Brazil’s Mattos Filho Eyes Growth in Age of COVID-19
More than a decade ago, one of Brazil’s leading law firms sought advice from Am Law 100 firms on how to establish a more collegial internal environment.
The eat-what-you-kill compensation system that had helped Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados grow into a top-flight firm for tax, corporate and capital markets had spurred infighting and created silos. Those divisions made it difficult to recruit and promote partners to expand in a fiercely competitive market that’s highly coveted by global firms.
After conversations with leaders at Cleary Gottlieb Steen & Hamilton; Skadden, Arps, Slate, Meagher & Flom; and Simpson Thacher & Bartlett in New York—and at Spanish firms like Uría Menéndez and Garrigues—Mattos Filho opted for a modified lockstep system that has allowed the firm to more than triple its partner count, to 108 from 30, and quadruple revenue.
“Today the firm is more important than any one of us,” said founding partner Roberto Quiroga, who is 58.
Mattos Filho has 650 lawyers spread across five offices in Brazil, as well as offices in New York and London, making it one of Latin America’s biggest firms by head count. Ten years ago the firm had just over 300 lawyers.
The full-service firm ranked second in Latin America by number of mergers and acquisitions deals worked and fourth by value during the first half of 2020, with 16 deals announced worth $1.7 billion, according to data from Mergermarket.
The mere size of Brazil helps firms there consistently rank at the top of Latin American league tables. Brazil is Latin America’s largest economy, with a population of 210 million people and geographic span nearly as big as the continental U.S.
COVID-19 brings work
Brazilian capital markets activity has come roaring back after an initial drought caused by precautions over COVID-19, as record low-interest rates prompt domestic investors to seek alternatives to paltry fixed-income returns.
The first wave of transactions consisted of follow-on offerings for companies seeking rescue capital during quarantine. The success of those sales inspired others to resuscitate plans for initial public offerings. At the same time, a weak local currency has renewed interest in acquisitions in the country.
Domestic firms like Mattos Filho are in a prime position to benefit from the boom: Bar rules in Brazil prevent global firms from providing local law services in the country, and also frown on formal tie-ups between Brazilian and international firms.
Quiroga said his firm is on track to handle around 80 M&A transactions this year—which is typical—while working on 40 initial public offerings.
After an initial freeze on hirings in March, Mattos Filho recently added positions in capital markets, M&A and litigation to manage the increase in business. The firm hasn’t cut pay or laid off employees during the emergency, though it did tap into a government program to cover part of its payroll for furloughed support positions such as waiters and receptionists.
The Mattos Filho team continues to work from home as COVID-19 claims evermore lives in the country. A top consideration for an eventual return to offices will be schools; a majority of the firm’s lawyers are women and many of those women have school-age children.
Like many service providers around the world, Mattos Filho has noticed an increase in productivity while staff work from home—leading to reflections about the longer-term needs for office infrastructure. But the firm pushed forward in July with the opening of a regional office in the city of Campinas on the belief that face-to-face work will dominate in the long run.
“We need a strong firm to compete if one day the market opens,” said Quiroga.
Other priorities going forward, Quiroga said, include building out Mattos Filho’s environmental and tax practices, with parallel efforts to recruit more Black lawyers. Though Black people account for more than half the population in Brazil, they are severely underrepresented both in law schools and in the legal profession.