Finance wants to create a mathematical model to assess the judicial risk of government measures

The PGFN (Attorney General of the National Treasury) wants to create a system that allows the government to assess, in a preventive way, possible legal risks arising from measures being studied by the Federal Executive.

The central objective is to anticipate whether a given legal solution may result in an even greater headache in the future —and precisely to avoid adopting that path.

Although it seems like an obvious measure, this evaluation is not done systematically today. Some initiatives are subject to careful analysis, but this is not always the rule. The Union also has a number of legal bodies responsible for defending before the courts, and their information bases are not unified, which can make it difficult to measure risk.

“The minister has an idea or a political demand came, a demand from the President of the Republic, [então] I want to know what the risk of this demand is. I want to make an interim measure for anything, what is the legal risk? I want to know this beforehand,” he says to Sheet the Attorney General of the National Treasury, Anelize Lenzi Ruas de Almeida.

The PGFN already monitors part of the actions filed by the Union or in which it is a defendant, but the objective now is to anticipate the analysis in order, if possible, to avoid that a government initiative is judicialized, as has frequently occurred.

The method is known by the formal term of “jurimetry” and has been used in large law firms in the country. It consists of applying statistical models to information from legal processes.

Almeida invited federal prosecutor Manoel Tavares to develop the model. The biggest challenge, according to her, is to quantify something that often depends on legislative wording and not on a number.

Some of the questions to be answered are whether there is a lawsuit on the subject, what is the majority position, whether there are decisions in the Carf (administrative court that judges tax conflicts) and, in an unprecedented case, what the legal doctrine says.

“For example: the government gave a hefty benefit for two years. At the end of the first year, he said ‘it’s not worth it, the policy objectives were not met, let’s revoke it’. What is the legal risk of revoking ? It will depend on the case, but it is one of the questions that, I hope, the model answers”, he says.

“How do you calculate this? It could have a huge impact and it could have no impact at all. But it’s no use going to the minister and saying ‘there’s a risk’. The question is what is the risk, how much is the risk.”

The idea is conceived in the midst of a new strategy adopted by the Minister of Finance, Fernando Haddad (PT), to closely monitor judicial fiscal risks, which in recent years have become a relevant pressure factor on the public budget.

A monitoring council was created, with the participation of ministers Jorge Messias (Attorney General of the Union) and Simone Tebet (Planning and Budget), in addition to Haddad.

On an advisory basis, the collegiate may request information on the economic impact of judicial theses and suggest measures for articulation between the bodies to monitor the actions. The presidential decree that created the council provides for bimonthly meetings.

According to Almeida, the model has “homemade” inspiration and is based on the experience of the JEO (Budget Execution Board) — formed by ministers of the economic area and who is responsible for spending decisions and distribution of resources within the government

Specialists from other entities, public and private, may be invited to participate in the meetings, without the right to vote. Thematic groups and commissions may also be set up to prepare studies and proposals.

There is also a permanent technical committee, made up of representatives of legal bodies —among them the PGFN itself—, in addition to the National Treasury and the Federal Budget Secretariat, to provide support and advice to the council of ministers.

The creation of the collegiate took place in the wake of important judicial defeats, such as the decision of the STF (Federal Supreme Court) that removed ICMS, a state tax, from the calculation base for PIS and Cofins, federal taxes. The understanding caused an embezzlement in the collection of the Union.

There was also a considerable increase in precatorios, amounts to be paid by the Union to comply with a final judicial sentence —in this case, there is pressure on the side of expenses.

The jump in precatories, which would reach BRL 89 billion in 2022, was what led former Minister of Economy Paulo Guedes to propose a payment ceiling for these judicial debts so that they do not occupy the space of other public policies within the ceiling of expenses. The measure was the target of criticism by those who classified the change as a “default”.

At the time, the Economy and AGU exchanged accusations behind the scenes: Guedes said he had not been warned about the “meteor” of judicial debts, while the legal area had documents that proved the warnings made to the economic team. In addition, estimates of legal risks are computed annually in the Federal Government’s Balance Sheet.

“When Minister Haddad proposed [o monitoramento], my first reaction was to say ‘already exists’. But the operational flow already exists. He wants a strategic look”, says Almeida.

“Each ministry is its own box, it has its own world, the ministers are there, each one putting out his own fire. When you create a forum and get the ministers talking about the subject, the chance of avoiding future noise is enormous. You share the decision , and this is important in a subject that is transversal.”

The initiative to create the council was praised by specialists in public accounts. “If well executed, this task will have the potential to improve the Union’s legal defense and reduce the pace of growth of precatorios”, wrote economist Marcos Mendes, associate researcher at Insper and columnist at Sheet.

In Almeida’s announcement for the command of the PGFN, on December 19, 2022, Haddad stated that the handling of “the most important issue for the country’s fiscal balance” would be in her hands and the deputy attorney general of the National Treasury, Gustavo Caldas.

The minister also said that he would be part of the team that would act “firmer with the courts to reduce the fiscal risk of judicial decisions”.

Almeida is the second woman to assume command of the PGFN. Before her, Adriana Queiroz served as Attorney General of the National Treasury from 2009 to 2015.

Treasury Attorney since 2006, she holds a master’s degree in public policy from the University of Oxford, in the United Kingdom, and a postgraduate degree in public administration from FGV (Fundação Getulio Vargas).

He has held a number of positions at the PGFN and has also served as Deputy Head of Legal Affairs at the Presidency of the Republic.

At the Attorney’s Office, he headed the area that manages the Union’s Active Debt. There, Almeida put into operation a project that, at the time, also seemed obvious, but was equally distant from the body’s day-to-day: the creation of a risk classification of debtors, to increase the efficiency of collection.

Until then, the PGFN used the same collection efforts against an active company and an already bankrupt company. The project consisted of creating a scale for classifying credits by greater or lesser chance of recovery. The model is still applied today and allows for better targeting of work at the agency.