Hogan Lovells has announced the opening of an office in São Paulo, adding to its existing presence in Rio de Janeiro, where the firm opened a bureau last year.
The São Paulo branch will operate as a foreign legal consultancy, offering international legal capabilities to Brazilian and non-Brazilian companies and financial institutions that are entering or already doing business throughout Brazil and the rest of Latin America, as well as Brazilian companies pursuing opportunities abroad.
The firm’s earlier decision to open in Rio was novel, as most international firms opt for São Paulo, but the new development is an obvious strategic move. Some regard the firm’s relationship with Petrobras as one of the key reasons behind the latest opening.
The São Paulo team will be led by capital markets specialist Isabel Costa Carvalho, formerly of Clifford Chance. She will be a partner in São Paulo, bolstering the firm’s cross-border corporate, equity capital markets, and debt capital markets practices.
Costa Carvalho specializes in international capital markets transactions, including having served as counsel in over 50 IPOs and a variety of debt transactions. She recently handled the largest IPO in Latin America in the last five years - an IPO for BB Seguridade with an estimated value of US$6 billion. She also assisted major Brazilian corporate clients on high-profile international banking and cross-border M&A work, including Asian and African deals. Moreover, she handles the NYSE listing for Brazilian airline TAM.
Costa Carvalho, who spent more than two decades practicing law at Clifford & Chance, said the decision to join Hogan Lovells was because of the firm’s global footprint.
“The firm offers me and my clients exciting new opportunities,” she said. “The offices in Brazil are perfectly positioned to complement our New York- and London-based capital markets practices focused on Latin America. I believe my deep knowledge of Brazil’s legal and business environment will assist Hogan Lovells to develop further its existing knowledge and client base to make us the preferred law firm on the ground. My international capital markets and corporate expertise complements perfectly well with the Rio office’s banking and infrastructure and project development and finance expertise.”
International firms in Brazil
Local partners are generally receptive to the firm’s growing presence in the country, but amid the positive reactions, concerns continue to be voiced about the ongoing restrictions faced by international firms working in Brazil.
Marcelo Perlman, a name partner of Perlman Vidigal Godoy Advogados, said that while the local community is welcoming, international firms face regulatory hurdles and the limitation that the Brazilian Bar Association has set. He calls the restrictions unreasonable.
“I believe that such limitations are not reasonable and should be lifted,” he said. “International firms should be allowed to practice local law, through their own local attorneys duly enrolled with the Brazilian Bar, without risk of unregulated legal advice. International law firms would, if allowed to practice local law, generate work opportunities for local lawyers, inspire quality improvements to local legal services, and, rather than represent a threat, help attract a perception of greater added value in the work of the existing local firms which can truly deliver top-notch services.”
The restrictions create a limited market for international firms as it stands, as Ana Carolina Barretto of Veirano Advogados highlighted.
“The market hasn’t changed much and foreign law firms can’t practice local law so they are all competing for a very small piece of the pie which involves advising international companies doing business in Brazil,” she said.
Under the current regime, the decision faced by international firms opening in Brazil is either to act as a consultant in foreign law, which is allowed by the regulations, or to try to enter into a "partnership" with a Brazilian firm. Paulo Coelho da Rocha, a partner at Demarest Advogados, noted that most internationals have moved towards the first option.
“Most foreign firms that had a stronger presence in Brazil through partnerships with Brazilian firms dissolved their arrangements apparently because they took into account the Brazilian Bar regulations which are restrictive,” he said.
Firms also face a decision over location. Hogan Lovells’s decision to opt initially for Rio was out of step with most internationals, which favor São Paulo.
“São Paulo holds a lot of relevance,” Perlman said. “Brazil is not undergoing significant growth but it is an important and promising market for firms. The country is large and relevant and the economy has opportunities that still lie within. Rio has specific niches that [Hogan Lovells] benefits from tremendously. São Paulo has a more corporate and finance quality to it. Those are very separate regions that complement each other. So, it makes sense.”
Overall international firms still face significant challenges when trying to break into the market: “Brazil’s legal market is a tough egg to crack,” Perlman says. “It takes time to crack and a lot of commitment and investment. It does require some time for the firm to build a local reputation and show clients that it’s a long-term Brazilian partner that is here to stay.”