International eye: Italy

McDermott and Carnelutti split

Law firm mergers and demergers were the order of the day in Italy in recent weeks. McDermott Will & Emery‘s merger with Italian firm Carnelutti failed last month (October), with the firms splitting just two years after their merger.

Carnelutti was staunchly proud of its 100-year history and it seems that independence served it best. One US source from McDermott’s management told The Lawyer at the time of the split: “The Milan partners are going to be at their most productive if they’re independent – not to say that they weren’t productive when merged with us.”

As recently as three months ago, Carnelutti managing partner Luca Arnaboldi was making public platitudes that all was rosy with the merger. But there had been questions surrounding it from the start.

McDermott has a small London presence, and the lack of referrals it would be able to bring was seen as a problem. Under the split agreement, Carnelutti regains its Milan independence, while McDermott keeps its small presence in Rome.

The Chicago-based giant, which announced two partner hires in Rome in conjunction with announcing the split, is not the first firm to fail in attempt to merge with an Italian firm, and history suggests it will not be the last.

Clifford Chance had an acrimonious divorce from Grimaldi e Associati in 2002, with that merger also lasting only two years.

Both McDermott and Carnelutti have been at pains to stress publicly that the break-up is amicable. If there is friction between the two, it has been well hidden by both firms’ management – even from their own partners. McDermott partners on both sides of the Atlantic said they had been briefed by senior management that the split was “entirely good-natured”.

But McDermott’s failure to get the Milan lawyers to see themselves as part of an international firm has surely caused friction. Given the Italian attitude to independence, the split had an air of inevitability about it.

Indeed, The Lawyer, when analysing the merger almost two years ago to the day (27 October 2003), questioned how long it would last. The Lawyer wrote: “What are Carnelutti and McDermott Will & Emery thinking? While Carnelutti has had problems over the years, it is still seen as a better firm in Italy than McDermott is globally.”

Taylor Wessing to launch in Italy

As first reported in The Lawyer (24 October), Taylor Wessing remains on track for an Italian launch and has drawn up a shortlist of five candidate firms for either a full merger or a mass lateral hire.

A four-partner Taylor Wessing team has been exploring opportunities over the summer. Despite the search proving, in the words of managing partner Michael Frawley, “more difficult” than anticipated, the team reported back to Taylor Wessing’s international management board in September. Frawley said the firm is now considering which parties it will officially approach.

Frawley blames cultural issues, such as the Italian firms’ desire to remain independent and the close grip on client relationships held by a small number of senior Italian partners, for the delay to the firm’s international expansion programme. But he says that the increased presence of US firms in the Italian market was bringing pressure on local lawyers to seek international deals.

Tonucci delays merger

The forthcoming marriage of leading Italian independent firm Tonucci with Milan-based practice Franzosi Dal Negro Pensato Setti is a significant domestic development. However, it is understood that what will be the largest domestic tie-up in the Italian market has been postponed until the end of the year because the parties failed to negotiate the final terms of the merger. Given the history of mergers and splits in Italy, we won’t be holding our breath.

Clifford Chance‘s Luigi Chessa returns to the fold

October ended with The Lawyer’s revelation that Clifford Chance’s former joint Italian managing partner Luigi Chessa has rejoined the magic circle firm’s Rome Office as of counsel just two years after quitting. Clifford Chance will hope the shock return will be evidence that the Italian practice has drawn a line under its recent woes. In fact, CC sources seem cock-a-hoop.

Chessa was appointed joint Italian managing partner alongside incumbent Nicholas Wrigley in 2002 following the departures of Vittorio Grimaldi, four partners and 26 other lawyers from Clifford Chance’s Italian practice in March 2002.

Chessa, a highly-rated structured finance lawyer, was a partner at Clifford Chance from 1997-2003. He left the firm in February 2003 and, despite being offered an opportunity to join Sidley Austin Brown & Wood as the US firm’s joint managing partner, decided instead to go it alone.

Ironically, the principal reason behind Chessa’s surprise return to Clifford Chance was because he missed the support and infrastructure available at a large law firm.

Since 2003, Chessa has been Standard & Poor’s legal adviser for Italy and secretary to the board of state savings bank Cassa Depositi e Prestiti. Chessa decided to rejoin Clifford Chance as of counsel rather than partner in order to continue to dedicate time to Cassa Depositi.

Parmalat saga continues

On the deals front, Parmalat hit the headlines once again. As first reported in The Lawyer (17 October), the latest stage in the ongoing saga has gifted EY Law Italy and Willkie Farr & Gallagher major mandates.

EY Law is advising unlisted Italian dairy group Granarolo, which is considering whether to launch a bid for Parmalat. Meanwhile, Willkie Farr is believed to be acting for French dairy group Lactalis, which is also considering a bid for Parmalat. Parmalat’s shares resumed trading earlier this month following a 22-month suspension.

The company’s shares dramatically collapsed at the end of 2003, resulting in Enrico Bondi, corporate turnaround specialist, being appointed as the company’s administrator. Gianni Origoni Grippo & Partners, which has been advising Parmalat throughout its insolvency, is advising the company on its potential takeover. As reported in The Lawyer (11 April), the Italian firm is already the chief beneficiary of the fees bonanza arising out of the high-profile insolvency.

International roundup Coming up: Asia: 14 Nov Europe: 21 Nov US: 28 Nov Europe: 5 Dec