International & Cross-Border Capabilities – Italy in review
2022 was a turbulent year for several reasons. Despite financial markets recovering post COVID-19 pandemic, the conflict in Ukraine had a massive impact across Europe. This article will look at what we learnt from our conversations about the Italian legal market.
Prominence of Inbound work
Despite the global situation, many commentators pointed to an increase in inbound work in Italy. This was particularly noticeable in the private equity sector, with an increase of clients from the US undertaking inbound work in the jurisdiction. This amount of work with the US played nicely into the hands of international law firms either based in the US or with offices there, who have been able to coordinate matters efficiently because of their cross-border collaboration capabilities.
“Large international networks have an advantage in attracting cross-border work.”
As well as private equity inbound work being on the rise in 2022, many also highlighted an increase in inbound work in the energy sector. This was because of the European Green Deal, which aims to set the EU on a path to transitioning towards green energy and reducing the amount of fossil fuels used. New projects in this sector relating to renewable energy have seen a considerable rise in activity.
“We have seen more energy and infrastructure work coming in.”
Investor Uncertainty
This increase in the amount of inbound work in these sectors may paint quite a rosy picture of the legal market in Italy. However, our conversations showed that this was not the case across the board. We found that banks and sponsors were increasingly adopting a more cautious approach to lending and financing projects.
“They want to use effort and time to evaluate a deal. My feeling is that they are very cautious and very attentive to what they do and how they do it.”
Such uncertainty can be explained, to some extent, by the conflict in Ukraine, which resulted in a great deal of volatility in the financial markets. As a result, banks and sponsors closely monitored the situation and looked to take their time when making lending decisions, preferring to wait for the markets to stabilize.
New regulations
2022 saw an increase in the number of regulatory mandates that law firms were advising on. New regulations regarding foreign investors operating in Italy has led to a plethora of issues needing navigation, resulting in an increase in regulatory-related work for law firms. The increase in this type of work is also a consequence of the larger role the state played in the economy, with more Government scrutiny on transactions because of amendments made to the so called “Golden Power” regulations.
“We see an increasing interest in regulatory matters.”
What is in store for the legal market in Italy in 2023?
Given the amount of cross-border work with the US, it is expected that many of the international law firms will continue to utilize their cross-border expertise to tap into this market, whilst expanding their practices in the process. Demand, not only in Italy but throughout Europe, for a one-stop shop offering incorporating strong cross-border expertise, combined with good local knowledge will be of paramount importance in 2023.
Similarly, we believe that an increased demand for lawyers with niche experience, such as in green energy and renewables, will occur, given volatile energy issues in Europe, and the need to move away from Russian energy sources.
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