Business Strategy & Client Development Seminar in Sao Paulo

Any affiliations between international and Brazilian law
firms have been judged outside the limits of local regulations by the São Paulo
bar association, in a move widely interpreted locally as a sign of the bar’s
increasing rigidity in the face of an influx of international firms.

The decision on Thursday by the ethics and disciplinary
tribunal of the São Paulo division of the Ordem dos Advogados do Brasil is an
advisory one, designed to reaffirm the law rather than to judge on any specific
firm. Nonetheless, it is a strong indication of how the tribunal might decide
if a case is brought against one of the US or UK firms or their local alliance
partners.

The tribunal reached a decision having consulted CESA,
the law firms’ association. Its head, Jose Luis Salles Freire of TozziniFreire
Advogados, said that CESA, which contains firms with and without international
affiliations, “has done as much as it could or should do, which is provide
information to the Bar. The decision now rests with them, as the
regulator.”

He also noted an opinion widely held among his peers in
the legal community in São Paulo. “The issue here is of one of the
independence of Brazilian law firms. That will be the critical issue in any
future decision.”

The OAB regulation at the heart of the debate is number
91, passed in 2000, which states that lawyers in Brazil cannot associate with
non-lawyers, including accountants or economists. The tribunal decided that
under Brazilian law, foreign legal consultants are not lawyers, and thus
associations are impermissible. “There is a fundamental principle that the
only person that can be considered a partner is a lawyer, which is the
difference between a qualified lawyer and a university graduate,” said
committee member and university professor, Luiz Antonio Gambelli.
“[Foreign lawyers] are consultants in foreign law.”

The firms most under the spotlight are Mayer Brown LLP and its local alliance firm Tauil &
Chequer; DLA Piper and its affiliate Campos Mello Advogados; and Linklaters  and its local entity, Lefosse Advogados in
cooperation with Linklaters Other international firms with local presences – such as Baker & McKenzie
LLP Squire, Sanders & Dempsey LLP, or the Spanish firms – are not thought to be the subject of possible investigations. Those firms only acting as foreign law consultants are in the
clear.

Almost all of the ethics committee agreed that law firm
affiliations violated regulations, with only one dissenting voice: Eduardo
Teixeira da Silveira of Lobo & de Rizzo Advogados He said there was no rule specifically prohibiting affiliations, and thought
that interpreting rule 91 as a specific ban was stretching its intention. He
argued instead for a strict regulation of associations to ensure Brazilian
firms remained independent.

According to Folha de São Paulo, the rapporteur, Cláudio
Felipe Zalaf of Cláudio Zalaf Advogados Associados, responded: “When I
want to avoid burglars getting into my house, I lock the doors and windows.
Eduardo has just closed the windows.”

José Eduardo Haddad of Haddad, Malheiros, Casoni e Ruzene
Advogados Associados agreed with Zalaf that foreign consultants are not lawyers
in Brazil. “An express prohibition does not exist, but simply that it is
because there cannot be a base for such a prohibition, because the provisions
remain absolutely closed on the issue.” Other members of the committee
expressed support for Teixeira, but felt unable to side with him. Gilberto
Giusti of Pinheiro Neto Advogados  congratulated him, but said the regulation
was clear and gave no room for further discussion. “The tribunal has to
recognise what the law gives us.”

The international law firms and their local alliances did
not want to publicly comment, but those that Latin Lawyer spoke to expressed
surprise at the “radical” decision. “It is a decision based on
fear and on protectionism, but it is also one-sided: we, certainly, were not
given the opportunity to present our case,” says one Brazilian partner of
a firm with an international alliance. “I am confident we are within the
regulations and look forward to being given the chance to prove that to the
OAB.”

A local lawyer from an independent firm voiced the
opinion of many in the community. “It does not look good for them – the
Bar is known for its rigid application of the rules and its resistance to
change,” he said. “But I, for one, hope the rules stay in place. I’m
confident of my ability to compete against the other leading firms here. But
Brazilians don’t have the deep resources or strength to fight off the global
firms, and it is not fair competition to ask us to do so.”

Short notice, but in case any of you are in Sao Paulo and would like to attend a seminar that I’m presenting along with my partner, Janet Stanton-hosted by Hudson Legal-here’s the pertinent info: