O Sols Mio

Despite the foreign invasion on the Italian legal market, Studio Legale Carnelutti remains fiercely independent. Tamzin Hindmarch reports on the survival instincts of the 100-year-old firm which refuses to join forces with a US or UK giant

As you are led into the office of Studio Legale Carnelutti's managing partner Marino Bastianini, try casting your eyes sideways. You will spot a large newsroom spike, onto which some 50 copies of the French newspaper Le Monde have been therapeutically impaled. It rather gives the impression that journalists are not at the top of this man's Christmas card list.

The spike isn't real though, it is actually a work of art, and when I turn my attention back to Bastianini himself, the large wide-toothed smile I see before me is not that of the ornamental wooden crocodile snoozing on the desk between us, but belongs to a man whose charisma and charm immediately puts visitors at ease. When it comes to selling Carnelutti's image, Bastianini is a very good salesman.

But the boss is not the only person in this firm who appears to be happy. As I wander down its corridors and meet other grinning partners, I wonder if behind the tall wooden shelves of the library there is a secret room where staff are tickled with feathers before going outside to meet clients. Or perhaps they serve giggle juice in the canteen.

The truth is that these people have good reason to be content. For despite the fact that they could have been front line cannon fodder during the invasion of Italy by UK magic circle firms and US giants in recent years, Carnelutti has remained just as it wanted to be – an independent Italian law firm.

Bastianini says: “Today, while we cannot compete with Clifford Chance all over the world, we can certainly compete with them here in Italy.”

Professor Francesco Carnelutti established the firm 100 years ago in Venice. He was a highly respected lawyer whose text books are still referred to by today's Italian law students. When he died in 1965, his two sons took over the firm.

Partner Paolo Scarduelli says: “He had two sons and they were also very good. It is often the case that the second generation is weaker than the first but that was not the case with these brothers. They were extraordinary lawyers because they were the first in Italy to open the profession to the international market.”

In fact the firm's Paris office is run by a descendant of Francesco Carnelutti. His nephew Alessandro Carnelutti has spent time as a French diplomat in Brussels and through his practice offers specialist advice to clients on EU law.

The London office was established more than 20 years ago and is used by Carnelutti's lawyers to keep an ear to the ground in the City.

“It is a sort of diplomatic move to keep us informed of what is going on in Europe's financial capital,” says Bastianini. “If there is a major UK institution doing business in Italy, we would like to know about it.”

While a hefty portion of projects for the Milan office are connected to the city's role as Italy's banking and finance centre, the Rome office is used for work generated by the state authorities, ministries and anti-trust clients based in the capital.

Meanwhile, the Naples office specialises in maritime and corporate law and is used strategically to cover the south of Italy and the coastal ports, while the Padua office covers the industrial and prosperous north east. “We place our offices where the business is,” says Bastianini.

Carnelutti moved from its original Milan offices near the cathedral to the five-storey building it uses today in September 1999. It offers legal services to Italian clients and foreign investors. Areas it advises on range from general corporate and commercial law to dispute resolution, food and drug, and energy law.

Today the firm is ranked among the top in Italy and Bastianini is one of the country's leading lawyers in corporate, commercial and M&A.

The firm's main practice areas are M&A, banking and finance, general corporate and commercial, anti-trust and taxation. The IPO department, headed by partner Luca Arnaboldi, is also showing promising results this year. This year the firm has dealt with a total of 18 IPOs. Other areas of strength include litigation and arbitration, sports, entertainment and media law and telecoms.

The firm's main growth areas are administrative law, real estate, employment law, taxation and anti-trust, for which a demand was brought about by a change to Italian trading regulations in 1990.

Scarduelli says: “I think anti-trust is a growing field in the Italian market in general. It is quite a modern area of the law and is therefore particularly exciting for the young lawyers.”

But times have not always been easy for Carnelutti, and the firm as it is today is the result of a number of Italian mergers.

Bastianini says: “It was quite a nice market for us here in Italy 10 years ago. Then the British arrived and took over or linked themselves with other leading commercial law firms such as Gianni Origoni & Partners, Grimaldi and Brosio Casati, and everything changed.

“They started to reduce an already narrow sector of the market, so we had to change our strategy in order to be in a strong enough position to compete with them.

“To do this we had to be able to offer the entire range of services usually rendered by the UK firms acting in the corporate and banking sectors alongside us.”

But according to Bastianini, there was a price to pay for remaining independent and undefeated. “The changes caused us problems because we knew that to stay this way was going to require an enormous amount of investment in terms of time and personal commitment from those in the firm,” he says.

“Most people wanted to enter into this new venture and had the spirit to make it work. But there were some exceptions and we lost some people as a result – the old man usually thinks that it is too late for him.”

Since 1998, the firm has been in dispute with those who quit over their use of the Carnelutti name. When they left the firm they set up in independent practice in London and Milan under the name Studio Legale Fondato da Francesco Carnelutti. A few months ago however, the firm won a judgment that prevents the breakaway group using the Carnelutti name. Bastianini says he expects the dispute in Milan to be settled before the end of the year. Despite the departures the team has since grown from 12 partners and 35 lawyers to 18 partners and 140 associates and support staff.

Clients include telecoms giant Nokia, BSkyB for television rights and other legal matters, AXA, Severn Trent Water, a number of big ticket US and UK multinationals, and major Italian banks.

Bastianini says: “We formed a new partnership whose strategy was to create a law firm able to supply the same range of services as those supplied by the international UK or US firms, but based here in Italy.

“In order to progress, we absorbed a number of smaller firms which had good clients but which were not able to satisfy the clients' desires because they did not have the bigger organisation behind them. They were on the verge of losing clients to the multinationals. At the same time we needed to grow to become a rival.”

The result is a melting pot of pre-existing Carnelutti employees and partners, lawyers from smaller Italian firms absorbed either fully or in part – such as Marchini Oreste – and those who joined when their own firms merged with a multinational. Carnelutti is in discussions with another Italian firm, though a decision on a merger has not yet been made.

In terms of results, the firm has been able to increase its sales volume by adding growth to the original platform and is able to offer all services at national, international and cross-border level, except criminal law.

According to Bastianini, in the second year after the shake-up its return on revenues doubled and this year the firm has already seen a 60 per cent increase on this.

“At the very beginning some of them [foreign firms] made tempting offers to get clients on board. We know of cases where they offered to take care of an acquisition for no fees except investment of costs,” he says.

“They entered the market very aggressively and it was distressing for us because some of our UK clients here in Italy were also clients of UK firms in the UK. So when those firms moved over here they offered to take care of everything as a package deal. In a few cases this was accepted by the client because they were convinced that it would save them money.”

But he believes that for the time being at least, the party is over and a new trend is emerging in the Italian market. He says international clients are reassured by Carnelutti's “insider” knowledge of the Italian markets and economic trends, and national clients are often grateful to be doing business through a lawyer who can interpret international law in terms that they are familiar with and without the embarrassment caused by language barriers in the meeting room.

The firm has picked up extra work from the growing number of Italian companies expanding into the global market and therefore needing cross-border legal advice in a number of new areas, which a smaller traditional Italian firm may not be able to provide.

Bastianini says: “I can understand that to a multinational company, a multinational firm which could assist all over the world with a global package would be impressive. But at the end of the day they have to question whether it is really so.

“We did not suffer particularly from the fact that multinational firms came to Italy. Although we lost some foreign clients because of the situation which they brought about, we have gained many more Italian ones than we used to have,” he says, viewing the new arrivals as competitors rather than enemies.

“Being a national law firm we believe that we are in the best position to take care of both.”

Carnelutti may have been successful in forcing through growth to defend its independence and market share from the invasion of UK and US firms, but it remains under constant threat.

While it may claim to be winning domestic clients back from its new international neighbours, the demand for multi-jurisdictional capability is only going to increase, and if Carnelutti cannot meet that demand on its own, it is likely to be left facing one of two stark choices – opt for some form of international alliance or fight at all costs to retain an independence which could ultimately see the firm's best clients drift away and the famous Carnelutti name fade into mediocrity.

But the firm's current buoyancy suggests that the desperate drive for global domination will not leave it out in the cold.