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4Jun2015Jun4,2015

A delicate balance

Ary Oswaldo Mattos Filho, recipient of Latin Lawyer's 2015 Lifetime Achievement Award, talks to Joe Rowley about his professional careers in private practice, public service and academia

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For those fortunate few whose talents translate equally to academia and law firm management, the legal profession can often entail a struggle between enriching the soul through learning and enrichment of a more prosaic kind through private practice. Within Brazil, few are perhaps better placed to understand the conflicting emotions that this can elicit than Ary Oswaldo Mattos Filho, founding partner of both Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados, one of Brazil's leading firms, and GVLaw, one of the country's leading law schools.

During a career spanning more than five decades, Mattos Filho repeatedly found that while his temperament may have been naturally inclined towards academia, his talent for public service and private practice repeatedly pulled him in other directions. Whether helping Brazil's government draft a fiscal reform during the economic turmoil of the 1990s or implementing a radical new approach to legal education at the country's leading business school, Fundação Getúlio Vargas, Mattos Filho's career has involved its fair share of twists and turns.

While many of these opportunities bear testament to the breadth of the lawyer's talents in many different aspects of the legal profession, a continuous strain running through Mattos Filho's career has been his sustained involvement in academia, either as a student or professor. However, neither has maintaining an academic profile been without its own fair share of challenges or temptations – especially during the privatisation bonanza of the late 1990s when foreign companies flocked to Mattos Filho's newly established firm in droves. "When you start to practise law and you start to make some money, it becomes like Count Dracula... tasting blood for the first time," he recalls. "You become an addict for blood, so for me, the conflict between academia and private practice became like an internal fight between the saint and the mercenary."

A life in letters

Born and raised in São Paulo, Mattos Filho only discovered his aptitude and passion for law after enrolling in the law faculty at the University of São Paulo. Although his father was a lawyer, Mattos Filho says he didn't actively try to persuade his son to follow him into the profession, and his practice, which was mainly concentrated in Brazil's hinterland, gave him little opportunity to see firsthand what the job might entail. Indeed, even landing a part-time job at the Department for Justice at the age of 18 to help him support himself through his studies failed to ignite a passion for law, not least due to the bureaucratic nature of his role, which consisted of informing members of the legal profession of the mathematical rules when considering whether to promote lawyers in the public sector. However, when Mattos Filho did discover his calling, it couldn't have come sooner in his university career: "I entered the University of São Paulo law school and, to my surprise, I fell in love with law from the very first day," he recalls.

Mattos Filho would spend the next five years in his home city indulging his newfound passion in one of Brazil's most prestigious universities. Graduating in 1965, Mattos Filho won his first job at Pinheiro Neto Advogados soon afterwards, but continued to balance paid work with studying for a master's degree in commercial law, which he received four years later.

With Europe all the rage among Brazilian law students during the late 1960s, Mattos Filho showed an independence of mind by taking the unusual step of applying for US universities, and won a scholarship to study for a master's degree at Harvard. "When I was at the law school, all the students were eager to pursue something in Europe; usually Italy, France or Germany – but I was one of the few law students who applied for a scholarship in the US because I knew I wanted to study company law and taxation," he explains. "These areas were much more developed and innovative in the US than in law schools like the Sorbonne or Rome, and much more practical too, because company law, taxation and economics were joined up. My classmates who went to France were studying theories about this and theories about that, but not about applicability of law, and that was what made up my mind."

Bitten by the academic bug, Mattos Filho left Harvard a year and a half later and returned to Brazil, where he took up a full-time professorship position at the Fundação Getulio Vargas (FGV) business school. Balancing his teaching responsibilities with studying for a PhD in tax law at the University of São Paulo, he spent the next three years teaching taxation and appropriation law, before receiving his doctorate in 1973. However, just when it seemed Mattos Filho was destined for a life in letters, his career took another turn when, shortly after receiving his doctorate, the dean of FGV called a meeting to announce that the school was experiencing financial difficulties. "The dean of the school met with us and said that if we stayed at the school we would probably still receive our salaries; but just in case, we should do some work outside the school," he recalls. "He gave us the liberty to do something outside the business school in order to earn some money, but asked us to remain loyal to the business school. And so we did."

Teaming up with another law professor, his next step was to launch Mattos Filho & Suchodolski Advogados, a two-partner boutique a world away from the 350-lawyer, full-service outfit that would eventually bear his name. "We were just two lawyers with no secretary because we didn't have the money to pay [for one], and we had just started publicising that we are lawyers and looking for business. At that time, any fish we caught in the net was a good catch," he says.

Over time, the lure of academia grew too great, and in 1982 he returned to Harvard to take up a two-week summer course in securities law. Led by Louis Loss, who is widely viewed as one of the founding fathers of securities law in the US (one apocryphal story credits him with coining the term "securities regulation"), the course inducted Mattos Filho into an area of law that would come to define the next 10 years of his career. After being spotted by the professor, who offered to recommend him for a Fulbright Foundation scholarship, Mattos Filho returned to Harvard as a postdoctoral researcher in 1984, and was overseen by Loss for eight months. Having noted early on that the canon of available securities literature lacked a comprehensive volume in Portuguese, Mattos Filho decided to fill the gap by writing a book.

After returning to Brazil, he rejoined his private practice, spending the next five years dividing his time between writing the book, teaching and advising the São Paulo stock exchange as of counsel. With his unusual skill set and deep knowledge of the US securities and company regulations, he was soon approached by Brazil's securities commission, the CVM. A job offer followed, and in the first week of January 1990, he took up the position of chairman.

A political animal

With GDP decreasing by an unprecedented 4 per cent that year and rampant inflation peaking at a record high of 2,938 per cent, Mattos Filho joined the securities commission at a turbulent time for the Brazilian economy. Although he could do little about Brazil's hyperinflation, or contracting economy, Mattos Filho set his mind to one element that was in his control: the country's shortage of foreign currency. Together with the chairman of Brazil's Central Bank, who was a close friend of his, the pair set about easing restrictions and creating as many new types of securities as they could in a bid to boost foreign investment in Brazil's capital markets. "I spent the first years just flying to the US, Japan, the UK, Switzerland [and] France, to advertise that Brazil's securities market was open to investors," he recalls.

On the domestic front, the pair also introduced changes that allow Brazilian companies to float securities abroad and access new types of securities, such as commercial paper. However, to help the government combat widespread insider trading and tax evasion involving the capital markets, certain securities were also scrapped. Among those were so-called bearer shares, which are wholly owned by whoever holds the physical stock certificate. "The CVM could not perform the tax man's job in combatting people working with inside information, nor market manipulation, if we didn't know the name of the owner," he says.

With Brazil's economy continuing to deteriorate, Mattos Filho was soon given an expanded brief to draft a fiscal reform programme as part of a prior agreement with the IMF. Working alongside five economists (he was the only lawyer), Mattos Filho moved to the federal capital Brasília, and worked for a year on a proposal to tighten Brazil's tax system and rein in expenditure. But it was only once this was complete, Mattos Filho jokes, that the real challenge began, with the group tasked with travelling throughout the country to promote the reforms at local and federal level. "Trying to sell a proposal of fiscal reform and tax reform is incredibly tough. Everybody was saying that we should have fiscal reform, but nobody wanted it when it affected them," he notes.

Rather than a resistence, it would prove to be party politics that put paid to their proposal. In October 1992, facing a certain conviction for corruption and influence peddling, the incumbent president Fernando Collor de Mello resigned from office during the last day of his impeachment trial and was replaced by his vice president. However, with the vice president pursuing a different agenda to the former president, the group's proposal was soon mothballed, and Mattos Filho took the decision to leave Brasilia and return to private practice.

Managing partnership

Returning to civilian life would prove far more difficult than merely picking up where he left off almost three years earlier. With conflict-of-interest rules barring Mattos Filho from communicating with his partners throughout the much of his tenure at the CVM, he returned to private practice to find the firm in the middle of a discussion about its future direction. In one camp were those who viewed the firm's growth rate as being too slow and wanted to pursue a more aggressive expansion strategy; in the other, those who preferred to keep the firm at a more manageable size.

Mattos Filho found himself inclined towards the more bullish end of the spectrum, viewing attempts to restrict the natural growth of the firm as tantamount to a death knell. "To have a good law firm you must have good young lawyers, and good young lawyers want to be able to progress in life," he explains. "For me, it is not possible to have a law firm in which the older partners are satisfied with the size of the firm but expect younger lawyers to continue producing more work or finding new clients."

His chairmanship of the CVM drawing to a close, Mattos Filho put his theory into practice. At the head of a group of 18 lawyers, including the three other new name partners, Mattos Filho left the firm he had lent his name to for more than 20 years to create a new outfit: Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados.

From day one, Mattos Filho and the rest of the partnership began equipping the firm for growth. A New York consultancy was hired to help put in place the organisational structures required, such as specifications for promotions, the formulation of the departments and mechanisms for profit sharing.

Although economic conditions were far from ideal when the four partners launched their new firm in September 1992, two factors worked in the firm's favour to help it become established. One was Mattos Filho's already well-established reputation in public circles and academia, which helped raise the profile of the firm despite strict rules in Brazil governing how local firms could advertise their services. A second was Mattos Filho's membership of the government's privatisation committee during his time at the CVM. "My work was just legal and was done as a CVM member, not as an individual," he explains. "Because all the companies [under consideration] were publicly held corporations... we had to adapt the rules and regulations for publicly held enterprises to those companies to be privatised, [but] the real work was drawing up and establishing the bidding model for privatisation."

With Brazil's privatisation programme set to become one of the largest in the world by the end of the 1990s, generating some US$90 billion for the government, Mattos Filho's detailed knowledge of the process helped the firm win its fair share of the clients as international companies poured into the country in the hunt for a bargain. "Our law firm initially had a normal rate of growth, but a big increase in demand for legal work came with a movement towards privatisation, because then companies needed law firms for business that gave us a really enormous influx of legal work," he says.

Back to school

By the end of 1990s, Brazil's privatisation programme had not only helped swell the government's coffers, it had also helped fuel the firm's rapid growth in headcount and revenues. But despite this success, it would be academia that would once again take precedent as Brazil entered a new millennium. Having taught securities regulation at FGV since leaving the CVM seven years earlier, in 2000, the business school asked Mattos Filho if he would be willing to help establish a law school and offered to make him dean of the new institution. "I said yes but with some conditions, because Brazil does not need more law schools," he says. "Brazil needs a different type of law school and my proposal was to create a law school that would... have a new curriculum and a radical and new way to teach law."

Much to his surprise FGV agreed, and Mattos Filho began defining how his vision of a modern law school would look. To help add flesh to his ideas, Mattos Filho recruited "a few young and bright lawyers" to staff the faculty and teach a continuing education programme focused on company law and tax law to help fund the project during its formative stages. To enhance the quality of legal education being offered, Mattos Filho decided to staff GVLaw with a full-time law faculty and allow students to study full-time for the first three years: an unusual move at a time when most law schools in Brazil operated on a part-time basis. Another innovation saw the school develop the courses it offered based on a Socratic method of teaching, which aimed to develop critical thinking skills through direct engagement and questioning of the material, rather than the more passive memorisation of case studies. A third feature saw Mattos Filho introduce substantial flexibility into the course by giving students in their final years the option of working part-time as traineed in a law firm, allowing students to earn a double degree by taking credits in FGV's other departments, or spending a semester abroad at a foreign law school and have their grades validated upon their return. Despite many of the features of the GVLaw course having never been seen before in Brazil, the programme proved an instant success when it launched in 2002, with its 60 student places remaining consistently oversubscribed ever since.

Over more than a decade as dean of the law school, Mattos Filho focused his efforts on securing GVLaw's reputation as one of the leading law schools in Brazil. Applying the same ceaseless energy to his academic role as he had when launching his two former firms or holding public office, Mattos Filho spent much of the time travelling the world to build links with leading universities, not least Harvard, and raise the profile of the institution. While receiving his fair share of accolades during this period it is perhaps ironic that the full scale of his achievement in challenging the status quo of legal education in Brazil was only made most visible when he had already stepped down as dean. In 2013, global rankings compiled by the Financial Times named GVLaw one of the most innovative law schools worldwide – the only Latin American institution to make the list.

Looking to the future, Mattos Filho is clear that retirement is not an option. Despite stepping down from GVLaw in 2010, he instead returned to private practice – rejoining the firm he helped found more than two decades ago in an ambassadorial role. Always meticulous about striking the "balance between the saint and mercenary" that has driven his career in law, Mattos Filho took particular pains to maintain his connections with academia. Alongside continuing to teach at the FGV, albeit on a more informal basis, Mattos Filho has also started work on the third volume of a book about securities regulations he began researching while a postdoctorate researcher at Harvard (the first two volumes are due to be published in May). Further down the line, he also plans to write another book investigating why securities markets develop in some countries and not others.

Reflecting on a career spanning more than five decades, Mattos Filho says it was neither academia, nor private practice, that emerged victorious from his various roles practising law in its public, private and academic manifestations. Instead, what he learnt is the importance of maintaining a healthy balance between the two. "Depending on the period, sometimes academia was main objective and sometimes it was the law firm, or the CVM," he recalls. "It was never a difficult decision to return to academia, but dividing time between academia and private practice was difficult, because I thought I could perform both equally well, which means you don't take time out for vacations, or your own life. You are always pursuing something as a lawyer or a professional and that is unhealthy."

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