Awaking liberties

Liberalizzazione is a key word in Italian politics at the moment. Since last summer Romano Prodi’s government has set about increasing competition in several sectors of the Italian economy. There have been strikes and protests by operators in the affected sectors, which have included taxi drivers as well as lawyers. While there are now more taxis in circulation, the changes for lawyers, of whom there are already more than 120,000 in Italy, have been more subtle, but no less significant.

There have been several unsuccessful attempts to relax the restrictions on professionals to allow greater competition. However, Law 248 of 4 August 2006, known as the ‘Bersani’, after the minister of economic development who championed it through parliament, proved a watershed. His objective was “to increase the freedom of consumer choice and promote greater competition in the markets; also to help relaunch the economy and reduce unemployment by liberalising business activity and creating new jobs”. The changes were startling to those who have become accustomed to the relaxed pace of reform in Italy.

Since 1942 complex minimum tariffs for contentious and non-contentious work have been mandatory. Any agreement between a lawyer and their client to charge less was void, even though the previous version of the professional code allowed lawyers to charge fixed fees for non-contentious advice, provided, as protection for the client, there was proportionality between the level of the fee and the level of commitment required of the lawyer.

The only legal requirement now is that fee agreements must be in writing in order to be enforceable. Most of the international firms have never applied the tariffs, but while hourly billing is common among traditional Italian firms, low fixed-fee arrangements and abort fees of the sort commonly encountered in the UK have been more problematic in theory. This now looks like a thing of the past.

The changes also included the introduction of conditional fee arrangements in litigation, where the lawyer may fix their fee as a percentage of the award won for their client. These are permitted, subject to the proportionality rule referred to above, whereas any agreement to transfer the rights that are the object of the proceedings remains prohibited. Italy is a litigious society, largely due to the relatively low cost of starting and pursuing claims, and there seems little reason for this to change, even though the courts are groaning under the weight of cases.

In addition, certain restrictions on advertising have been abolished. Now advertising that informs the consumer as to specialist qualifications and the nature of the services offered and their cost is permitted in any media, providing the information respects the criteria of truthfulness and transparency and the manner and form of the dissemination of the information is fitting with the dignity and decorum of the profession. This is indeed a welcome change that corrects the very restrictive position in the past, under which even brochures had to be approved in advance by the Bar Association.

Finally, there has been a relaxation of the restrictions on multidisciplinary firms, providing that the members of such a firm are not members of any other. This opens up for the first time the real possibility of mixed practices, advising clients as multidisciplinary teams, such as lawyers and commercialisti (accountants), particularly on tax and other technical areas.

After initial protests, on 16 December last year, the National Bar Association fell into line and approved the new professional code of conduct, reflecting the changes pushed through by Bersani. However, the association remains sensitive on the question of advertising, and a lawyer may still not reveal the names of clients, even if they have consented to the disclosure. This remains a bone of contention for international firms in preparing their ‘credentials statements’ for pitches and presentations, where in theory clients’ details may only be included if already in the public domain. Getting the law firm’s name in the client’s press release on completion of a deal is still therefore advisable.

Not content with this shake-up, in December the cabinet approved a bill to give the government delegated powers to issue further decrees reforming professional services in general (not only lawyers, but also engineers, architects, doctors and notaries, among others). The scope of the bill, which had its first reading in parliament on 24 January 2007 and which has now entered the committee stage, encompasses some structural issues, such as access to the professions, as well as business issues, including the structure of the fees.

The aim of the bill is to confront the need for professional firms to help Italy compete in a global arena and to rise to the challenge created by the ever-increasing integration of European markets and with the growing phenomenon of foreign professional services and consultancy firms in Italy. Certain reforms have already been implemented for the legal profession in the Bersani, but there are further changes that will be significant for both domestic and international firms.

The delegation will allow the government to provide that the fee for professional services must be agreed between the client and the service provider, and that it can be linked to the achievment of certain objectives. Provision will be made for the client to have the right to know in advance what the fee will be, or if this is not possible to be told the minimum and the maximum fee, as well as a general indication of maximum that may be charged for any particular service.

There will be mandatory insurance for professional liability, having a maximum cover that is appropriate for the level of risk relevant to each profession. At the time of taking on instructions, the professional will be required to notify the client of the details of the policy and its maximum cover. This could prove awkward for international firms, which have complex and extensive insurance cover and which are notoriously reticent about revealing their levels of cover.

One of the most controversial proposals among the legal profession is that the period of training for professionals should not exceed 12 months and that it can begin during the final period of university. This is an attempt to shorten the road to qualification, which occurs late in Italy. As far as lawyers are concerned, students generally go to university aged 19 and a degree in jurisprudence currently takes five years – three for the short degree with a further two for the specialist degree, which is required before one can enroll as a trainee. Training takes around three years and the trainee must sit a written examination followed by an oral test some 10 months later. It is unusual to find trainees qualifying much before their 28th birthday, which is much later than their Anglo-Saxon counterparts, for instance.

If the bill becomes law the government will have 18 months to bring forward the individual decrees implementing the principles, so it is some way from becoming law. But the signs are that it will be hotly debated, and not just by lawyers.

Leah Dunlop is Italy senior partner at Lovells