Public hearing concludes alliances between local and global firms to be reviewed

International law firms could face tougher restrictions in Brazil as the Brazilian Federal Bar Association, Ordem dos Advogados do Brasil (OAB), considers drawing up new rules governing alliances between local and international law firms.

The issue, which was debated in an OAB public hearing last month (7 May), is contentious, as some local practices feel threatened by international firm moves to break into the sought-after market by providing international law advice.

The hearing, attended by groups including the Inter-American Bar Association, the International Union of Lawyers, as well as representatives from the Law Society of England and Wales and various international law firms, concluded that alliances between local and international firms need to be reviewed as they fall outside the remit of existing regulations.

It found existing regulations restricting practice in Brazil apply only to foreign firms and professional consultancies rather than alliances, paving the way for the OAB either to amend current regulations to incorporate alliances or come up with new regulations, with the latter the more likely option.

In the meantime, while attendees voted not to toughen the existing Provimento 91/2000 regulation governing foreign firms in Brazil, it is likely to be more stringently applied, as the local Bar continues to resist the market opening up.

Linklaters, DLA Piper and Kennedys are among the raft of international firms with associations in Brazil, while others to have recently announced plans to open their own foreign law offices, including Hogan Lovells and DAC Beachcroft.

DAC Beachcroft partner Hermes Marangos said: "In all cases, the opening of the market has been accompanied by stricter rules to ensure Brazilian businesses are protected. This recent decision creates uncertainty about how associations will be run and firms will want to be careful – you don't want to invest heavily only to find you can't share in the benefits of your investment."

Co-founder of UK business network LatAm Forum Yves Hayaux-du-Tilly observed: "It will be difficult for the OAB to draw up new rules governing alliances that are very pro-international investment. If no other industry in Brazil has this, why should law be any different?"

The Law Society is set to travel to Brazil later this year as part of a delegation by the Lord Mayor to promote business links between the UK and Brazil and will meet with the OAB as part of the visit to discuss the rules for foreign law firms. A spokesperson said: "We have actively followed the recent debate by the OAB, and it is encouraging to note that it will now consider new rules on alliances between foreign and Brazilian firms."

For more, see Eversheds sets sights on Brazil as UK firms continue to eye up BRIC benefits.