Brazil – The new Government and what to expect for the Legal market

Rio de Janeiro aerial view

We are halfway through 2019 and have now had a glimpse of Brazil’s new Government’s performance, led by President Jair Bolsonaro.

There is no hiding from the fact that the new President, dubbed “Trump of the Tropics” by the Brazilian media for his extreme views, is a controversial figure. Several of his quotes as President have sparked rebellion amongst many in Brazil and overseas.

Recent revelations of private conversations between prosecutors and Justice Minister Sergio Moro – Bolsonaro’s main ally – have suggested wrongdoings when Moro was judging the case against former President Lula. These allegations have increased scepticism on whether the new Government has the ability to stop corruption and get the country back on track.

 However, there are reasons to be optimistic. According to a recent article from Forbes, it looks like Wall Street is happy. Despite the slower than expected first half, the recent progress made towards passing the crucial pensions reform and the new Government’s bold privatisations plans seem to have boosted investors’ confidence in the months ahead.

Assuming the plan goes smoothly, investment in infrastructure is to reach approximately R$ 250 billion (4% of the country’s GDP) by 2022, with much of this new investment expected to come from foreign investors. The volume of M&A transactions and share offerings for the second half of the year are likely to be bolstered by the privatisations of state-owned assets. Furthermore, the fast growth of start-ups – a main target of investors – is anticipated to be another driver for M&A activity.

We are yet to see how things will play out for Brazil in the upcoming months, but there is no question about the potential of its market. As the largest economy in Latin America, Brazil is one of the few emerging countries that can combine its potential for growth with market scale, making it a very attractive market for any business that wants a presence in the region.

Despite the restrictions that prevent international law firms from advising on Brazilian law and entering into partnerships with local firms, Brazil has proved to be a very lucrative market for major global law firms. There are currently over 20 international law firms with offices in Brazil, and we should see more global practices expanding their presence to Brazil in the next couple of years.

With the increasing number of international law firms entering the Brazilian market and the uptick of transactional areas such as M&A, Capital Markets, and Project Finance, I foresee interesting times ahead for highly skilled US and UK qualified lawyers who are considering their options locally or looking to relocate to Brazil. It is worth noting that fluency in Portuguese remains a deal breaker for most vacancies, so if you are serious about relocating there, I suggest you start taking Portuguese classes.

Please get in touch with our colleague Thiago Silva to discuss opportunities in Brazil.