Linklaters has ended its Brazil cooperation agreement with Lefosse Advogados as a number of law firms rethink their local operations amid faltering hopes for market liberalisation.

The firm called time on the agreement in October after the Brazilian Bar unanimously voted to uphold the rules for foreign firms in Brazil, which allow firms to offer international legal advice but stipulate strict demarcation between foreign and local practices.

In a statement, Linklaters said: "Our cooperation agreement with Lefosse ended in October to order to comply with the new regulations. Consistent with these regulations, Lefosse and Linklaters continue working together to serve clients, on a matter-by-matter basis, based on the strong 'best friends' relationship we have built over the last 12 years."

The firm will maintain its Sao Paulo base – which it launched in association with Lefosse in 2001 – with office head Alberto Luzarraga splitting his time between the base and New York. 

Meanwhile, Squire Sanders is set to close its Rio de Janeiro office at the end of this year with foreign consultant Timothy Smith leaving. The firm ended its association with Derraik Advogados last year.

Elsewhere, Mayer Brown, which remains associated with Tauil & Chequer Advogados, no longer has its own presence on the ground after its three-partner Sao Paulo office was closed down last year. 

Simpson Thacher Sao Paulo co-head Todd Crider said: "For firms targeting local law, the regulations are chasing them from the country. I think there will be a shake-out in the near term and many firms will either scale back or depart – the reality is too many international firms piled into Brazil too fast."