Within its 70-year history, Pinheiro Neto Advogados has built a solid position in the Legal Market. The firm's prestige and reputation have now crossed Brazil's borders. How does the institution manage to maintain its relevancy and modernity throughout the years?
Leaders League: How do you see Brazil's current economic context and what is the impact on corporate law?
Alexandre Bertoldi: I believe that our economy is not in its finest moment. After several years of an exaggerated euphoria regarding Brazil, we are going back to reality. I wrote a article that was published on The Economist about this subject, in the issue with the famous cover of the Christ (the Redeemer) 'crashing', which was a reference to another issue published earlier with the Christ 'taking off' as a rocket. I figured that Brazil was not as good as everyone thought and now I believe we are not as bad as everybody is saying we are.
This 'institutional crisis' we are experiencing in Brazil, with lots of corruption investigations, ends up giving less maneuverability for the GCs to make mistakes - which drives them to invest in 'safe harbors' to avoid getting their decisions questioned. This scenery, however, offers great opportunities and increases differentiation; those who manage to act correctly and differentiate themselves will, when everything goes back to normal, reap what they sow.
Imagine an investment bank with a busy work pipeline, making deal after deal. Do you think it will consider Pinheiro Neto or a medium-sized office? They know they cannot make mistakes. That is how, as astonishing as it seems, we ended up having better results than we did last year.
L.L. What is Pinheiro Neto's take on organizational growth and culture?
A.B. We are definitely very concerned about growth, and we truly believe in organic growth. Our culture is such that we have never hired a partner laterally and seldom hire lawyers in this manner. We want to train professionals. We do not have the ability to grow as quickly as others might during prosperous times, but we also do not retract when it becomes more challenging; that is because we invest in our number one asset: our people. We send fifteen lawyers a year to pursue master's degrees abroad and another fifteen pursue internships abroad. We aim to grow sustainably and under control - and our business model depends on the training of our professionals. We hire an average of 30 recently- graduated lawyers every year; this year we decided to hire them all, and in the end we had a better year than expected.
We have a 100% transparent remuneration system; everybody knows how much everyone earns. A third of the office's profit is equally divided among the partners; another third is divided according to the equity that everyone has - and can sell - and which is limited by a cap that people usually reach after around eight years; the last third is divided by merit without any subjective criteria, it is based on executed tasks. There is no payment based on case sourcing or client relationship – the client does not belong to a partner. It is one thing to talk about how the task was executed, and another to talk about the results it brings to the office. We reached a system in which compensation doesn't vary more than 20% from one partner to another: it is a somewhat 'socialist' firm, as they say.
The rationale behind this is that we do not want people to stay here only for the money. Money is good, everybody likes it and a firm that does not succeed financially does not make sense; but the person must buy into the model – the work environment and the way we do things. I believe that, in spite of being well paid here, they could earn even more elsewhere; but the status, security, work environment and the trust you have in your partners in Pinheiro Neto is hardly replicable. We know each other for more than thirteen years, there are no outsiders, and we intend to keep it this way as long as possible – the maturation process for you to become a partner is 11 years. Every year we reward those who reach twenty, twenty-five, thirty years in the office.
L.L. What is your opinion on the profile of this new incoming generation of lawyers? Does the model adapt to the people or must people adapt to the model?
A.B. I think that people nowadays are under the impression that there are a lot more opportunities and certainly have more urgency than before; so waiting eleven years before having a chance to become a partner is a challenge. We have increased flexibility in many aspects, of course - when I began, having a beard was forbidden, you had to be here at 8:30AM sharp - now, the day-by-day in Pinheiro Neto is more laid back than its own policies. There are other things, however, that we cannot allow because of our philosophy - some people do not like ties but, in an office where 70% of the clients wear ties, it has to be mandatory.
I try to talk to everyone who quits their job at the office – and that is now one of my most important tasks. The concern about career and future is less relevant than the aspiration for personal well-being; people nowadays are more hedonistic. We certainly have to adapt, but, on the other hand, it is a business model that cannot hold as much change. It is inconceivable for us not to have a physical office, for example. Implementations, as long as small and reasonable, might happen, but not revolutions.
L.L. How about the decision making process in the firm? Were you able to find a model that allows partners to have a voice in the firm's decisions?
A.B. Yes, I believe so. We hold General Partner Assemblies, in which our first basic principle is that each partner has one vote, and all votes are equal. All 85 of our partners participate and we meet four times a month - every Monday, during lunchtime. Two meetings a month include all partners. The other two meetingsare divided into different areas. I believe in decentralization - we have partner committees which are responsible for areas such as IT, marketing and recruitment, and everyone is encouraged to share their ideas - the result is that most of our partners are involved in management in some way. In these meetings, we also elect the managing partner and the governing body, responsible for institutional policies. Both are 3-year terms, and elections for those positions never fall on the same year.
L.L. What advice would you give on management within the field of corporate law?
A.B. Have a pulse, understand people, understand what is happening – otherwise you are not doing a very good job. The rest will come as a consequence.
I hired an MIT graduate to help me analyze the historic trend for all of our office results, and it was very clear: When the environment worsens, you see how it affects the office. Of course, we are integrated in a certain context - but you cannot really control it. What you can control is the deterioration of the internal environment.
If the internal environment is put in jeopardy due to salary dissatisfaction,.if there is envy, or the perception of injustice, of bias and favoring, if there is perception that some are the elects while others are the rejected, things simply do not move forward. The numbers have confirmed what I have always believed empirically.
Thomas Di Benedetto