The new Italian government has thrown open its legal market to full competition after scrapping minimum fees for lawyers.
As first reported by The Lawyer (12 September 2005), the European Commission threatened legal action against Italy last year to combat anticompetitive regulatory practices such as minimum fee caps and advertising bans.
The Italian government passed a decree on 30 June abolishing the tariff system, which offers lawyers a minimum percentage of a deal or case, and also lifts the limits on law firms advertising.
Tariff systems allow transactional lawyers to charge clients a percentage of the deal they are working on, from a minimum of 0.5 per cent up to a maximum of 3 per cent.
Litigation lawyers often command a percentage of the value of the case and could previously bill minimum amounts for filing court documents.
Lawyers can still charge on a tariff basis if they agree it with the client, but will not have the safety net of a minimum percentage.
Bruno Cova, co-head of Paul Hastings' Milan office, said he welcomed the changes. "I'm in favour," he said. "I don't see why this profession should have minimum fees."
He added that it would not affect the way foreign law firms do business, saying: "For transactional work no international firm charges on a tariff basis. It tends to be the Italian firms and corporate boutiques."
Another Italian lawyer agreed that it would affect Italian firms more than their international counterparts. "It might hurt some of the big firms as it could change the attitudes of some clients. The percentages can be unbelievable on the big deals," he said.
Professor Guido Alpa, president of the Consiglio Nazionale Forense (the Italian Guild of Lawyers), wrote to Italian president Giorgio Napolitano saying the reforms would penalise lawyers and citizens alike, causing irreparable damage to the country.
He is worried that small firms and sole practitioners, which make up a large proportion of Italy's 150,000 lawyers, would struggle to compete.