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While several of the U.K.’s biggest firms have opened offices or forged alliances in Italy, most American firms have not yet rushed to settle outposts in this increasingly dynamic market. Still, they have been kept busy by the work generated by the major economic and political changes that have occurred in the country over the last few years. Traditionally, the government dominated the Italian economy. It owned one-third of all national industrial enterprises and two-thirds of all banking systems. But things have changed dramatically since 1992, when the government launched a vast privatization program. This divestiture of assets, together with other important reforms, including the establishment of the euro as the new Italian currency, has prompted the steady growth of the Italian stock exchange and has sparked a wave of elation in the Italian financial world. Impressive acquisitions (such as Olivetti SpA’s $58 billion takeover of Telecom Italia SpA in 1999), mergers (Banca di Roma’s 1999 link with Medio Credito Centrale and Sanpaolo-IMI’s hookup with Banco di Napoli S.p.A. in the same year), and new entries in the stock exchange listings have followed, piquing the interest of domestic and foreign investors. Italian law firms, typically small with 50 lawyers or less, were not structured to provide the support required by these complex deals. Lawyers with corporate expertise were needed, and U.S. and U.K. firms quickly filled in the gaps. Sullivan & Cromwell, for instance, has represented the Italian government in privatization deals since 1993, mostly out of the firm’s London office. In fact, few of the U.S. firms active in Italy have actually opened branch offices there. Of those that have, the Rome office of Cleary, Gottlieb, Steen & Hamilton has already established itself as one of the most important law firms in the city. Its team of about 25 lawyers has worked on a number of high-profile corporate matters, including the 1999 listing on the Italian and New York stock exchanges of Ducati Motor Holding SpA, the 1998 privatization of Banca Nazionale del Lavoro SpA (BNL), and last year’s privatization of Finmeccanica SpA, in which Cleary served as international counsel to IRI S.p.A. — the public holding company. The longest-established American firm in Italy is Baker & McKenzie. In 1962, then-associate Alberto Delibero, an Italian transplant working in the Chicago office, returned to Italy to open the Milan office. In 1968, the firm followed with an office in Rome. “This was a fast-growing country after the war,” says Corrado Bartoli, a partner in Baker’s Milan office. “There were many opportunities and sizable investments from American companies.” Though the business then was general corporate and M&A work, Baker now has ten practice groups and almost 100 lawyers between its two Italian offices. More recently, Willkie Farr & Gallagher went on a lateral hiring spree to staff branches in Milan and Rome that opened in August. With close to 20 attorneys there now, Willkie hopes to take advantage of the growing Italian market by doing corporate, M&A, and private equity work. “Business is really opening up in Italy,” says Jack Nusbaum, the firm’s managing partner. “A lot of the privately held companies in Italy are considering public offerings, are being sold, or are considering leveraged buyouts — things that were not commonplace in Italy a few years ago.” Willkie opened two offices, because while Milan is the business center, Rome is the seat of government and the country’s many government-controlled entities. Several major U.K. firms, including Clifford Chance, Freshfields, and Allen & Overy, have set up shop in the last few years by uniting with Italian firms. Feeling the pinch of foreign competition, Italian firms have adopted different strategies. In 1999 three major firms, Bonelli e Associati, Erede e Associati, and Pappalardo e Associati, merged. This exclusive linkup, now called Bonelli Erede Pappalardo, has 76 lawyers and offices in Milan, Rome, Genoa, and Brussels. On the other hand, the 100-year-old Milan-based Studio Legale Carnelutti has chosen to go it alone. The 150-lawyer firm has maintained its independence and opened offices in Paris and London to raise its international profile. At least one Italian firm has acted to boost its presence in the U.S. This year the New York branch of Rome-based Studio Legale Tonucci affiliated with New York’s Pavia & Harcort. “They are first a Roman firm,” says name partner George Pavia, who expects that Tonucci’s government ties will bring in “more Italian business than we were getting before.” Muzzetta, a graduate of the University of Milan School of Law, served as in-house counsel for an international trade company in Italy. He is currently working on an LL.M degree in trade regulation at the New York University School of Law. American Lawyer staff reporter Daphne Eviatar assisted in the reporting of this article.

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