Italy's lawyers see themselves as individuals, rather than cogs in the corporate wheel. Claire Ruckin analyses the management challenges this presents as Italy's firms go global

The law is a people profession – a truism that nonetheless rings especially true in Italy. The widely-documented trials and tribulations of the Anglo-Saxon firms are testament to the power of personality in Milan and Rome.

But there are now signs that corporate Italy and its law firms want to go global, with the biggest independent firms looking east to open up in eastern Europe and China and to form India groupings. The chances are, this will be a major management challenge for Italy's law firms; having dismissed the 'imperialist' management styles of today's global firms, will they be forced into a U-turn and adopt the management techniques of the international firms in order to improve their global ambitions?

With the rapid consolidation of the banking sector almost complete – the €100bn (£68bn) proposed merger between Unicredit and Capitalia being one of the most high-profile examples – Italy's banks are preparing to put themselves on a more global footing, which in turn will expose Italy's law firms to a greater number of cross-border transactions. As Ashurst Milan managing partner Riccardo Agostinelli says: "Italian clients are becoming stronger and more able to compete with international players."

With clients broadening their horizons, law firms are inevitably following. Bonelli Erede Pappalardo banking and finance partner Andrea Novarese comments: "Law firms will have the opportunity to follow the large banks, which are expanding their businesses both domestically and internationally as they enter into foreign markets through cross-border transactions."

Gianni Origoni Grippo & Partners launched a 'Chindia' desk earlier this year for clients with interests in the Indian and Chinese markets and Slaughter and May ally Bonelli says it would like to start its international expansion into Russia, China, India and eastern Europe.

First though, Bonelli needs to sort out its corporate structure – the firm has struggled to push through reforms designed to rationalise the firm's remuneration structure and promote younger talent, recently delaying plans to push the changes through last month. The thinking behind the pay changes are perhaps a step too far for now – the move was designed to place less emphasis on individual performance, spreading profits more evenly across the firm. Crucially, the partner vote would have essentially required them to opt for a pay cut in favour of younger lawyers.

"We are in discussions to improve the situation. We were supposed to take the first step [in May] but are going to take more time as there is no rush. We are trying to accommodate a vast majority of opinions," says Novarese, in response to suggestions that the firm has put proposed changes on the back burner.

On the domestic front, sectors such as litigation, private equity and M&A in the utilities sector are growth areas.

Chiomenti head of corporate and M&A Carlo Croff says: "In the banking sector the major stuff has already been done. It will last for the next couple of years but other areas are emerging."

The firm is expanding its administrative law department in anticipation of utilities consolidations. Indeed, M&A in this sector has already taken off; Italy's third-largest energy company and biggest local utility was recently formed after the E9bn (£6.1bn) merger between AEM and locally-listed utility ASM earlier this month.

Chiomenti is also reinforcing its litigation department to accommodate possible future class actions. Where exactly the strategic impetus to bulk up litigation came from, is an interesting question. Chiomenti's unofficial overseas 'best friend' Skadden Arps Slate Meagher & Flom recently announced the launch of a team aimed at defending corporate clients in Europe from class actions. To suggest Chiomenti's plans to accommodate a possible wave of class actions is part of a Skadden plan for Europe-wide dominance in defending class actions may be taking it too far, but the parallels are certainly clear.

Had more European class action legislation been in force at the time of Parmalat's collapse in 2003, the dairy giant's accounting black hole may well have generated a raft of lucrative instructions, on both the claimant and defendant side.

Chiomenti is not the only firm turning its attention to litigation – Gianni is also in the process of enlarging its dispute resolution offering.

And the smaller firms are also responding. Litigation partner Enrico Zattoni at M&A and litigation boutique Pedersoli, says contentious instructions contribute to about half of their workload. He says: "Dispute resolution could be the golden goose for Italy over the next 10 years. The introduction of contingency fees and the threat of class actions will put a lot of pressure on firms to build up effective dispute resolution groups."

Zattoni argues Italy's domestic firms are at an advantage here given their traditional strength in litigation compared to the international firms' transactional prowess.

Clifford Chance (CC) Italian managing partner Charles Adams says the firm could stand to benefit from the new litigation landscape given who they currently act for: "Ours is the kind of firm that could benefit from changes in class action law. We have acted for institutions that have faced claims from investors – most famously Parmalat."

Just as many family-run businesses are now becoming targets for private equity buy-outs, so Italy's law firms are still dealing with their generational issues and how to ensure the continued success of a firm after the founding partners retire. The firms have grown, but in many cases the modus operandi has not changed.

CC's Adams points out: "The traditional Italian model is an 'eat what you kill' culture; with relatively small groups of partners sharing the spoils. The structure of law firms has remained the same even though these firms have grown considerably. These structures cannot survive in a market that is becoming increasingly globalised."

Ashurst's Agostinelli observes: "Due to the complexity of new transactions and international players entering the market it has been accepted that a structure is needed. You can grow substantially, but unless you introduce something to consolidate and preserve the new blood coming in, you run the risk of collapsing."

Failure to adapt a firm's structure inevitably manifests itself in departures. Eyebrows were raised when partners Andrea Mazziotti di Celso, Antonio Segni and Fabio Labruna left Gianni in February last year to form 50-lawyer M&A outfit Labruna Mazziotti Segni. The losses certainly fired the much-needed warning shot to Gianni's senior partners.

It responded to the departures and revamped its management and remuneration committee in an effort to bolster its succession and retain younger partners. In a sign of the growing importance that the firm is placing on management – and the partner time it is taking up – Gianni last week announced the introduction of a senior partner role. Francesco Gianni will assume the more strategic role of senior partner while Rome-based M&A specialist Giovanni Nardulli assumes day-to-day management responsibilities.

Lovells Rome-based private equity partner Leah Dunlop says the Labruna Mazzotti breakaway marked a turning point in the Italian market: "Until Labruna Mazziotti Segni, some people said a break-off would never work as the firm would keep the clients. But I suppose a few founding or senior partners, no matter how brilliant and well-connected they are, cannot keep a grip on all of the clients – the Labruna team timed it perfectly."

Roberto Cappelli, corporate partner at Grimaldi & Associati, argues his firm does not have to deal with the same succession issues as the other independents, thanks to the pure lockstep that the firm has had in place since the outset. "The bulk of our senior partners have evolved together for the last 20 years," he says.

Grappling with generational and growth issues is not confined to Italy's domestic firms though – the history of the international firms' forays into Italy is littered with stories of bust-ups and mass walkouts.

At first glance it would be fair to say that the US remunerations and management model suits the Italian market better than the London breed. The American 'eat what you kill' culture lends itself to the tradition of local firms each having their high-earning rainmakers far more than the blander, institutionalised model developed by UK firms.

One of the most successful international firms in Italy is undoubtedly New York's Cleary Gottlieb Steen & Hamilton. Milan partner Roberto Casati points out: "UK firms are too hierarchical and at times lawyers feel they are employees rather than partners. Italian lawyers are free-spirited prima donnas who are entrepreneurial. They do not like being told what to do – especially attending numerous meetings and compiling reports".

Casati's comments are clearly coloured with his experience of practising at Allen & Overy (A&O), where he was the firm's local senior partner. His departure was prompted by A&O's efforts to integrate his practice into the firm's global practice structure, coupled with Cleary offering him a place at the top of the lockstep – a pay deal worth approximately $2m (£1m) a year.

Gianni says: "A top lawyer wants to be a lawyer, not an administrator. If you want to import the London management style into Italy you will have to adapt it to the Italian mentality to succeed."

A&O is one firm that has seen a recent exodus of partners, all of which could be rooted in Casati's 2004 departure for Cleary. At the beginning of the year A&O was hit by the departure of high-profile Milan-based finance partner Davide Mencacci to magic circle rival Linklaters. Within weeks banking head Giancarlo Castorino left to join Italian independent Marena Bonvicini & Ludergnani.

And last October, A&O parted company with its Turin office, following the decision of corporate partner Carlo Pavesio – A&O's only partner in Turin – to launch his own practice, Pavesio & Associati.

CC's Adams says: "All of the global firms – including Freshfields Bruckhaus Deringer, CC, Linklaters and A&O – have faced difficulties. It is finding the right balance between imposing a global model on a profession that has been running itself for decades in a very different way. The problems are basically cultural. One lesson to learn is that if you do not create a stable group of people you will run into problems."

Yet not all UK firms are experiencing difficulties. After a period of lying low since the alliance with Gianni spectacularly collapsed, Linklaters is now enjoying good times. Mencacci's arrival from A&O came at the same time as Pedersoli banking partners Andrea Arosio and Dario Longo. It is expected that more Pedersoli lawyers will join Linklaters ranks in the coming months.

Linklaters Milan-based projects partner Sarosh Mewawalla says the firm will continue to expand over the next six months into areas such as acquisition finance, structured finance, corporate and capital markets. He comments: "Italy is not an easy market. We deliberately took a slow approach to recruiting as we wanted to study and understand the market. We are looking at people both culturally aligned with us and who are leading practitioners in their field."

It may seem obvious, but making sure you have the right person to run the team is vital in Italy, possibly more so than in any other European jurisdiction. US firm Bryan Cave is gearing up for a September launch after taking on a team led by high profile Fulvio Pastore and Paolo Barozzi from Willkie Farr & Gallagher. The firm stressed the importance of the practice being based around a set of people who share the same mentality and culture. And the higher pay rates of the US firms is vital in a market where partners at the independent firms earn millions.

But, as Italy inevitably opens up as an increasingly global player, the institutionalised structure of an international firm may be what is needed. Clients will expect the same level of service across the firm's offices – something that is more easily delivered if there is a global management team to oversee this.

Linklaters' Mewawalla argues an institutional structure is better equipped to deal with multinational cross-border transactions: "An Italian client will come to Linklaters – a relatively new firm in the market – because of our institutional structure and the fact that our global links mean we can put a team together in less than a day across the world for Italian clients wanting to engage in multi-jurisdictional transactions."

The strong client-adviser relationship in Italy has to date seen the local firms keep an iron grip on trophy clients – Milan's rainmakers have their loyal followers. If the international firms can get a chance to show their mettle on cross-border deals, this famed client loyalty will face its first real challenge. But for this to happen, it still comes down to individuals.

Labruna Mazziotti's Fabio Labruna sums it up: "Whether it happens to be a UK, US or Italian firm, what will decide if it succeeds in the market is the ability to attract the best people with the capability to create a relationship with clients."