London-based or supervised arbitration is a real alternative to the International Chamber of Commerce (ICC) Rules, which are the most commonly used at present. We firmly believe that support from the Bar for establishing better arbitration systems would be welcome.
There are also opportunities arising for members of the traditionally publicly funded bar. The most obvious one appears in the field of business crime and anti-corruption/money-laundering. The Brazilian government and its business community are painfully aware that Brazil remains too low down Transparency International’s Corruption Perceptions Index (69th place). They are keen to ensure compliance with international standards such as the UK Bribery Act, which is creating opportunities for advisory work, notably as Brazil is preparing very similar legislation. In addition to crime-related work, there appear to be openings in family (jurisdiction dispute, child abduction, immigration advisory work) and human rights work, for private client practitioners.
The Bar Council’s response
Given these developments, the International Committee of the Bar Council has made Brazil a priority. Last October we (Frederico having been co-opted onto the committee as a native Brazilian with a practice largely focused on Brazil) visited Sao Paolo, Brasilia and Rio de Janeiro, exploiting the opportunity created by both the Lord Mayor and the Law Society visiting Brazil at the same time.
We succeeded in establishing good relations with the OAB’s federal leadership in Brasilia and its branches in Sao Paolo and Rio de Janeiro, the British Chamber of Commerce’s offices, local officials of our valuable supporters UK Trade & Investment (UKTI) as well as local law firms. There was great interest in engaging with the Bar Council and barristers. The Federal OAB offered us a Memorandum of Understanding, which we have now accepted as a basis upon which to develop our relationship. Through this visit we laid the groundwork for a first significant delegation from the Bar, which we are now planning to steer to Sao Paolo and Rio de Janeiro in the first quarter of 2014. This opportunity will be widely advertised and we expect significant interest from the profession.
Ahead of this, we will very soon be holding a seminar at the Bar Council on 4 March to talk in more detail about the Brazilian legal market and assist with the launch of a Bilateral Law Association, Lex Anglo-Brasil, on 11 March, which will bring together lawyers from both jurisdictions for professional learning and networking. Moreover we will soon be setting up an Interest Group for barristers interested in South America. Anyone interested in this or any of the aforementioned events should contact the International Team.
There are immense opportunities in the Brazilian market for those willing to invest time, energy and a bit of money. We found that Brazilian lawyers are very keen to establish links with the English Bar to mutual advantage, and we look forward to working with many of you on this exciting country in the future. Brazil may not be the easiest market to penetrate, but if you put in the effort, you will enjoy the benefits of a fast developing economy, interesting legal issues, competent local lawyers, a wealth of work and the opportunity to be involved with a nation of warm, welcoming and infectiously happy people.