Law firms increase offer of government relation services
The troubled political scenario of 2016 and the illegality in relations between businesspeople and the public power, revealed by investigations such as Car Wash and Zelotes, have shed light on an area hitherto treated timidly by law firms: government relations. The industry has been stimulated recently by the need to systematize a secure, legal and efficient way for companies to deal with office holders.
In December, Brazil’s first law firm specialized in the segment was created in Brasília: MJ Alves & Burle Advogados e Consultores. Led by lawyer Marcos Joaquim Gonçalves Alves, the firm defends interests in the executive, legislative and judiciary branches, including the resolution of litigation in higher courts.
During his 20 years working in the Mattos Filho law firm, focused on corporate law, especially on tax issues, Mr. Alves has built a network of relations with senior officials and businesspeople. At the same time, he fell in love with government relations, which in his view involve the development of studies and arguments not only legal but also economic and social to press for change through the three powers.
The law firm has a code of conduct whereby lawyers may terminate the contract if clients misbehave, such as by directly seeking a public agent to seek advantages. In the work of pressure for legislative changes, proposals must be presented officially to a Congress member on behalf of the sponsoring entity. The goal is to avoid situations of conflict of interest, like bills signed by lawmakers but written by lawyers who defend affected companies. “If I have transparency, I have security. The more light on the subject, the better,” Mr. Alves argues.
He prefers to use the term advocacy when referring to the new activity, which, according to him, involves knowing the industry well, defining the strategic agents involved, and presenting a proposal to a parliamentarian who might be interested in it, for example. In his view, only this last step could be classified as the lobby itself. In the case of the judiciary, the work involves defenses that take into account social and economic aspects, and strategies according to the profile of each minister.
The MJ Alves law firm also has as partners lawyer Fernanda Burle, who worked in Washington as policy director of the Brazil-U.S. Business Council, which represents American companies with business in Brazil, as well as lawyer and political scientist Leandro Modesto.
Also in Brasília, traditional law firms such as Mattos Engelberg Advogados saw a 60% increase in demand for services in government relations last year. The changes generated by the political instability and the alternation of government were other contributing factors. “The high level of legal and institutional insecurity, in addition to the intense reform agenda of the [Michel] Temer government, has boosted this demand,” says lawyer Caio Leonardo Rodrigues, partner at Mattos Engelberg and one of the pioneering lawyers in government relations.
Mr. Rodrigues explains that, until the 1990s, the law firms’ culture was to await the enactment of a bill to go to the judiciary. Today, it’s known that it’s less costly to participate in the decision-making process and try to improve what is being discussed.
Mr. Rodrigues noticed the possibility of working in government relations still in the 2000s, in a scenario of privatizations and creation of regulatory agencies. “I realized that this would require a new type of lawyer, who could speak the private sector’s language and also of the public sector,” he says.
He points out the demand for this kind of service had a first big expansion in 2008, amid the need for the Brazilian state to intervene in the economy and reduce the impacts of the global crisis of that time. But the supply of services in the segment was not yet matured. “Demand knocked on firms’ doors without them being prepared for this,” says Mr. Rodrigues, who notes a greater professionalization of the sector in the last four years.
At Mattos Engelberg, three main services are offered: monitoring of regulatory environment; creation of corporate internal rules for interaction with authorities; and strengthening of both institutional presence and capacity to respond to political, regulatory or institutional risks.
At Tozzini Freire Advogados, the segment was institutionalized last year, responding to an earlier demand noticed in the law firm’s different areas, says Luiz Fernando Visconti, partner responsible for the mining industry and co-chief for government relations. The attorneys monitor bills, suggest relevant topics for discussion by authorities and participate in public hearings. Mr. Visconti highlights the interest of mining clients in discussions on changes to the Mining Code and royalties in 2016. “It’s important to demystify the activity,” Mr. Visconti adds.
The enacting of the Anti-Corruption Law in 2013 is another factor that stimulated demand for services in government relations. At the Barbosa, Müssnich, Aragão (BMA) law firm, the entry into force of this law resulted in a first expansion of the segment at the company, which began to work along with the corporate ethics and compliance areas. “Before the law, customers were already worrying about the right way to relate to the government. With the law and the more rigorous penalties, the importance of the area has grown,” says Eduardo Carvalhaes, partner for the infrastructure, regulation and government affairs area at BMA. Since 2013, the segment has grown 30%, Mr. Carvalhaes says.
A typical case for government relations, Mr. Carvalhaes explains, is of foreigners who come to Brazil and want to participate in bids, in order to understand what they can and cannot do. For this, consultants have a more limited role, according to the lawyer, since they cannot defend clients in any administrative or judicial proceedings. But it’s not uncommon to see in internal investigations or in the creation of compliance programs the joint operation of law firms and consultancies.
“We don’t lobby, but we give advice to clients on how to relate to the government. We don’t approach the government, since today this has no regulation,” Mr. Carvalhaes says. The boundary is the follow-up of bill procedures in Congress.
Demand for government relations services has always existed for the headquarters of the Souza Cescon law firm in Brasília, but has increased in the last two or three years, says lawyer Luciano Inácio de Souza. From the second half of 2015, the area was structured internally.
For Mr. Souza, the business community has realized the importance of knowing what happens in Congress, how the proposals are going, followinh Parliamentary Inquiry Commissions (CPIs) and public hearings, and performinh the risk analysis of the proposals’ impact on the industry in which the client is inserted.
Despite the growing demand for a regulated channel of business-to-government relations, this link is still not well-regarded by society, says Larissa Wachholz, director at the Government Relations Institute (Irelgov). However, she believes that lawyers’ reputation is changing for the better, especially within the corporate world. Two years ago, there was not even a government relations program in Brazil, she says. The offer has been increasing since the first one was created in late 2013.
“Today we believe the area is seen as a new profession,” says Andréa Gozetto, coordinator of FGV Management’s MBA in government relations. In the MBA, students are usually from law, communication or international relations areas. The affinity of lawyers is natural, Ms. Gozetto says, since the defense of interests is the profession’s core, but the approach of government relations is very different from the contentious one. “The lawyer is trained in college to fight, and government relations is anything but this,” she says.