Law Firm Market Overview

Italy’s economy remains sluggish, with annual GDP growth having hovered around 1% for the past 12 months or so; last year’s predictions of a potential revival in fortunes thus seem ill founded in retrospect. Political upheaval is practically a national pastime in Italy and after a brief period of uncharacteristic calm following the 2014 appointment of Matteo Renzi as prime minister, the country once again tumbled headlong into turmoil in late 2016 when Renzi suffered defeat in a referendum on constitutional reform and resigned to make way for Paolo Gentiloni – the country’s fifth prime minister in six years. Such uncertainty has made it difficult for Italy to shake off the economic malaise that has dogged it since the onset of the global financial crisis. 

While much of Europe also faces political unrest and realignment, Italy – which is particularly prone to such seismic changes – is invariably viewed as something of a tinderbox. But although the sustained instability has deterred many investors, the abundance of high-quality manufacturing companies and relatively cheap real estate remain prominent selling points. On account of the strength of these two sectors, most international law firms continue to register growth in Italy, despite its relatively weak macroeconomic performance, and the country remains a key European market of interest. 

Compensation and human resources

Associate compensation trends

During the past year, average base compensation for like-for-like levels of associate seniority tended to decrease slightly among the law firms surveyed. Comparing the 2017 survey results with those of 2016 yielded the following results for the total sample:

  • Average net percentage change in overall like-for-like associate compensation levels: -1%

Among large international and domestic law firms, it remains fairly standard for individual lawyers to advance annually up a level in seniority on established compensation grids.  Individual associates at such firms can expect to see their base compensation rise by an average of 13% a year during the first 10 years of fully qualified practice, providing they fulfil expected performance targets each year.

Headcount growth trends

While only 40% of the firms surveyed increased headcount during the past year, those that did increased personnel numbers enough to ensure that overall net average changes across the sample were positive during the past year.

Total staff headcount

  • Percentage of firms that increased total staff headcount during the past year: 40%
  • Median percentage headcount growth (among firms that grew): +10%
  • Mean net percentage headcount change (among all firms): +1%
  • Median net percentage headcount change (among all firms): +2%

Fee-earner headcount

  • Percentage of firms that increased fee-earner headcount during the past year: 40%
  • Median percentage headcount growth (among firms that grew): +10%
  • Mean net percentage headcount change (among all firms): +1%
  • Median net percentage headcount change (among all firms): +5%

Support staff headcount

  • Percentage of firms that increased support staff headcount during the past year: 40%
  • Median percentage headcount growth (among firms that grew): +9%
  • Mean net percentage headcount change (among all firms): +2%
  • Median net percentage headcount change (among all firms): +2%

Billing

Despite continued pressures on realisation rates, during the past year average standard hourly billing rates for like-for-like levels of associate seniority increased slightly among the total sample of law firms surveyed.  Comparing the 2017 survey results with those of 2016 yielded the following results for the total sample:

  • Average net percentage change in overall like-for-like associate lockstep standard billing rate bands: +2%
  • Average number of billable hours clocked by associates during last financial year: 1,150

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 7% during the first 10 years of fully qualified practice.

The above article contains extracts from the Italy 2017 Legal Market Intelligence reportThe full version of this report contains further data, including detailed compensation, benefit and billing rate benchmarking tables for all levels of fee-earners and business support staff.  For further details and pricing contact Gwilym Davies at gdavies@GlobeBMG.com or on +44 (0) 20 7940 6858.  

About Legal Market Intelligence

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