Doing business in Italy

Senior Italian lawyers often wear several hats. Respected practitioners may double as professors, politicians or directors of client companies. However, following the Parmalat and Cirio scandals, corporate governance has been scrutinised and regulatory reforms introduced along the lines of Sarbanes-Oxley in the US.

 

The majority of firms belong to sole practitioners or small family-run practices, where lawyers are generalists without specific areas of expertise. Conversely, numerous boutiques, led by university professors, offer commercialised academic advice, often in employment, tax, IP and dispute resolution law.

 

Client demand and the presence of international firms have compelled larger Italian practices to take note of Anglo-Saxon models and expand. Clients benefit from specialised partners and back-up teams, resulting in a faster, more efficient service, while younger lawyers are enticed by more equitable remuneration.

 

The international firms are here to stay, but not necessarily in happy fusion with Italian practices. US and UK partnerships remain keen to tap into the domestic clients to which Italian lawyers have access, increasingly appointing Italians as managing partners and Italian firms are lured by international networks and cross-border transactions.

 

Indeed, as the markets contract and corporates and banks seek to reduce legal costs,  the international firms are becoming ever more competitive, putting considerable pressure on local Italian law firms to reduce fees.

 

 

Charge-out rates vary according to practice area. For commercial legal advice in private equity, finance and real estate, a fee of between 0.5% and 3.0% of the transaction value is often levied. This figure varies depending on the firm instructed and the nature and complexity of the work. Competition is fierce, clients increasingly sophisticated and firms willing to barter on fees, even to the extent of capping final costs.

 

Hourly rates are allowed for contentious work. Senior partners may bill between €500 and €600 per hour, junior partners between €200 and €350 per hour and mid-level associates between €100 and €200 per hour. International firms charge substantially more than mid-sized firms.

 

In 2005 there was a wave of activity in the competition and antitrust arena, with the EC Competition Commission cracking down on cartels. In 2006 the largest single fine in history – €272 million – was imposed on Eni for collusion in the synthetic rubber price-fixing cartel. Furthermore, the new head of the Italian Antitrust Authority promised more open dialogue between the regulatory body and infringing companies with the intention of first attempting to resolve legal impasses. Filing fees and pre-judgment precautionary measures were also introduced.

 

The effects of the high-profile Parmalat case continue to be felt in the area of insolvency. Following the 2003 Marzano Decree and the 2005 Reform of the Italian Bankruptcy Laws, the 2006 Decree 6 was introduced, giving more power to Creditor Committees and thereby allowing for greater transparency and flexibility in restructuring plans.