UK legal services market set for liberal reforms package

The reverberations from the UK Government's plans for radical reform of its legal services market, the second-largest in the world, will be felt by lawyers far beyond the white cliffs of Dover.

It had, of course, been widely expected that the UK would legislate for substantial reforms of legal service regulation after a Government-backed report by Sir David Clementi was published in December 2004.

Yet the publication of the White Paper exceeded expectations of how far the UK would proceed in adopting Clementi's sweeping agenda.

The measures, due to become law within two years, will effectively abolish many of the blanket restrictions on the ownership of law firms, providing alternative models of ownership to that of the independent partnership model.

In its place, large companies, including supermarkets and banks, and other professional advisers such as accountants, will be able to own legal practices outright, subject to a vetting procedure.

In addition, law firms themselves will have a range of new funding opportunities, including floating on the stock market or selling minority stakes to outside investors. It is also expected that lawyers will be able to form partnerships with other professionals.

Against such radicalism, it seems almost a footnote that the reforms will force 'front-line' Bar regulators like the Law Society of England and Wales to split their representative and regulatory functions and lead to the creation of a new oversight regulator.

Unveiling the reforms on 17 October, the Lord Chancellor, Lord Falconer, said: "This White Paper heralds real change. There was no doubt that something needed to be done."

The package, which has received a slightly bewildered response from a UK legal profession struggling to get its head around the dawning revolution, will make the UK by far the most liberal legal market in the world.

While many foreign lawyers will be appalled by the implications of the initiative, should they prove successful, the pressure on other countries to adopt similar policies will be considerable.

Orrick agrees merger with Paris M&A leader

The impending union between Orrick Herrington & Sutcliffe and Rambaud Martel is arguably the most significant tie-up yet between a foreign firm and a major French practice.

The French firm is ranked alongside Bredin Prat and Darrois Villey Maillot Brochier as one of Paris' leading M&A advisers, even if its star is regarded to have waned somewhat in recent years.

Notably, in July the French firm announced that about a third of the partnership were to leave, with the bulk of the departing team expected to move to US firm Proskauer Rose.

Some observers are already wondering how Orrick's French operations will gel with veteran rainmaker Jean-Pierre Martel's team.

Even so, the firm should provide Orrick's finance-focused French practice (made up of the bulk of Watson Farley & Williams' former local branch) with some serious corporate clout and a sizeable contentious practice. Clients of the French firm, after all, include the French Government, BNP Paribas, Gecina and Galeries Lafayette.

Orrick chairman Ralph Baxter said: "We have a very high regard for Jean-Pierre, his partners and the whole firm. We are very excited about the discussions and are hopeful we can take them to a successful conclusion."

The combination has the potential to shake up the French legal scene and place Orrick at the top of the market.

Coming after Orrick secured sizeable London and Moscow teams this summer from the disintegrating Coudert Brothers, 2005 looks like a breakthrough year for the firm's European network.

McDermott Will & Emery's Italian 'merger' bites the dust

The graveyard of Anglo-Italian mergers received a new headstone this month as it was announced that the union between McDermott Will & Emery and Carnelutti was to come to an end.

The two firms surprised the market when they joined forces in 2003, despite previous claims from Carnelutti that it was committed to independence.

It was an interesting choice for one of the country's oldest law firms, as Chicago-based McDermott was not viewed as one of the most likely candidates to make a commitment to a major Italian investment.

Just two years later – citing mutual consent – the Milan arm has performed another u-turn by returning to independence, with the bulk of the Rome office staying with McDermott.

Carnelutti chairman Marino Bastianini said: "Our firm has had a 100-year tradition of independence and, following two years of this exciting experience with McDermott, we plan to continue to grow as an independent firm."

For Carnelutti, which merged after losing ground to emerging Italian powerhouses like Bonelli Erede Pappalardo and Chiomenti, going it alone looks a challenging task. With around 50 lawyers, the firm is now dwarfed by Milan's top practices.

Whether it will realign itself with its pre-merger associated branches in Rome, Padua and Paris (which also practise as Carnelutti) is unclear, but as with Pavia & Ansaldo, which officially saw its split-off team leave this week, Carnelutti is now placed in the competitive Italian mid-market.

For international firms, the episode has been yet another reminder of the difficulty of hiring, retaining and managing Italian lawyers. Firms that have learnt this lesson painfully in recent years include Clifford Chance, Allen & Overy and Simmons & Simmons.

Yet with Italy still attracting interest from investment banks and cross-border M&A activity beginning to pick up, most notably with ABN Amro's eventful acquisition of Banca Antonveneta, foreign advisers are certain to keep trying.