While the three years following the onset of the Covid-19 pandemic were marked by instability and uncertainty – exacerbated by Russia’s war against Ukraine resulting in gas supply issues and inflation – law firms have been presented with opportunities for expansion and growth within a significantly reshaped legal market. With Italy among the European countries that suffered the most from both the pandemic and the energy crisis, its legal community has been concerned as to their fate in 2022.
Both large international and independent law firms faced an arduous business environment, characterised by tightened competition, shifting client needs, technological advancement and strict regulatory developments. Despite these challenges, many of Italy’s best independent law firms were able to achieve strong results in 2022 and have unanimously reported their busiest and most successful years, with an average increase in revenue of up to 10%.
‘In 2022 we recorded an average growth in work of 9%,’ says Legance managing partner Alberto Maggi. ‘Corporate finance and banking grew at this rate, but also IP, white-collar crime and public law grew significantly. For Legance, 2022 was again a record year in terms of economic results.’
One of the key changes in the legal market in 2022 was the continued shift towards remote working and digital services, which forced law firms to invest in new technologies, especially AI, to streamline processes and improve client service and efficiency as well as seeking new ways of providing legal assistance. Similarly, the increased reliance on technology led to growth in demand for legal services in data protection, intellectual property, and cyber security matters. Growth has also been witnessed in regulatory compliance, M&A, and Covid-19-related litigation in the healthcare sector. Across the board, independent firms have reported significant growth in dispute resolution, with an unprecedented number of disputes arising, particularly in the M&A, banking and finance, infrastructure and digital sectors. For many firms, litigation departments were the main source of turnover.
As companies seek to navigate financial difficulties, Italian law firms have seen an uptick in restructuring and insolvency mandates. BonelliErede president Stefano Simontacchi, however, notes that while restructurings did in fact steadily increase, enormous state aid and recovery packages given to corporations and individuals have brought the economic decline to a temporary halt. But while a temporary reprieve was achieved by tapping into Italy’s PNRR (national recovery and resilience plan) and NextGenerationEU, the EU’s recovery package, this has yet again been toppled by geopolitical developments. As Simontacchi comments: ‘With inflation on the rise and the possibility of a major recession just around the corner, we and other European firms expect that 2023 will see a high number of restructuring cases.’
‘With inflation on the rise and the possibility of a major recession, we and other European firms expect that 2023 will see a high number of restructuring cases.’ Stefano Simontacchi, BonelliErede
Other areas of growth, predicted to continue this year, have been large investments in infrastructure, real estate projects and energy transactions. Disrupted energy supplies, changes to energy regulations, pricing and fees, has put pressure on businesses, and severely impacted financial institutions. Equally, it has propelled the transition towards green energy. Firms that were able to respond quickly and effectively to increasing demand and investment in renewables to reduce the existing dependence on Russia were able to capture new business and expand their client base. This trend is accompanied by an increased focus on sustainability and environmental, social, and governance (ESG) issues. In recent years, top Italian firms have established ESG-focused teams to address the pressing needs of clients to navigate the complex regulatory environment as transactions are increasingly structured through an environmentally and socially conscious lens. Contrary to the US or the UK, ESG work in Italy as well as other southern parts of Europe has not translated into large revenues yet; mandates are so far predominantly emanating from the public sector instead of high-level investigations within corporations.
Another layer of uncertainty was added by Italy’s new government. After Giorgia Meloni, party head of right-wing Fratelli d’Italia, was named prime minister in October following elections in 2022, the impact of the new government on the legal landscape is yet to be seen. While changes in regulation are expected to particularly impact the demand for legal services in data protection, IP, and environmental law matters, policies to attract foreign investment may lead to further growth in M&A, banking and finance, and the real estate sector.
With an augmentation in foreign investment, Italy is becoming more attractive for international firms. While historically several international outfits have entered the Italian legal market, few if any have been successful and as such are not perceived as an immediate threat to the independence of local firms. However, Simontacchi comments: ‘Will a local independent firm be able to compete in the next 20 years, given the quantum leap the world experienced and – at EU level – the increasing subjects that will be centrally regulated? Those are the real challenges to be faced, regardless of whether international firms expand into Italy.’
Filippo Modulo, Chiomenti’s managing partner, suggests ‘complex deals require more multidisciplinary and homogeneous capabilities from law firms’. To tackle a client’s issues effectively today, he says an integrated approach is essential: ‘Any transaction ought to be accompanied by the same level of quality and competence on the regulatory side that is provided with the main deal advice. Chiomenti got there after years of focus and pursuing a clear strategy.’ Other independents having achieved that strength-in-depth throughout the firm include BonelliErede and Legance.
Another challenge faced by the entire legal sector in a post-pandemic environment is being attractive to new talent. According to the managing partners of Chiomenti and BonelliErede, there is not a war for talent among firms per se but rather a structural problem that needs to be overcome. The generational shift is pushing firms to adapt their work-life balance management and their operations with the aim of improving flexibility, job satisfaction and good health among staff.
It is clear that independent Italian law firms face a range of challenges over the coming year, including increased competition, technological advancement, talent attraction, increased regulation, inflation and geopolitical uncertainty. Those with agility and the ability to embrace new technologies, respond to the needs of clients, and stay ahead of changes in a rapidly changing world, are headed towards success in this competitive market. LB
| Rank (by Legal 500 ranking) | Firm name | Region | Total lawyers | Total partners | Promotions | Offices | Partner hires |
|---|---|---|---|---|---|---|---|
| 12 | Chiomenti | Italy | 420 | 58 | 1 | 6 | 3 |
| 13 | BonelliErede | Italy | 554 | 92 | 6 | 8 | 5 |
| 16 | Legance | Italy | 353 | 82 | 15 | 3 | 2 |
| 19 | Gianni & Origoni | Italy | 435 | 110 | 6 | 11 | 2 |
| 56 | ADVANT Nctm | Italy | 280 | 68 | 1 | 4 | |
| 58 | Gattai, Minoli, Partners | Italy | 176 | 31 | 2 | 2 | 1 |
| 63 | Pedersoli | Italy | 160 | 49 | 13 | 3 | 5 |
| 64 | Gatti Pavesi Bianchi Ludovici | Italy | 160 | 44 | 6 | 3 | 4 |