International eye: Italy

Husnara Begum on the month in Italy:

Linklaters courts Giliberti for merger

Once bitten, twice shy – but not in Linklaters’ case. After its split from long-term ally Gianni Origoni Grippo & Partners, the magic circle firm has started merger talks with leading Milan-based M&A boutique Giliberti Pappalettera Triscornia e Associati in its efforts to re-enter the Italian market.

As first reported by The Lawyer (16 January), Linklaters is understood to be planning to hold preliminary discussions with the seven-partner Italian independent with a view to either a full-scale merger or establishing a best friends relationship.

However, observers argue that the talks are unlikely to succeed, principally because Giliberti’s partners are understood be split over whether or not to join forces with the City firm. Giliberti did not return calls for comment.

Linklaters terminated its four-year alliance with Gianni by mutual consent in April 2004, leaving the City firm with a small US and UK law practice in Italy, but no local law capability.

The split came after frustration on Linklaters’ side that the association was impeding its progress in such a key European jurisdiction. But while Gianni took the split in its stride (indeed, the Italian firm was quick to tout itself to alternative overseas firms, including Herbert Smith), Linklaters has not been so lucky in its attempts to boost its presence in Italy.

But Linklaters is not the only major international firm to experience difficulties in breaking into the Italian market in recent years. Last October Chicago-based McDermott Will & Emery became the latest overseas firm to see an Italian tie-up unwind when its merger with Carnelutti failed. The two firms agreed to demerge just two years after joining forces in 2003.

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

MBR&M and Tonucci tie the knot
Mayer Brown Rowe & Maw (MBR&M), however, bucked the trend of unwinding tie-ups after announcing plans to launch an alliance with Rome-based Studio Legale Tonucci. As part of the alliance, the two firms will cooperate in areas such as referrals and client development.

MBR&M and Tonucci do not have any plans to merge, but the Italian firm’s co-founding partner Marco Nicolini says: “A full merger isn’t our target now, but it isn’t something we can exclude.”

Nicolini argues that, although several international firms have experienced problems in Italy of late, he is confident an alliance between Tonucci and MBR&M will be successful. “We’ve already been working together for two years, so both sides were convinced that it was the right thing to do. We’ve also taken a very prudent and cautious approach,” he claims.

SJ Berwin launches Italian arm
SJ Berwin broke into the Italian market at the end of 2005 with the hire of private equity and acquisition finance heavyweight Alberto Morano and a team of three partners.

As exclusively revealed on (1 December 2005), Morano, a former White & Case partner, is now the head of SJ Berwin’s Italian operation, which was launched officially on 5 December.

He is being supported by fellow White & Case partners Massimo Chiaia and Fabio Cigna, and partner Arturo Meglio, who joined from Lombardi Associati.

Hammonds completes merger with Rossotto
In contrast to Allen & Overy, Hammonds appears to have at long last resolved its Italian troubles.

As first reported by The Lawyer (16 January), Hammonds finally reached an agreement with its Italian merger partner after months of tense negotiations about the future of the relationship.

Hammonds agreed a merger with Turin-based Rossotto e Associati in 2002, subject to a three-year transitionary period. In May 2005, The Lawyer revealed that, although the period had expired, full integration was delayed due to a massive gulf in the profitability of Hammonds’ UK and Italian offices.

The Italian operation has a profit margin of around 50 per cent, while according to The Lawyer UK 100 Annual Report, the UK arm of Hammonds stood at just 19 per cent. At the start of the negotiations, Rossotto demanded that Hammonds bring its profit margin closer to the 25-30 per cent mark.

It is understood that recent improvements in Hammonds’ financial performance and stability have contributed to the new arrangement, cutting out the need for another year of transition.

A&O suffers another partner defection
Allen & Overy’s (A&O) Italian practice has again been rocked, this time by the departure of high-profile projects partner Franco Vigliano, who quit the magic circle firm to join Ashurst. The move leaves A&O with just one project finance partner (Catia Tomasetti) in Italy. A&O’s Italian operation has been plagued by management difficulties and a raft of defections in recent years. In October 2004, the bulk of the firm’s Turin office – once the beating heart of the old Brosio Casati e Associati empire, which joined with A&O in 1998 – walked out to launch boutique Bin Avvocati Associati. This followed corporate rainmaker Roberto Casati’s decision to jump ship for Cleary Gottlieb Steen & Hamilton in early 2004.

Meanwhile, banking star Andrea Arosio quit A&O for corporate boutique Pedersoli e Associati, taking with him senior associate Dario Longo and a crack team of seven associates.

Unfortunately, A&O’s Italian woes did not end there. At the tail end of 2005, three Milan-based corporate associates, led by Alessandro Giovanelli, resigned en masse to join Italian independent Pavia e Ansaldo.

Bonelli boosts turnover to €100m
Leading domestic firm Bonelli Erede Pappalardo is closing in on archrival Gianni Origoni Grippo & Partners. Bonelli, Slaughter and May‘s Italian ally, is on target to boost turnover by 16 per cent from last year’s figure of €86m (£58.6m) to at least €100m (£68.1m), making it the largest law firm in Italy by turnover.

The 300-lawyer firm was the second-largest Italian firm behind Gianni, which has a turnover of €91.4m (£62.2m), according to The Lawyer Euro 100 2005. The figures were boosted by Bonelli’s takeover of administrative law boutique Sica last year, in which Bonelli acquired a 20-lawyer team, including four partners.

Bonelli partners also enjoy one of the highest profit per equity partner (PEP) figures in Europe, at €1.7m (£1.2m), with top partners pocketing a whopping €7m (£4.8m).

The Italian market is very difficult to break into successfully. But with PEP figures as high as €5m (£3.4m), it is a risk worth taking.

International roundup Coming up:
US: 13 Feb
Europe: 20 Feb
Asia: 27 Feb
Europe: 6 March