The Italian market differs deeply from other European legal markets in one key regard: international firms are spread wide throughout Italy, but are often only selectively present in the market. Many of them are either strong only in specific areas or had to resort to sporadic lateral hires in order to offer a full-service, to the detriment of a cohesive team and vision. Accordingly, it is the independent firms that are often seen as the true market force.
BonelliErede and Chiomenti, as well as Gianni & Origoni and Legance, account for a significant chunk of the market. Armed with this strength, Chiomenti’s managing partner Filippo Modulo is well pleased with the past year’s performance and does not seem concerned about the future. With businesses and finance up and running, and capital as available as ever, 2020 was for a record year for Chiomenti. When asked about the next 12 months and possible downturns or recessions, his answer is clear: the question is misplaced.
‘The first reason for optimism is that the initial disorientation when countries started to go into lockdowns is now overcome. “What would you do if a pandemic broke out?” is a question that not too long ago would have sounded absurd, but is one that, unfortunately, we had to learn how to answer.’
He says the operational emergency has passed: those that were less prepared to work from home might have suffered in the early months but had plenty of time to catch up and realign their perspective on the way they had to do work. Once the panic was over, many firms even had to review their early Covid-19 predictions to a less dire outcome, as the market too had been more resilient than expected. ‘Yes, the virus did hit hard, but selectively, and some operations were sluggish to say the least. But other areas are not just surviving – they are alive and kicking.’
On top of the restructuring activity generated by clients in exposed sectors, strategic M&A and complex transactions are still happening; foreign investors have not lost interest in Italy; and the government introduced emergency measures to facilitate business access to credit. These include funds and financial guarantees issued by the state-owned investment bank Cassa Depositi e Prestiti. Moreover, there is also a tool aimed at protecting Italian companies and preventing foreign parties – notably from China – from getting their hands on assets in strategic sectors such as finance, telecoms and data. It is the so-called Italian ‘golden power’, launched in 2012 and revamped last August, that enables public authorities to intervene in market transactions that are deemed strategic and direct or completely block them.
An additional factor that bolsters the confidence of independent law firms in Italy is Brexit. According to some Italian specialists, London will cease to be the chosen jurisdiction for many finance-related cases, and, as knowledge of the common law will be seen as less of an advantage, UK firms will likely be bound to draw civil law expertise from local firms. BonelliErede is one firm that has made significant strides in disputes in recent years – with the addition of partners from independent player Lombardi e Associati in 2019 and, more recently, hiring the former president of the court of appeal in Milan, Marina Tavassi, as of counsel at the start of this year.
So where do challenges lie? ‘Where they have been lying for decades. Coronavirus hasn’t changed that,’ says Modulo.
Firstly, it is very competitive. The market is highly fragmented and the client base is too, with different cross-practice matters arising in myriad sectors. Independent firms have to be ready to address the needs of their chosen market segment.
Secondly, there is the pressure to transition from an old-school to a more up-to-date type of law firm. Italy is known for housing a number of legacy firms that focus their strength around a sole, highly recognised practitioner – a business model destined to disappear (albeit slowly) as it struggles to tackle the complex, multidisciplinary requirements of today’s interconnected market. In order to succeed, new-generation Italian law firms need to find newer methods to collaborate and provide outstanding teams in place of pre-eminent individuals.
And, while the likes of Latham & Watkins and Linklaters in particular have made significant strides in Italy in recent years, the real competition, as far as Italian independents see it, is still with each other. LB