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“Clear the books”

    Numbers in Color, by Jasper Johns, 1959: “Baker McKenzie both supports and expects Trench Rossi Watanabe's compliance with the Bar Association and all other local law requirements”

annals of law

“Clear the books”

What happened when investigators knocked on the door of one of Brazil's largest law firms

Ana Clara Costa | Edição 189, Junho 2022

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 versão em português

Translated by Meg Weeks

From his office at 815 Connecticut Avenue, overlooking the White House gardens, the lawyer Kevin O’Brien dispatched an email to the more than six hundred principals – the partners who composed the top echelon – of Baker McKenzie, the largest law firm in the US and one of the largest in the world. At the time, Baker McKenzie partners worked from branches in thirty-six countries, including Brazil. The email included memos written by six lawyers in the running to become chairman of the firm’s Executive Committee, which comprises the eight most important partners from across the firm’s various branches. The committee sets the course for the firm as a whole, whose clients include corporate giants such as Abbott Laboratories, Oracle, and Google.

One of the memos that O’Brien attached was by Eduardo Cerqueira Leite, a veteran lawyer from Brazil with an undergraduate law degree from the Universidad de la República in Uruguay and graduate degrees at the Universidade de São Paulo and New York University. In it, Leite laid out the professional and personal qualities that left him poised to step in as chair. In a sequence of numbered paragraphs, he cast himself as “decisive,” having “charisma,” “honesty,” “integrity,” “courage,” and the “ability to inspire,” and backed up the claims with real-life examples. Recipients of the email were informed that the best example of Leite’s leadership skills came during his time at the head of Baker McKenzie’s offices in Brazil. He wrote: “When I became managing partner in Brazil, our offices were underperforming, dysfunctional groups abounded, partner tensions were too frequent, we often had inconsistency and quality issues, we faced generational clashes, we regularly received complaints from other offices about our work, and we didn’t have a diversified client base. Our lawyers were fragmented, competitive with each other, not collaborative and we were dealing with a unique crisis in Brazil and Latin America.” After describing the difficulties that Baker McKenzie had faced, Leite detailed how he had taken them on and transformed its Brazilian operations into one of the global firm’s highest-performing offices, producing sizable profits even in the wake of the financial collapse in 2008, two years prior.

The memo worked. Leite was elected chairman of the Executive Committee in late 2010 and re-elected for another term, serving through 2016, when he retired. Leite’s tenure marked the first time a Latin American occupied the top position at Baker McKenzie, where he had started as a partner at the firm’s Brazilian branch in 1986. Later, as head of the firm’s Brazilian operations, he had served as an intermediary between its local offices and those abroad. His political savvy had earned him a seat on the Executive Committee representing Latin America, a position he had occupied before ascending to the chairmanship.

In 2004, Christine Lagarde, currently serving as president of the European Central Bank, was the chairwoman of Baker McKenzie’s Executive Committee, the position that Leite would occupy six years later. Lagarde had started out at the firm’s Parisian offices in 1981 as a junior lawyer, when she was 25 and a recent graduate of the Université Paris Nanterre’s law school. Lagarde had a solid run at the firm, but she left in 2004 to become the Ministry of Foreign Commerce in the Jacques Chirac administration. On October 5 of the same year, shortly before she left Baker for good, Lagarde sent an email to Leite – who was then heading up the Brazilian branch, based in São Paulo – in which she subtly reprimanded him.

In her message, Lagarde explained that Baker McKenzie had created a new corporate structure, headquartered in Zürich, Switzerland, to provide the firm with more robust legal protection from oversight mechanisms. In practice, this legal protection involved the creation of a series of companies in multiple jurisdictions, including in tax havens, to break up the group’s capital. It was a common practice in the market, designed to minimize risk: if the company were to be targeted with lawsuits, its capital wouldn’t be concentrated in a single location. Internally, the move was dubbed Project Fairmont. The maneuver was not illegal, but it was intended to circumvent trouble with the law, and arose on the heels of a scandal: when Enron went bankrupt in 2001, Arthur Andersen was subsequently convicted of having cooked its clients’ books, in what became one of the biggest accounting fraud schemes in history.

In order for Project Fairmont to move forward, all of Baker McKenzie’s clients would have to be notified of the change. And Lagarde was irritated because the firm’s Brazilian clients had yet to be informed. “I hope that the client notification process, which helps all of us to achieve the liability protection which Project Fairmont is intended to bring about, can be completed as expeditiously as possible PLEASE,” Lagarde wrote, resorting to all caps to emphasize her point. In the email, she listed the partners working at the Brazilian branch and the number of clients that each managed; Leite alone was responsible for 82.

These two events – Leite’s election to the chairmanship and Lagarde’s admonition several years earlier – would have been business as usual for a large law firm with branches all over the world, if it weren’t for one detail. At the time, Leite worked at Trench Rossi Watanabe, a well-regarded Brazilian law firm based in São Paulo, which operated functionally as a branch of Baker McKenzie, an arrangement not permitted by Brazilian legislation. A 1994 law, Lei 8906, which regulates the practice of law in Brazil, prohibits foreign firms from establishing offices in the country and competing with local ones. By the letter of the law, Baker McKenzie should not have been operating a Brazilian branch. Nor should it have been representing Brazilian clients in local courts, as it seemed to have been doing.

 

For the last six months, piauí delved into the story, and is now able to show how Trench Rossi served as something of a front for the US firm – a barriga de aluguel, or “belly for rent,” an expression used by several sources to describe the nature of the relationship between the two entities. Over those six months, piauí interviewed twenty-seven people in the legal community in São Paulo, Rio de Janeiro, and Brasília, whether in person, over the phone, or by video conference. Most asked not to be identified because of former or current employment ties to law firms mentioned in this article or because they had served on the board of the Brazilian Bar Association (Ordem dos Advogados do Brasil, or OAB), which is undertaking its own confidential investigations into the presence of foreign law firms in the country. In addition to these interviews, piauí was able to access over a hundred documents pertaining to the partnership formed between Baker and Trench – mainly emails, some of which were filed as evidence in court proceedings, as well as spreadsheets, correspondence, internal presentations, and reports.

In order to keep on the right side of the law, partnerships between Brazilian and foreign law firms must be limited to cooperation agreements. In the legal community, however, it is an open secret that some firms’ partnerships go beyond mere cooperation—a practice that the OAB, given limitations on access to private data, cannot easily regulate. What the legal community is generally not privy to are the details of this sort of partnership (which can even include financial interdependence and the subordination of a Brazilian bureau to an international firm) and the internal measures adopted to ensure that compromising information never sees the light of day.

The prohibition on foreign law firms operating in Brazil was instituted with the support of the OAB. The law establishes a type of market reserve for Brazilian firms, along the same lines as laws created to shield certain economic sectors from external competition. Legislation limiting foreign participation in the communication and energy sectors was a boon for Brazilian firms, one that the country’s lawyers were quick to demand themselves. According to the rules, a foreigner can only practice law in the country in two specific circumstances: as a foreign lawyer registered with the OAB or as a consultant on laws of their country of origin, not on Brazilian legislation.

To circumvent the 1994 ban, Brazilian firms began securing “cooperation agreements” with foreign law firms that did not involve—at least officially—shareholder participation in Brazil. When such agreements do involve some type of shareholder action, Brazilian firms functionally become branches of international companies. In 2010, when this strategy began to expand, spurred by increased foreign interest in an economically ascendant Brazil, defenders of the market-reserve legislation asked the OAB to intervene.

The following year, the OAB opened a case to investigate the issue, and in 2012, the plenary of the Federal Council of the organization reinforced the ban. “Lawyers or partnerships of lawyers that associate in any form with foreign lawyers or foreign law firms are committing an ethical infraction,” the body declared in a statement written by the case’s rapporteur, Marcelo Cintra Zarif. “Under no circumstances, through no workaround, may foreign firms operate on Brazilian soil on matters of Brazilian law, much less through simulated associations.”

The articles of incorporation of Trench Rossi Watanabe, registered with the OAB, make no mention of Baker McKenzie. The partnership had been forged abroad, precisely through what Zarif had referred to as a “workaround.” Until 2004, the year in which Project Fairmont went into action, the firm’s principals had been advised to associate themselves with a Chicago-based holding company called Baker & McKenzie LLP. Through this company, bonus payments and other benefits were delivered to Brazilian lawyers in either Brazilian or offshore accounts. By triangulating through the U.S. firm, Trench Rossi Watanabe was able to skirt OAB oversight.

That year, however, in the wake of the Arthur Andersen scandal, Project Fairmont had the Chicago-based entity shut down. In its place, each country, Brazil included, would create its own holding company—which would not offer legal services—and this company would sign a service contract with Baker McKenzie. To all intents and purposes, Baker would be paying the holding company, not the employees of the Brazilian law firm; and the holding would essentially be a “mirror company,” its corporate structure replicating each principal’s share of the law firm.

Following the new guidelines, Trench’s Brazilian partners founded Iguatemi Participações Ltda., through which they could receive transfers from abroad. The change tiptoed around Brazilian law; because Iguatemi did not offer legal services, it did not need to be registered with the OAB. When Iguatemi was registered with Brasília’s Board of Trade, Leite sent emails to local partners explaining the new structure. In one of these emails, sent at 3:22 pm on June 12, 2004, Leite explained that Iguatemi would adopt “Firm rules,” with a capital F – this being the way employees tended to refer to Baker McKenzie. In another email, sent the following day at 3:59 pm, Leite wrote that the firm had yet to determine if the Brazilian capital that was still in Chicago would remain there or if it would be sent to Service BV, one of the new societies created by Baker McKenzie in Switzerland. “In any case, future payments of that capital will take place outside of Brazil and in hard currency,” Leite wrote. “I’m proposing that the capital be transferred to Service BV so that we aren’t subject to American tax laws.”

As far as the OAB was concerned, Trench Rossi Watanabe was operating legally. All of its partners were Brazilian, and, at least in theory, it had no ties to foreign firms. In practice, however, in light of its maneuvering in Brazil and abroad, all evidence points to the foreign firm having used its Brazilian counterpart as something of a surrogate.

Before long, however, things would get even more complicated.

 

Eduardo Cerqueira Leite had only been at the helm of Baker McKenzie’s Executive Committee for a few months when, in May of 2011, the São Paulo arm of the OAB notified Trench Watanabe that it was aware of the nature of the firm’s foreign partnership. The notification, which took Trench by surprise, came in response to multiple requests for the OAB to investigate the firm. In its communications to Trench, the OAB threatened to suspend the licenses of the firm’s lawyers and implied that there could be legal consequences for this breach of ethics. Over the months that followed, Trench’s partners came up with a plan to face the onslaught of the OAB’s investigation.

Six months after the notification, on October 19, Claudia Prado, a Brazilian partner at Trench, sent an email to Raymundo Enríquez, a Mexican lawyer representing Baker McKenzie’s Latin American branches on the Executive Committee, and attached a document that laid out all of Trench’s weaknesses ahead of the OAB investigation. The document, written in English, indicated a degree of unease about the inquiry and an awareness of the danger they were in: “The threat of the OAB investigating our internal data (tax, accounting, financial, management, etc.) is real and now closer than anyone ever imagined.”

The document also listed what the firm needed to hide: “We have real vulnerabilities, the largest of which is the evidence of loans from Baker & McKenzie in our accounting and tax records, as well as in the Central Bank of Brazil records,” she warned. Trench, according to the attachment, had received $9.38 million in loans from the U.S. company, $7.4 million of which needed to vanish from its balance sheets. “Nevertheless, for the OAB purposes, it is essential to clear the local books from [sic] all of the payables to Baker & McKenzie to avoid the concept of financial interdependence. The clearing of these funds should be implemented through invoicing which will trigger taxes in the amount of another us$ 3,814,724.”

In practice, in order to clear its books, Trench needed to return $7.4 million to Baker; but since it didn’t have the funds, it would have to bill its American partner for the sum. Baker would have to pay $7.4 million to Trench in Brazil, allowing the firm to pay off the loan and wipe it from its ledgers the very same day. The final payment would be made to Baker McKenzie International BV, a branch based in the Netherlands. According to the plan, Trench would only pay the taxes levied on the “service” provision, a total of $3.81 million.

After discussing this proposal and making a few adjustments, Baker’s Executive Committee green-lighted the fiscal alteration designed to avoid OAB oversight. Two months later, in December, Claudia Prado let the staff at Trench know that the operation had been a success. In another email, sent on December 16 at 9:11 am, she wrote to her colleagues in Portuguese: “For everyone’s information, we were finally able to wipe the loans from our books, which for years had been a source of worry for various reasons […] We should be very happy to close out the year with this mission having been accomplished.” (Eduardo Leite and Claudia Prado did not respond to our requests for an interview.)

The truth was that, even though the accounting ledgers reflected a change, Trench’s subordinate relationship with Baker remained intact, as became evident in February of 2012. That month, Trench’s partners attended a presentation about an important project for L’Oréal,  one of Baker’s most lucrative international clients. The French cosmetics behemoth wanted to open a headquarters in Latin America, and it had commissioned Baker to complete a tax assessment in order to evaluate three countries: Brazil, Chile, and Panama. The task was undertaken by lawyers from the three potential sites, all of whom were presented as lawyers employed by Baker: Clarissa Machado and Camilla Lagrasta of Brazil (both employed by Trench at the time), Alberto Maturana of Chile, and Alejandro Ferrer of Panama. In PDF prepared for the presentation, all thirty-two pages had Baker’s logo and the disclaimer that the information contained therein was “privileged & confidential.” The analysis concluded that from a fiscal perspective, L’Oréal’s Latin American headquarters would be best located in the Central American tax haven of Panama. (Ultimately, the company decided to build its new branch in Brazil, where it was inaugurated in Rio de Janeiro’s port neighborhood in 2017).

September 18, 2012 brought further evidence of Trench’s subordination to Baker. In an email sent by Trench director Claudia Metzger, Baker’s Brazilian partners were informed that the firm’s global expenses had been driven up by, among other things, the closure of its San Francisco office. June 29, 2013: yet another example. Simone Musa, another Brazilian partner, was consulted by her Baker colleagues in Düsseldorf, Germany, who wanted to know if the payment that they had received from a Brazilian client could be deposited at Baker’s Porto Alegre branch. Musa’s German colleagues were looking to avoid being taxed twice on the income, both in Brazil and Germany. At 9 am on August 7, Musa sent an email denying their request. She wrote, in English: “Unfortunately, none of the Brazil offices currently can engage on charging from client fees due to foreign offices. The main reason is our Bar Association, as you may know, we are currently litigating and negotiating our relationship with a ‘foreign’ Law Firm in Brazil. We could not produce evidence in our offices [sic] accounting or books that we have financial dependency (like formula adjustments and the like) with Baker & McKenzie.” In other words, receiving money in the name of Baker’s German branch would contaminate Trench’s books in Brazil.

By “formula,” Musa meant the equation Baker used to calculate the earnings of its principals and offset any periodic revenue imbalances between the parent company and its subsidiaries. At the end of every fiscal year in the United States, Baker covers any shortfalls in its affiliates’ balance sheets. According to two former partners interviewed by piauí, negative balances were not common at Trench, which tended to operate in the black and almost always contributed to Baker’s global earnings. (Claudia Metzger has since left Trench, but Simone Musa remains at the firm.)

The partnerships set up among Baker’s different branches were designed to assuage potential tensions among the firm’s subsidiaries. When a client was served by partners in different countries, each lawyer received a percentage of the total payment—sums that were referred to internally as “client credits.” By October of 2016, for example, Rio-based partner Anna Tavares de Mello had accumulated $1.6 million in fees paid by sixty-five clients that year, both in Brazil and abroad, as demonstrated in a spreadsheet accessed by piauí. Though Claudia Prado had retired three years earlier, she received $382,220 over the same period – this because, under Baker’s retirement plan, retired employees continued to receive 50% of the payments made by clients for whom they had worked while at the firm. (Partners could retire early and still receive 100% of their clients’ payments—the percentage only fell to 50% once they reached mandatory retirement age.)

In light of the extensive ties between the two firms, Suzan Mitsuuchi, then the communications manager at Trench, emailed firm’s partners on January 10, 2014, as the OAB’s investigation was nearing completion. She suggested that Baker’s global intranet, BakerWorld, should no longer be open to all of the firm’s employees, and that access should be restricted to principals in order to avoid leaks of data that she warned was “sensitive considering the OAB investigation.” That sensitive data included proposals created by Baker’s global services that were presented to major clients—such as Hilton and Allianz—on which the Brazilian office had collaborated extensively, as well as the invoicing details for each of the firm’s foreign branches. Another worrisome aspect of the setup was the Brazilian law firm being represented as “part of Baker McKenzie” and not as an independent law firm. Moreover, BakerWorld also allowed access to the profiles of clients and the partners serving them across all branches. (Suzan Mitsuuchi, who is no longer at Trench, did not respond to our requests for comment.)

BakerWorld’s database was a gold mine of evidence of the partnership between the two firms. It contained the names and contact information of all its associated Brazilian lawyers, none of whom were identified as employed by Trench. Mitsuuchi insisted on emphasizing this point in her report on the firm’s vulnerabilities: “Information including client credits, financial reports (invoices, top matters, etc.), client programs, and business plans are strategic data that should not be freely available to everyone.” Anna Tereza de Mello, for example, was listed as having worked for Baker since 1996, in Rio de Janeiro, and not as a Trench employee. She showed up as a legal specialist for Baker, not Trench, in a number of areas, including “banking and finance,” “energy, mining, and infrastructure,” and “mergers and acquisitions.” Mitsuuchi herself appeared as a Baker’s “Communication and Business Development Manager,” with no apparent ties to Trench.

Despite all this, Trench Rossi Watanabe alleged in its defense to the OAB that it was not associated with Baker McKenzie, and that the two firms only maintained a “cooperation agreement.” Trench representatives claimed that Baker had never operated in Brazil and that the partnership allowed for autonomous action on the part of both firms, “without any subordination to foreign lawyers whatsoever.” Once Trench had made its case, the OAB’s São Paulo office and the law firm reached an agreement. Trench representatives signed a “Conformity Agreement,” later dubbed a “Conduct Adjustment Agreement” (TAC, in Portuguese), in which Trench agreed to take a number of corrective measures. It would modify the email addresses of all of its employees, swapping “@bakermckenzie.com” for “@trenchrossi.com,” and the firm’s website would also shift over; the U.S. firm’s would no longer appear on the Brazilian firm’s website, business cards, letterhead, or promotional materials; and Trench would commit to maintaining “absolute autonomy and independence” vis-à-vis Baker.

The agreement was signed on January 30, 2014. Four days later, the OAB’s case against Trench was closed. Over the course of the investigations, the OAB had not examined the accounting records of the law firm to verify the origins of the money that it took in. If it had, it would have found evidence of transfers made by Baker to underwrite the opening of Trench offices in a number of state capitals and even renovations at the firm’s São Paulo offices—details that further confirm the relationship of dependence between Washington and São Paulo.

Just two months after the case was closed, evidence came to light that the relationship between the firms was the same as always. On March 19, Baker’s Brazilian partners received an email from the firm’s Latin American Regional Counsel proposing measures to improve the group’s results in the region, such as increasing fees and creating compensation funds to reward partners for good performance. (At the end of the 2016 fiscal year, two years after the agreement was signed, the Brazilian office came in tenth in Baker McKenzie’s global ranking, taking in $42 million that year. In 2017, internal documents showed that the firm’s earnings had increased by 23.8%, to $52 million, bumping the firm up one place in the global ranking.)

Once the Conformity Agreement was inked, firm director Claudia Metzger sent an email to her colleagues, letting them know how they should refer to the latest changes. In the message, sent at 9:53 am on May 21, she explained that the new visual identity, email domain, and website were meant to “revitalize” the firm on the 55th anniversary of its founding – and then mentioned briefly, in a single sentence, that the changes were being made in accordance with “the new OAB guidelines.” She went on to advise Trench’s lawyers to reassure clients that, despite the changes, the firm still maintained its “strategic cooperation” with Baker McKenzie. Only the principals with ties to Baker had access to the content of the agreement—and, as a result, only they could know if its terms were being met. The other partners at Trench were left in the dark.

In 2019, five years after the Conformity Agreement, Ana Tereza Basílio, who had been a partner at Trench until 2005, felt no need to hide her relationship with Baker. In a post on social media, Basílio congratulated Christine Lagarde for her nomination to the presidency of the European Central Bank and mentioned that they worked at the same law firm. “I had the honor of being a partner alongside her at Baker&MC. She worked on the labor law team, and I was in litigation,” Basílio wrote. Today, Basílio is the vice president of the OAB’s Rio de Janeiro branch.

 

In the 1950s, Baker McKenzie began a push to internationalize its operations, spurred on by the broader wave of postwar industrial expansion. Its founder, Russell Baker, had a special interest in Latin America; he had lived in New Mexico and spoke Spanish fluently. The first law firm he set up abroad was in Caracas, Venezuela, in 1955, because his first client, Abbott Laboratories, wanted to expand its operations there. As the years passed, Baker McKenzie expanded exponentially. Russell Baker, who had once boxed at county fairs in order to pay his tuition at the University of Chicago, was soon one of the most powerful men in the United States. He died in 1979, at age 78. Today, the law firm he founded is one of the largest legal conglomerates in the world, with an annual income of $3 billion. Thomson Reuters has pegged Baker as the highest-grossing legal-services company in the world, a position it has maintained for the last twelve years.

In the 1980s, the law firm gained notoriety for reasons other than its financial success. One of its New York lawyers, Geoffrey Bowers, was fired six months after he was diagnosed with aids, removed by a committee of partners who voted 3 to 12 against him. Since Bowers had received a positive performance review just four months earlier, he surmised that his firing was due to his illness, as he had begun to manifest facial sores caused by Kaposi’s sarcoma, a common symptom of aids at the time. The lawyer sued the law firm for discrimination, but Bowers died in 1987, well before a court sentenced his former employers to pay $500,000 in damages in December 1993. Baker appealed the court’s decision and ended up signing a confidential settlement with Bowers’s family in 1995. (This episode inspired the 1993 film Philadelphia, in which Tom Hanks’s performance as the HIV-positive protagonist won him an Oscar for Best Actor in 1994.)

In a sense, Trench Rossi Watanabe was born from Baker McKenzie’s rib. It all began when a Harvard undergraduate, Paul Griffith Garland, decided to accept an internship at the Brazilian firm Demarest Advogados in 1955. He found himself in São Paulo, learned Portuguese, and ended up completing a law degree in Brazil, which allowed him to join the local bar association, the OAB Garland eventually returned to the U.S. to finish his bachelor’s at Harvard, and had just graduated when he received a call from Russell Baker proposing that he go back to Brazil to head up operations at Baker’s subsidiary firm in São Paulo. It was 1959, and at that time, Brazilian legislation did not prohibit foreign firms from acting in Brazil. Garland accepted Baker’s offer and invited another Harvard graduate, Carlos Emílio Stroeter of Brazil, to join him. Their office, Garland & Stroeter, provided legal services to Baker McKenzie’s U.S. clients with business in Brazil, Abbott Laboratories chief among them, through the early 1960s.

After the 1964 military coup, U.S. support for the dictatorship triggered a wave of anti-American sentiment throughout much of Brazilian society. Garland’s wife, Joan, who had never fully adapted to life in Brazil, grew uncomfortable with the antagonistic attitudes of those around her, and the 1968 assassination of the American military officer Charles Rodney Chandler by members of São Paulo’s armed underground left her on edge. Fearing a descent into violence, the couple decided to return to the U.S.. Garland remained a partner of the firm he had founded in Brazil and kept working for his clients from his new base of operations in New York. The distance caused a certain estrangement between Garland and his Brazilian partners, and disagreements about clients led him to sell his share of the firm in 1972. (Tragedy would befall the family some time later in the United States, when their twenty-year-old daughter was hammered to death by her boyfriend in 1977, an incident that came to be known as the “Bonnie Garland murder case.”)

After Garland’s departure, the firm changed its name to reflect the presence of two promising partners, Irecê Trench and Ronaldo Veirano, who had since come on board. In 1986, another partner joined the firm, a retired judge from the São Paulo Court of Appeals named Kazuo Watanabe. Five years later, in 1991, Stroeter left the firm following a disagreement with a colleague, Carlos Alberto de Souza Rossi. In 1996, when Veirano left in order to open his own office, the firm adopted the name it has kept to this day: Trench Rossi Watanabe.

Veirano remembers his time at Baker McKenzie fondly. “I was a partner there for twenty-five years before I decided to open my own office with other partners, but I had a great experience there. I learned a lot, I got to know the founder, and the training he gave me was invaluable,” he said to piauí. “[Russell Baker] was a visionary in that he anticipated the expansion of American companies in the postwar period, and he gave wonderful opportunities to young people like me, who came from middle-class families, even the lower-middle class, and I had a very successful career thanks to those opportunities.” Today Veirano runs a large law office in Rio de Janeiro.

Amid the changes at the firm, the OAB passed the 1994 legal statute limiting the activities of foreign lawyers within Brazil. Because Trench’s association with Baker was not laid out in its articles of incorporation, the firm never considered terminating its partnership with its U.S. colleagues. The creation of the 1994 statute reflected a shift in the Brazilian legal community. Because the Fernando Henrique Cardoso administration (1994–2002) had brought a wave of privatizations in key industries, Brazil had become an attractive site of operations for foreign law firms interested in facilitating the hugely lucrative purchase and sales of entities previously administered by the federal government. Brazilian law firms came to believe that a market-reserve system would be the best antidote to aggressive foreign competition.

At the turn of the century, Brazil’s projected growth fueled even more foreign interest; and in 2001, the OAB’s Provision 91 cracked down further on the activities of foreign lawyers and associations between foreign and local law firms. Regardless, major foreign firms attracted by the country’s economic upswing, including Linklaters, DLA Piper, and Mayer Brown, entered into agreements with local offices and unsettled the Brazilian market with their financial clout. Tozzini Freire Advogados, one of the country’s most traditional outfits, lost around ten lawyers to DLA Piper, which entered into an agreement with the Rio-based firm Campos Mello. Mattos Filho, which had been ranked six times as the best law firm in Brazil and twice as the best in Latin America by Chambers and Partners, the leading publication for the legal industry, lost its chief capital markets specialist to Linklaters, which had an agreement with the Brazilian firm Lefosse. Mayer Brown, in turn, linked up with Tauil & Chequer and wooed well-respected lawyers from Machado Meyer and Mattos Filho, in São Paulo, and Barbosa, Müssnich Aragão, in Rio de Janeiro.

This game of musical chairs ruffled associates at some of the country’s most important law firms, who encouraged the OAB to close ranks. In February of 2011, the OAB’s representatives in São Paulo, where tensions were most pronounced, issued a directive that further restricted associations between Brazilian and foreign lawyers. Once again, “cooperation agreements” remained kosher, but the directive did ban “partnerships.” It also banned the use of foreign firms’ names in the visual identities of local firms, which had become common in recent years. Under pressure from the OAB, Linklaters saw the writing on the wall and terminated its partnership with Lefosse, leaving Brazil in 2013. The bar association’s investigation of Trench, initiated at the height of the tensions in the 2010s, ended up yielding more tangible results.

Carlos Alberto de Souza Rossi believed that the large Brazilian firms that had enjoyed long-term relationships with foreign entities should not be targeted by the OAB, but that newcomers such as Linklaters should be punished. When the OAB opened its first investigation, into the association between Linklaters and Lefosse in 2000, Rossi himself remembers being reassured by Orlando Di Giacomo Filho, then the president of the Commission on Law Firm Partnerships of São Paulo’s OAB branch. Rossi emailed his colleagues on March 10, 2003, assuring them that Di Giacomo Filho had told him that Trench was a “simple” case because it was “duly registered” and “perfectly well known” in the legal world. In his read, the OAB was only “irritated” by the other cases, such as Linklaters’ association with Lefosse.

This may explain why the OAB, having lobbied for the ban on foreign firms, has since come under fire, and why its branches have markedly different practices when it comes to investigating ethical infractions. In 2009, for example, Tauil & Chequer sent its annual balance sheets to the OAB in Rio de Janeiro, where the law firm is based, openly declaring the financial data on its association with Mayer Brown. A report filed by the OAB Commission on Partnerships, mentions the filing and states that the Tauil & Chequer ledgers show loans made by Mayer Brown made “with the intent of increasing the working capital” of the Brazilian firm. Those ledgers demonstrate that from December 2009 to October 2010, Mayer Brown sent a total of $3.3 million in transfers to Tauil & Chequer and three other firms associated with Igor Tauil and Alexandre Chequer. While the Rio-based Commission on Partnerships flagged the transfers and opened disciplinary proceedings, the investigation did not result in punitive measures.

In an investigation of the same firm initiated by the OAB in São Paulo the following year, in 2010, Tauil & Chequer complied, just as it had in Rio, sending documentation of its affiliation with Mayer Brown. Once again, the firm effectively delivered evidence that incriminated itself. The document, to which piauí had access, stated that Mayer Brown would lend $8 million to its Brazilian affiliates (Clause 6.8), and that part of the sum would be used to expand the firm’s São Paulo office (Clause 6.9). It went on to say that the foreign firm would purchase assets of Tauil & Chequer for $2 million, providing the necessary funds to pay the fine levied for breaking its agreement of cooperation with the us firm with which it had previously been associated, Thompson Knight, now known as Holland Knight.

The investigation initiated by the OAB in São Paulo, unlike the proceedings begun by its Rio-based counterpart, went forward. In light of evidence of the partnership between the two law firms, in 2018 the bar association sentenced the Brazilian partners to punishments ranging from mere warnings to temporary suspensions of their law licenses. Tauil & Chequer appealed the ruling to the OAB’s Federal Council in Brasília, where in 2011 the general principle had been reinforced in a decision authored by Marcelo Cintra Zarif, definitely establishing that associations with foreign law firms were prohibited. However, in late 2021, the OAB’s Federal Council annulled the São Paulo branch’s censure of Tauil & Chequer. “The Federal Council overturned the sentence,” as Alexandre Tauil put it. The first time he spoke with piauí by video call, Chequer was in his office at Mayer Brown in Houston, Texas. After the conversation, piauí gained access to the Federal Council’s decision, which explains that the annulment was due to procedural errors in the original sentence: each lawyer’s conduct should have been detailed separately in order for the Commission to properly identify and punish the infractions of each.

Those affected by the disciplinary hearings complain that the investigations begun in the 2010s were a witch hunt on the part of the OAB, especially its São Paulo branch. The market-reserve enthusiasts, on the other hand, argue that the OAB looks the other way as large foreign firms continue to operate freely in Brazil, using local firms as their “bellies for rent.” A manager of the OAB’s Federal Council, who asked not to be identified because of the confidential nature of the matter, recognizes that the bar association has been negligent in its monitoring of foreign firms. “The two offices, São Paulo and Rio de Janeiro, sit on their hands. Rio in particular does nothing, nothing against anybody. Only last year were a couple of the firms suspended,” our contact said.

Over the past several years, the Inspector General’s office of the OAB has questioned more than ten firms suspected of improper associations with foreigners. It also censured the state-run companies Petrobras, Eletrobras, and the National Social and Economic Development Bank (BNDES) for having hired more than thirty foreign firms to complete fiscal auditing and due diligence in Brazil, both of which are considered legal services and thus should not be performed by law firms based outside the country. Ary Raghiant Neto, then at the head of OAB’s internal affairs, also advised the association’s branches to suspend the credentials of all partners of foreign law firms that did not operate in compliance with Brazilian law. His recommendation was ignored. According to the Internal Affairs office, now directed by Milena Gama Canto, 14 investigations involving 43 foreign firms, are currently underway at the OAB.

      

The ban on foreign partnerships is a controversial topic in the legal community. Supporters of the measure generally work for large domestic firms and fear losing clients and employees to powerful conglomerates that can offer better remuneration and serve a single client in multiple countries. As they see it, if the ban were to fall, that would mean paving the way for unfair competition. Critics of the ban, meanwhile, many of whom are employed at foreign firms which operate in Brazil in spite of the law, claim that the market-reserve setup favors a handful of large domestic firms and ultimately harms the local market by isolating it from more current and competitive industry practices.

On the client side, some are favorable to opening Brazil’s legal-services industry up to foreign competition. An executive at a us-based multinational served by Trench Rossi Watanabe, for example, prefers to work with the same firm in both Brazil and the United States because lawyers in the two countries can work in tandem. She spoke with piauí on condition of anonymity because her company hadn’t authorized her to speak publicly on the matter.

The executive reported that her company was contacted by Trench about the disciplinary proceedings and subsequently informed that the case had been resolved and that all regulatory issues with the OAB had been put to bed.

Márcio Thomaz Bastos, who served as the Minister of Justice during Lula’s first term and ran one of Brazil’s most respected law firms, was an enthusiastic supporter of the OAB’s prohibition. Bastos, who died in 2014, argued that an unfettered opening to foreign competition would transform the legal field’s intellectual activity into a commodity for export, as is the case in Spain, England, and Australia, countries with no restrictive measures of the sort. In 2020, Brazil’s Foreign Affairs Ministry requested that the OAB reconsider its market-reserve policy, alleging that it might hinder Brazil’s admission into the OECD, the international organization for countries with high-income economies and high Human Development Indexes. However, the Center for the Study of Law Firms (Cesa), an entity that lobbies on behalf of domestic offices, reported that of the OECD’s 36 member nations, 19 maintain some type of market-reserve policy.

According to Gustavo Brigagão, a lawyer at the helm of Cesa who co-wrote the study, at least three of the OECD’s 19 members apply restrictions similar to Brazil’s. Oddly enough, in an example of the intricacies of disputes in the legal world, one of the honorary members of Cesa ­—which objects to foreign lawyers working in Brazil or for Brazilian firms—is Carlos Alberto de Souza Rossi of Trench Rossi Watanabe.

A former partner of a foreign firm which the OAB determined to be carrying on improper activities in Brazil says that the market reserve only serves the top brass at major firms. According to the lawyer, who asked not to be identified in order not to interfere with the OAB’s investigation, “it’s an elitist ban that only benefits founding partners, because 99.9% of lawyers in Brazil make less than R$5,000 per month (approximately $1,000). So who does the market reserve work for? With foreigners here, the field can incorporate new practices and give early-career lawyers more mobility. People only oppose it if they tried to sell their firms and found they couldn’t.”

Alexandre Chequer, a partner at Mayer Brown, is a fervent supporter of opening the market. “All this controversy over foreign lawyers working here may have stunted the Brazilian market by keeping large international firms from interacting with local ones and improving the quality of services we provide here in Brazil. From a hypocritical point of view, it’s good because you keep the competition out. But if you ask lawyers, you’ll see that most are in favor of opening the market to foreign firms. The only people against it are those who control the capital of the big domestic firms.”

From the headquarters of Tauil & Chequer in Rio de Janeiro, one can look out over the city’s port zone, the eight-mile-long bridge to the neighboring city of Niterói, and the naval installations on Santa Bárbara Island. Here, the branding and decoration mimic Mayer Brown’s visual identity, a sea of yellow and navy blue. The logo, which also features the colors of the U.S. firm, displays the names Tauil & Chequer in capital letters, larger than those spelling out Mayer Brown. The firm’s website and email addresses, meanwhile, point to the U.S.-based firm. Chequer, who heads up Mayer Brown’s energy law division, reports that he spends more time in Houston than in Rio and that he has a demanding travel schedule: in the days after we spoke, he was heading to Los Angeles, Singapore, Luanda, London, and Paris. No complaints on his end; it comes with the territory of being an important partner at a global law firm.

In the past, before his firm’s conviction by the OAB’s São Paulo branch and the annulment of the ruling by the Federal Council in Brasília, Chequer believed that the issue of foreign law firms operating in Brazil ought to go to the courts, arguing that it was the only way to spur a public debate on the matter and a potential reversal of the market-reserve policy. Following his hunch, he commissioned a number of legal professionals to formulate judicial opinions, one of whom was the jurist Miguel Reale Júnior. Reale Júnior argues that Article 5 of the Brazilian constitution guarantees free association as long as the ends of such an association are licit and not related to paramilitary activities. Now, his case having been dismissed, Chequer has laid down his arms and says that the justice system should focus on more pressing matters. “Since I wasn’t found guilty, why should I press it in court?” 

Other opinions challenge Reale Júnior’s interpretation. One of them, commissioned by cesa and drawn up by Carlos Ari Sundfeld, states that Article 5 does indeed permit freedom of association but includes the caveat that such associations are unconstitutional when they are intended to “do something that is legally prohibited.” Since the law clearly prohibits foreign partnerships, Sundfeld reasons, associations that fit this description are in violation of Article 5.

Ophir Cavalcante Junior, who led the OAB from 2010 to 2013, the period during which the disciplinary proceedings began, says he is aware of the challenges inherent in conducting thorough investigations of private law firms. “Our goal was to protect the market without keeping Brazilian firms from having relationships of any sort with foreign counterparts, since those sorts of connections are common.” Cavalcante Junior noted that the task of analyzing firms’ internal data in order to monitor and regulate their financial relationships with foreign entities “isn’t easy, because the information is not publicly available.” Moreover, investigations of this nature require judicial authorization, although Cavalcante Junior affirms that the OAB never appealed to the courts for permission to access any law firm’s confidential fiscal data. He claims the entity lacks the technical wherewithal to engage in more exhaustive investigations. “The resources aren’t there. It’s a costly process, and the OAB has other priorities considering the fact that we have millions of lawyers in this country. It’s never simple for an investigating body […] to get into the weeds of private arrangements.” In short, “the OAB has limitations because it isn’t the state, and so doesn’t have any comparable investigative powers.” Cavalcante Junior reports that the early 2010s saw intense pressure from the Ministry of Foreign Affairs and Spanish legal organizations to open up the market. “And let’s just say we had to hang on for dear life.” Cavalcante Junior accompanied part of the proceedings which produced the Conformity Agreement signed by Trench Rossi Watanabe and recalls that the objective, at the time, was not to completely cut ties between the Brazilian lawyers and their foreign colleagues, but rather to “rein in the greed that was driving them to come to Brazil and set up shop.”

 

According to the employees and former employees of Trench Rossi Watanabe who spoke to piauí, they assumed that, after the agreement was signed in 2014, the office would face no further OAB scrutiny. Carlos Alberto Rossi, who was influential in both Cesa and the OAB, had played a decisive role in ensuring that the firm was not more severely punished. The other senior partners, Irecê Trench and Kazuo Watanabe, hadn’t been closely involved with the Baker partnership; Trench, who died in 2018, did not even speak English. While trio had officially retired in the early 2000s, Rossi has remained involved in some of the firm’s business, especially matters related to the OAB. Watanabe, because of his experience as a jurist, is occasionally called upon to give opinions on specific cases.

After the agreement with the OAB, the firm’s path forward seemed clear, and 2015 and 2016 went by without major incident. In 2017, Trench lawyers sent their counterparts at Baker their financial-planning outlook for the next two years, a three-page document which piauí was able to consult. The plan states that the office’s priority during that time was to invest in the field of regulatory compliance. In 2017, Trench estimated that 30% of revenue would come from compliance accounts. The partners were to closely monitor their contract with Petrobras, the firm’s most lucrative client, which included compliance services in the wake of the nationwide anti-corruption investigation known as Operation Car Wash, which had uncovered an extensive record of illegal bribes at the state oil company. In the years that followed the Federal Police’s discoveries, the company paid over R$100 million for Trench’s services in helping to implement “best practices.”

The decision to expand their compliance services, however, marked the beginning of an extremely tumultuous period in Trench’s history, one which would land the firm on the radar of the police. This latest round of controversy started with the hiring of Marcello Miller, a former federal prosecutor who worked in Brasília and was considered competent and intelligent by colleagues. As had been the case with all other partners who had joined Trench since the two firms became affiliated, the Brazilian lawyers ran Miller’s application past their colleagues at Baker, who green-lighted his hiring. In an email sent to other Trench partners on February 22, 2017, partner Hercules Celescuekci explained that Miller would earn a higher salary than other lawyers with the same title because he was going to work on the compliance team, which had been in higher demand. “We will ask for help from the Firm if Miller’s hiring strains our finances,” wrote Celescuekci (“the Firm,” again, referring to Baker). The necessary internal paperwork went through quickly, as Miller would be a minority partner with just two  shares, as opposed to the principals’ six hundred.

(The former Undersecretary of Oversight of the Internal Revenue Service, Marcos Vinicius Neder de Lima, was another hire who passed muster at Baker, which authorized his hiring as a principal in 2010 and even paid him a signing bonus of R$2 million. Trench pledged to reimburse Baker 70% of that sum over the following years. In the document that proposes Neder’s hiring, to which piauí gained access, Trench promised Baker that Neder, given his connections, would attract clients such as major taxpayers Bradesco, Braskem, Itaú, and Petrobras.)

As it happens, an overlap of dates between Miller’s departure from the Attorney General’s office and his hiring at Trench raised the suspicion that he had been on double duty for a two-month period. As a prosecutor, he was said to have ushered in a plea bargain for the owners of the meat-processing giant JBS, the brothers Joesley and Wesley Batista, who had been accused of a number of crimes. Simultaneously, as a lawyer starting at Trench, he allegedly worked on the leniency agreement for J&F, the Batistas’ holding company.

The suspicion that Miller was working simultaneously in the public sector and private sectors was never proven, and the criminal case into the matter stalled in 2019. Regardless, the case sent shockwaves throughout the firm. Baker hired four investigators from the U.S. to question Trench lawyers in June of that year. The investigation was conducted remotely, but some interviews were given in person, with Brazilian lawyers traveling to Miami to make statements. The investigation was intended to determine whether Trench’s compliance team was in contact with Miller before hiring him officially. The investigators also wanted to know if the corruption accusation could harm the firm’s legal standing in the U.S., where laws are stricter on white-collar crime. Brazilian court records contain accounts of the investigators hired by Baker pursuing aggressive strategies, employing psychological threats, and demanding information, documents, and private messages. One of the Brazilian lawyers reported being held in a room for more than ten hours during his interrogation.

In 2018, the holding company J&F filed a lawsuit against both Trench and Baker in the jurisdiction of New York, alleging that both entities hid the fact that Marcello Miller provided legal services for J&F while he was still a federal prosecutor, which, according to the suit filed by the Batista brothers, compromised the plea bargain that they had been negotiating with the Attorney General’s Office. (The plea bargain had since fallen through, but under Attorney General Augusto Aras, the agreement was resuscitated and approved, allowing the Batista brothers to avoid jail time.) In the New York suit, the Batistas testified that “at all relevant times, Trench Rossi was affiliated with Baker,” and that “J&F selected Trench Rossi as counsel in connection with the corruption investigations, in large part based on Trench Rossi’s affiliation with Baker in the United States.” In 2019, J&F and the two law firms settled, and the lawsuit was dropped.

A former partner at Trench, who didn’t rank high enough in the firm to be associated with Baker, told piauí that the lack of transparency around the firms’ association left the lawyers on edge. “Many of my colleagues and I never participated in any of the discussions, we didn’t know anything about how they were being managed, but we were still named in the articles of incorporation as partners. We were afraid that if anything happened, we’d have to answer to the OAB. We were completely in the dark,” recounts the lawyer, who left Trench in the 2010s. After the J&F incident, two people were fired from the compliance team, but management remained intact, as did and internal practices concerning the firm’s relationship to its foreign partners. “A few people had all the control, the management was completely inaccessible and there was no improvement in transparency,” says the former partner.

 

After three tumultuous months following Marcello Miller’s arrival, Trench Rossi Watanabe was anxious to put the matter to bed as quickly as possible. While investigations had been unable to prove illegal action on his part, Miller’s image had been tarnished. His contract was terminated on good terms, meaning that he received what he had been promised upon being hired: a signing bonus of R$1 million and $250,000 by way of remuneration. (Miller had his legal license suspended by the OAB for three months, even in the absence of definitive proof of wrongdoing, and he was drawn into a congressional inquiry into J&F. Today, he works in the financial sector.)

To expedite the case against Miller and to demonstrate Trench’s willingness to cooperate with prosecutors, the firm sent all of its email exchanges with Miller to both the bar association and the federal prosecutor’s office. The move was intended to discourage investigators from conducting their own reconnaissance mission at the firm, which could reveal details of its association with Baker and expose sensitive information concerning clients. That investigation never took place, nor was the matter fully settled. In 2018, shortly after the public controversy with Miller came to light, the OAB’s São Paulo branch opened a new investigation into Trench’s relationship with Baker.

The first hearing came in late 2019, more than a year after the case was opened. After that, until the end of 2021, the OAB did not interview any more witnesses, but it did secure yet another Conduct Adjustment Agreement (TAC) with Trench. The content of the new agreement is not public, but the firm reported to piauí that the agreement “elucidated specific issues and reaffirmed Trench Rossi Watanabe’s commitment to complying with the Conformity Agreement,” the official name of the contract signed in 2014 at the culmination of the first investigation. The fact that the two parties agreed on a TAC implies that the OAB did not consider the most recent violations to be particularly egregious. Since it was devised by the organ responsible for writing the Brazilian code of legal ethics, the TAC has been used as an instrument for resolving minor legal infractions.

Trench Rossi Watanabe declined our requests for an interview, but the firm did send a statement in response to some of our questions, which follows in full.

Trench Rossi Watanabe is one of most renowned law firms in Brazil, with over sixty years of history. Its strategic cooperation with Baker McKenzie, the terms of which have been shared with the OAB, is intended to promote an exchange of technical and juridical knowledge in order to improve our provision of services. Additionally, we occasionally recommend the legal services of Baker McKenzie to our clients with business abroad when they need assistance with matters related to foreign legislation, and in turn, we provide services to Baker McKenzie that involve matters of Brazilian law. There is no contract of exclusivity, as we work with and recommend the services of other foreign law firms, nor is there any type of interference between these foreign firms and ours, whether in terms of our corporate, organizational, or financial structures.

Furthermore, we are not privy to Baker’s income streams or commercial performance data. We do share knowledge on best practices and juridical matters, as Baker McKenzie is internationally recognized for the quality of its legal services. It is important to reinforce that all partners of Trench Rossi Watanabe are Brazilian lawyers who comply with the norms and recommendations of the OAB.

In relation to the company Iguatemi Participações, Trench Rossi Watanabe affirms that the entity was formed in 2004 by some of our partners with the objective of conducting activities that were not related to the provision of legal services, and that it was liquidated in 2012.

The questions piauí sent to Trench included whether Baker is consulted on all hires at the Brazilian firm, whether the retirement packages of Brazilian lawyers are paid by Baker, if local partners are subject to Baker’s global Executive Committee, and finally, if Baker has made any investments in or financial transfers to Trench. These questions were left unanswered.

One month later, piauí sought out Trench with a list of follow-ups: seventeen questions, inquiring, among other things, about the lawsuit initiated by J&F, the hiring of former prosecutor Marcelo Miller, the details of the plan to remove from their ledgers any outstanding sums to be paid to Baker, as indicated by Claudia Prado’s email from October 19, 2011, whether the plan sent by Prado had been presented to Baker and to the OAB and if the firm had in fact attempted to obscure its financial dependency on the us entity. In response, Trench sent another statement, as follows:

Trench Rossi Watanabe has always cooperated with the OAB to clarify the terms of our relationship with Baker McKenzie, having provided all the information that led to the signing of a Conformity Agreement in 2014. We reiterate that there was never any sort of financial dependence on Baker McKenzie, with whom Trench Rossi Watanabe enjoys a relationship of strategic cooperation involving no transfers of profit, the details of which are fully known to the OAB.

Our firm clarifies that we comply with periodic external and independent audits, which assure that our financial operations comply with the proper norms. These operations are conducted solely as a matter of standard day-to-day activities, in compliance with legal regulations, not as a result of our agreements with the OAB. The signing of the TAC elucidated specific questions and reaffirmed our commitment to the Conformity Agreement signed in 2014.

In relation to the lawsuit initiated in the us by J&F, the case was dropped in 2019 with no recognition of wrongdoing and requiring no payment of restitution.

We are one of the few law firms in Brazil to maintain an internal compliance department that operates permanently and autonomously of our services to third parties, ensuring that we adhere to federal law, the dictates of the OAB, and best practices in the legal profession.

piauí sent thirteen questions to Baker McKenzie’s global board in Washington, asking whether Baker had any knowledge of local prohibitions on Brazilian lawyers associating with foreign firms, if it exercised any control over Trench’s administrative decisions, if it prompts, authorizes, or funds the hiring of new partners, if it has ever paid for the expansion of Trench offices, if it has loaned money to the Brazilian firm or investigated the hiring of former prosecutor Marcello Miller, and, among other things, if it was aware of Trench’s plan to remove documentation of loans given by Baker from the Brazilian firm’s accounting record. The reply, which did not address any specific matters, follows:

Baker McKenzie has a strategic cooperation agreement with Trench Rossi Watanabe, an independent and autonomous law firm as required by Brazilian law, an arrangement that is approved and regulated by the Brazilian Bar Association.

Baker McKenzie both supports and expects Trench Rossi Watanabe’s compliance with the Bar Association and all other local law requirements.

 Similarly, the Brazilian law firm Campos Mello stated to piauí that its activities are in accordance with Brazilian law, and its cooperation agreement with the us firm DLA Piper was deemed acceptable by the OAB’s São Paulo branch in 2016 after the latter conducted an investigation of the firm’s foreign connections. The OAB’s São Paulo office did not respond to our requests for comment. Dias Carneiro, another legal powerhouse in Brazil, informed piauí that it had previously had a cooperation agreement with the Spanish firm Uría Menéndez, which was terminated in 2012, and stated that it currently maintains partnerships with a number of foreign firms, but that none of these relationships involve financial dependency or corporate ties. The OAB has not disclosed whether the partnership between Dias Carneiro and Uría Menéndez was subject to any type of scrutiny or investigation by the authorities.

 

oAB’s investigations tend to be conducted quietly. The existence of an investigation is only confirmed if it results in sentences of suspensions or disbarment, as this information must appear on a lawyer’s licensing documentation. If an investigation results in a mere warning, no one other than the lawyer receiving the warning, will be privy to the decision. The discreet nature of these proceedings ensures that the OAB’s activities are not subject to public scrutiny, which, in turn, has prompted accusations that the association is a “notarial oligarchy” that creates rules for everyone, applies them selectively, and is itself accountable to no one.

Even the OAB’s Federal Council has struggled to stay abreast of the investigations. In October of 2020, bothered by the slow pace of the new investigation that the São Paulo office had opened into the dealings of Trench and Baker, inspector-general Ary Raghiant Neto requested in writing that the association’s Rio and São Paulo branches at the very least clarify whether Baker McKenzie was authorized to practice in Brazil on matters of foreign legislation. By the time his term was up at the beginning of this year, he had yet to receive a response.