The Italian job
10 July 2000
4 February 2013
17 September 2013
22 January 2013
10 January 2013
16 January 2013
Fine wines, fashion and food to die for are just a few of the attractions which might tempt the downtrodden rain-drenched UK lawyer to ditch the City in favour of la dolce vita.
But aside from the lure of palatial offices just a car ride away from the lakes and mountains of Italy and temperatures in the mid-thirties throughout summer, there are strong strategic incentives for setting up shop in the region. The appearance of these elegant, if tired, buildings is often deceptive. Italy's economy is growing, its markets are liberalising fast, and with this there is a greater need for state-of-the-art legal services which can cope equally well at both international and national levels.
You can find the beautiful Palazzo Belgioso on any tourist map of Milan, alongside the Gothic spires of the city cathedral and near the Scala. Built in the 18th century for the family of a Holy Roman Empire prince, it is now home to Gianni Origoni & Partners, one of Italy's leading law firms and part of Linklaters & Alliance.
Since it was established in 1988 as Gianni Origoni Tonucci, the latter partner has left to set up his own practice. Despite this, and since a Linklaters merger of Gianni Origoni's New York and London offices, it has grown from four partners and 10 staff to 20 partners and 160 staff.
Explaining the appeal of the country, Linklaters chief executive Terence Kyle says: "There is the emergence of a lot of growing and vibrant companies which are doing business in the world markets from their Italian bases, in particular high-tech businesses and specialist engineering, as well as the traditional industrial sectors."
Gianni Origoni's clients include Bausch & Lomb and Benetton's investment arm 21 Investimenti, Milano Centrale Spa, Mannesmann, INA and General Motors.
The firm prides itself on its modern "US-style" approach, offering a client-oriented service and emphasis on a speedy response to requests. It is currently in the process of recruiting a finance director and a marketing director. Both of the newly-created posts are a first for Italian firms and were made to accommodate the changing needs of local practices.
Indeed, Gianni Origoni is a perfect example of the cultural shift taking place in the Italian legal profession. All but one of its partners are equity partners - a far cry from the traditional patriarchal approach of bygone years, when a firm was passed down from one generation to the next and run by one or two lawyers with a small team working for them.
Beneath the fresco ceiling in a stately dining room - which doubles as the firm's conference room - Gianni Origoni partner Alessandro Giuliani talks of the changes facing Italian lawyers. "London has become the centre of European business and so for us as a leading Italian firm, our association with Linklaters as one of the UK's top five has been a natural match," he says.
"We were prepared to lose a little of our precious independence in return for its name and the quality of its activities, especially in terms of financial and M&A work."
The firms are expected to merge fully in January 2002.
This Anglo-Italian relationship is by no means unique. In the past decade, all but one of the magic circle firms have established an Italian connection with one of the country's existing reputable firms. Only Slaughter and May has stayed away.
Freshfields set up shop in the fashion district of Milan in 1997, taking over Lega Colucci Albertazzi & Arossa. It has another office in Rome. A year later, Allen & Overy merged with Brosio Casati & Associati in Rome, Milan and Turin, and most recently it opened an office in Padua (The Lawyer, 19 June). Both relationships have remained intact.
A&O managing partner John Rink says: "You cannot look at Italy separate from everywhere else in Europe. Italy is one of the most important economies in Europe so you cannot ignore it if you want to be a totally pan-European firm."
Within the same square mile of Milan - Italy's financial and banking capital - Clifford Chance continues to work in partnership as Grimaldi &Clifford Chance.
Grimaldi & Clifford Chance, which is the result of the 1993 merger between Clifford Chance and Grimaldi &Associati, boasts a successful growth rate. Initially made up of four partners and 15 staff, it has profited largely from the Italian government's privatisation programmes and the big-ticket work which it has produced to become one of the country's leading firms.
Arguably the market leader, it now has 11 partners and 45 lawyers in Rome, and a further partner and seven lawyers in Padua. Of the team in its Milan office, four partners and eight lawyers are from the UK. A further three are US lawyers.
The firm earned its reputation in the early years in Rome, where founding partner Vittorio Grimaldi - who has since left to establish his own practice - had strong links with the city and clients. The work was and still is largely related to administrative and governmental bodies. Among others, it has advised Italian state holding company IRI and shareholders in the banks Credito Italiana and Banca Commerciale Italiana.
As liberalisation began, a gap in the legal market was created which needed to be filled by lawyers specialising in securities, listed companies and banking work. In 1994, Grimaldi &Clifford Chance's Milan office opened to serve the city, which had shaken off its industrial past and gained a reputation as the country's economic and financial centre.
Its two main areas of practice are corporate finance and banking, though its litigation and regulatory services departments are expanding. And it is dealing with 20 separate listings of Italian companies on the Italian stock exchange this year.
Nationally it advises Banca IMI, Mediobanca and Banca Commerciale Italiana. Internationally it advises Warburg Dillon Read, Credit Suisse First Boston and Merrill Lynch among others. Securitisation clients include Morgan Stanley Dean Witter and NatWest.
"The merger has created a lot of cross-referral work between Italy and the UK firm's various offices, and vice versa," says partner Filippo Emanuele, whose father is not Italian, but is in fact from Newcastle.
"To get a good foothold in this market you need to have some good Italian contacts, so setting up with an established and well-known Italian firm is easier than setting up on your own.
"You need the right mix of people - those who either know the culture or have had experience on the international front before. It is no use coming in as a straight Anglo-Saxon who is not prepared to sacrifice anything for the Italian way of life."
Those at Freshfields, where 80 per cent of lawyers are Italian nationals, would agree. Co-founding partner Giovanni Lega says: "Freshfields has never forced us to change. I think we have been able to offer our clients a broader spectrum of services in specialist areas. Our transactional work has increased but we are still primarily assisting Italian clients.
"The important areas of legal work have changed in recent years. Finance work was almost non-existent before 1997. There has been a drastic increase in securities, capital markets and stock exchange work and national and international listings resulting from a change in business mentality. Before, this was a country where people would invest their savings into government bonds so they were not interested in risking their savings any other way."
Over the past couple of years, Freshfields has advised Olivetti's banks in the £38bn bid for Telecom Italia and Europe's third largest insurer Generali on its £10bn hostile bid for insurer INA last autumn.
When it comes to making a splash in Milan, there is no doubt that A&O did it in style, moving into offices on the Via Montenapoleone - just down the road from Versace, Gucci and Valentino.
The association between Brosio Casati & Associati and A&O began in the early 1980s when the two firms were operating from joint offices in Brussels, rather than through an active attempt by the men in suits to break into the Italian market.
As A&O began referring an increasing amount of corporate work to the Italian firm and expanding its finance activities, partners Roberto Casati and Guido Brosio began to rethink their strategy. Now both firms are benefiting from strong finance, banking and capital markets practices in Italy.
Casati says: "As the UK and US firms started moving in we had three options. We could remain exclusively an Italian law firm, gain larger clients and expand our business in minor Italian cities, or shrink and become a boutique firm with expertise, or become part of a bigger structure. The third avenue was the best for our clients and that was to be international.
"The only disadvantage is related to being part of a larger organisation in which a lot of time is devoted to the organisation itself. Most lawyers in this country believe that lawyering is the first task in life."
Casati is articulating a classic frustration felt by a number of Italian lawyers who are "not necessarily participating in meetings and management events".
He adds: "Although A&O is a very strong managerial organisation, in terms of being a lawyer life hasn't changed. I think every lawyer is micro-entrepreneurial and this is something which has to be preserved. In that respect I think we have succeeded."
But what of the non-aligned firms? Some clearly feel a certain reluctance to hook up with the Anglo-Saxons. Partner Andrea Rescigno of Studio Legale Capua Varrenti & Associati says: "We know that US firms are interested in the Italian market at present but when we asked our clients about the possibility of a merger they were very concerned because they did not want to start paying US fees."
Nevertheless, Rescigno knows that his and similar operations must grow quickly or unite if they are to resist takeover and he has no doubt that there are some advantages in joining the merger melting pot.
He says: "After attending a beauty parade last year, we were told that we had lost to a multinational firm for no other reason than its name.
"But at the same time I think that a mistake some firms here have made is to jump at the first opportunity to merge. There is no point just increasing in size, you have to look out for specialisms which are lacking in your own practice. It's no use joining up with 80 more lawyers if you all do the same thing."
Recently-created firm Carnelutti is determined to remain independent by expanding through further absorption of fellow national firms. Managing partner Marino Bastianini says: "This year we are seeing a return to the Italian law firms because some of these multinational firms offer their services by making available to the clients very young lawyers at very high costs and the clients are not happy."
But Grimaldi's Emanuele says: "Competition here is quite fierce in terms of pricing because everybody wants to get the same work. But I think we are able to hold our own because of our experience and reputation and coverage from an international point of view.
"Competition is healthy in the sense that it makes us fight for the work and keeps standards high. But at the end of the day there is enough room for everyone - this is a big market and it is still growing."
But now that so many of the opportunities have been taken, finding the perfect match as a foreign firm may not be so easy, according to Gianni Origoni partner Alberto Maggi.
He says: "Ten years ago in Italy the number of lawyers practising in a business law firm was practically negligible, so finding or poaching a good senior partner is very difficult, especially between the ages of 30 and 40-years-old.
"There are a lot of good lawyers in Italy who still do not belong to any merger or association. But they either do not speak any English or they have never practised on an international market and are therefore not used to the specifics of international clients, or they are already making nice money with a good reputation and they are happy with their lot."
Indeed, Italian lawyers remain fiercely independent. As Studio Legale Capua Varrenti's Rescigno says: "At the end of the day, in Italy you still find that it is the names Brosio Casati, Grimaldi or Gianni Origoni which are used and recognised - Clifford Chance, Linklaters or A&O are just the titles which come afterwards."
For middle-tier firms hoping to position themselves in the Italian marketplace, the prosperous Padua in north-east Italy is a good option. Just two weeks ago, Gianni Origoni & Partners announced that is was opening an office there - poaching some of the staff from the local office of Pavia & Ansaldo. Padua also houses Grimaldi & Clifford Chance's third Italian office (it also has offices in Rome and Milan), but is otherwise an area which remains relatively untouched by the magic circle.
Clifford Chance partner Filippo Emanuele says: "Padua is one of the most rich industrial areas and it has grown quite fast in the last 20 years and the region is home to major companies such as Benetton and Luxottica.
"A lot of family-grown industries have now grown up. Previously privately-owned businesses are expanding with increasing success overseas, searching for listings not just in Italy but on foreign stock exchanges and wanting to access capital markets.
"Suddenly they are needing advice from an international law firm with a presence in a number of jurisdictions, and their local lawyer, a family friend who they have always consulted in the past, no longer necessarily gets them the advice they need."
Alberto Maggi of Gianni Origoni says: "There is a concentration of new enterprises in the area. In the past, small and medium-sized companies have been very traditional in the way that they do business, and friends and local firms have always been consulted as always used to be the way in Italy. But we predict that the city is ready for a change and that these new ventures will need more sophisticated services than those which a sole practitioner can provide."
OTHER FIRMS IN ITALY
UK: Ashurst Morris Crisp has formed a strategic alliance with Negri-Clementi Toffoletto Montironi & Soci, with offices in Rome, Milan and Verona, since the latter's ties were broken with US-based Graham & James.
Simmons & Simmons has had offices in Milan and Rome since 1979 under the banner Simmons & Simmons Grippo through its relationship with listed lawyer Eugenio Grippo.
Lovells has confirmed that it is in talks with a number of Italian firms with a view to a partnership, although information on exactly which ones is being kept strictly under wraps.
Germany: Schurman & Partner and more recently Haarman Hemmelrath & Partner have established a presence in Milan.
US: Cleary Gottlieb Steen & Hamilton is one of the most successful USfirms in Italy, possessing a firm foothold in Rome.
ITALY'S TOP FIRMS
Bonelli Erede Pappalardo
Brosio Casati & Associati in association with Allen & Overy
Chiomenti Studio Legale
Gianni Origoni & Partners in association with Linklaters
Grimaldi & Clifford Chance
Pavia & Ansaldo
Studio Legale Carnelutti
Studio Legale Tonucci
Ughi & Nunziante
ITALY'S MOST ELIGIBLE merger PROSPECTS
Bonelli Erede Papparlardo
Chiomenti Studio Legale
Negri-Clementi Toffoletto Montironi & Soci
Studio Legale Carnelutti
Studio Legale Sutti
Studio Legale Tonucci
Ughi & Nunziante