The below article contains extracts from the Lexology Insights 2019/20 Italy law firm compensation, benefits and billing report. The full report contains compensation, benefit and billing benchmarking data for all levels of fee-earners and business support staff.
Legal market trends and conditions – Italy (Milan & Rome)
In 2018 Italy saw the establishment of a new governing coalition between the populist Five Star Movement and the far-right Lega Nord. Coming to power on a raft of populist policies – including the introduction of a universal basic income and major tax reductions – the new government intends to increase deficit spending this year to levels that the European Commission sees as economically hazardous. However, these are familiar waters for Italy – a country that has spent the past decade teetering on the brink of recession and lurching from one economic warning to another. With domestic growth having been so sluggish for so long, Italy has become a fertile hunting ground for international investors searching for acquisitional bargains in a country that remains globally renowned for manufacturing and is still nominally the ninth largest economy in the world.
Italian law firms continue to dominate the local legal services space in a way that remains fairly unique for such an international market. Several of the most prominent Italian firms are now branching out internationally for the first time, with several of the largest players having recently opened or expanded offices in the Middle East and Asia. Meanwhile, UK and US international firms in Italy have typically dodged the general domestic economic malaise by handling much of the inbound acquisitional work going on – especially in the real estate sector. And after a decade of contraction and stagnation in both revenues and headcount, most of the international law firms surveyed in Italy are now seeing moderate growth once more.
Compensation and human resources – Italy (Milan & Rome)
Provided that associates meet performance targets, they will typically advance up a seniority level in lockstep compensation grids annually. The average annual salary increase for an associate advancing up a level on a lockstep grid in Italy during the first ten years of full qualified practice is 11%.
During the past year, compensation lockstep grids for like-for-like levels of associate seniority have tended to remain unchanged at most law firms surveyed, though there has been a tendency to place associates on the lower end of salary bands for any given level. This has led to a slight decrease in like-for-like average associate compensation levels at several of the firms surveyed.
- Percentage of firms that increased fee-earner headcount during the past year: 73%
- Median percentage growth in fee-earner headcount (among firms that grew): +13%
- Median net percentage fee-earner headcount change (among all firms): +9%
- Mean net percentage fee-earner headcount change (among all firms): +10%
Support staff headcount
- Percentage of firms that increased support staff headcount during the past year: 55%
- Median percentage growth in support staff headcount (among firms that grew): +17%
- Median net percentage support staff headcount change (among all firms): +8%
- Mean net percentage support staff headcount change (among all firms): +6%
Billing trends – Italy (Milan & Rome)
Among large international and domestic law firms, it remains fairly standard for individual associates to advance annually up a level on established billing rate grids based on seniority. The annual average step rise is 6% during the first 10 years of fully qualified practice.
Comparing the 2019 survey results with those of 2018 yielded the following results for the total sample:
- Average net percentage change in like-for-like junior (years 1 to 3) associate lockstep standard billing rate bands: +5.2%
- Average net percentage change in like-for-like mid-level (years 4 to 7) associate lockstep standard billing rate bands: +2.7%
- Average net percentage change in like-for-like senior (years 8+) associate lockstep standard billing rate bands: +5.1%
Average net percentage change in overall like-for-like associate lockstep standard billing rate bands: +4.3%