Sullivan & Cromwell has taken a lead role on Fiat's merger talks with Chrysler, as the ailing auto industry continues to feel the effects of the economic downturn.

The Sullivan team acting for Italian automaker Fiat is being led by Palo Alto-based partner Scott Miller. Miller has represented Fiat since Sergio Marchionne took over as Fiat's chief executive in 2004.

Marchionne has a long-term relationship with Miller and Sullivan dating to previous ventures, including a series of mergers involving Swiss aluminium business Algroup, where Marchionne once served as CEO. Miller also advised Fiat when the company terminated its alliance with GM in 2005.

Chrysler's parent company, private equity fund Cerberus Capital Management, has called on longstanding adviser Schulte Roth & Zabel. The US firm also advised on Chrysler's earlier merger talks with General Motors.

The Schulte Roth team was led by partners Richard Presutti, Robert Keisel, and Alan Waldenberg.

Fiat is set to acquire a 35% stake in Chrysler, giving the car manufacturer immediate access to Fiat's production techniques and international market penetration. Fiat is known for luxury brands such as Alfa Romeo and Cinquecento.

Chrysler hopes to leverage the deal, and the potential it holds for increased profits, to convince lenders to restructure its debt obligations and other liabilities, said Miller. Chrysler has already been lent $4bn (£2.9bn) as part of its bailout agreement with the US Government.

This article first appeared on The Am Law Daily on americanlawyer.com.