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February is the cruellest month as far as Allen & Overy’s (A&O) Italian arm is concerned. Last month saw the firm lose banking and finance head Giancarlo Castorino and partner Davide Mencacci.
In February last year projects head Franco Vigliano and banking stars Andrea Arosio and Dario Longo quit the firm.
The series of departures has left A&O without a top-level banking name in Italy. For a banking practice with A&O’s pedigree, not having a credible finance practice in such a key jurisdiction is problematic to say the least.
As a stopgap measure it looks as though managing partner Massimiliano Danusso will have to take up some of the slack – but Danusso is not really a banking lawyer, he specialises more in equity capital markets.
Crucially, A&O has not been able to surmount the inevitable personality clashes and politics of its Italian office. A string of lawyers contacted by The Lawyer claim that former banking head Castorino was a source of tension within the Milan partnership.
Influential London banking star Stephen Gillespie (now at Kirkland & Ellis) is cited as having been a key supporter of Castorino, who was regarded by many in London as an undoubted talent within a patchy Italian practice. However, former Milan colleagues say that, despite his skills as a lawyer and a businessman, Castorino’s maverick tendencies divided the office. In a typical comment, one lawyer says: “He was one of the best lawyers I ever met, but he wasn’t a team player. He fought with each lawyer in the office.”
Whatever the history (and Castorino himself could not be reached for comment) A&O is now facing a very difficult situation in Italy after the top-level departures.
One Italian lawyer close to the firm says: “Allen & Overy is basically empty for banking now. Piece by piece it went at all levels – trainees, associates, partners.”
Most former lawyers of the department look back with sadness rather than anger. One former member says: “It’s a real pity. There was a period around 2003 when Allen & Overy was the best banking firm in Italy.”
Many associates who left A&O have moved in-house at banks. In normal circumstances this would be regarded as a plus, but sources close to the situation suggest that mandates will not necessarily come to A&O by right. One lawyer claims: “Many former lawyers are at banks now and aren’t considering to use the firm anymore.”
To add to the firm’s troubles, magic circle rivals Clifford Chance and Linklaters have overcome their own problems on the peninsula and are ramping up in finance.
“[A&O is] looking to hire a team, but it’s not easy at the moment as there’s a lot of competition. They have to start from zero,” says an observer.
Central management is determined to look at the situation as an opportunity to reform the Italian banking practice, but without the politics that have gone before.
A&O global head of banking Mike Duncan says: “We’re in a state where we need to re-establish the practice. We need to replace Giancarlo [Castorino] and Davide [Mencacci]. Italy’s a fairly fluid market and there seem to be personality clashes everywhere – we’re not different in that regard.”
Other sources within the firm say the new-look Italian finance practice will be broader and less focused on leveraged finance so as to resemble London more closely.
A&O needs not only to hire in fresh blood, but may also need to overhaul its entire working culture in Milan to make sure the next generation of banking stars does not follow the class of 2003 out of the door.