Labouring away: Launching a new law firm model in Italy

Co-managing partners Luca Failla and Francesco Rotondi reflect upon LabLaw’s journey from radical concept to award-winning firm

 

Key takeaway points

1. Do your market research

2. Differentiate yourself

3. Don’t build a firm around one or two egos. Instead, build a unified team

4. Don’t treat your team like machines

5. Inspire your team’s passion for what they do

6. Stay flexible

7. Don’t fight changing conditions – evolve '¨with them

8. Keep learning

9. Don’t stay still

 

The past five years have been an incredible journey for us. We have moved from being lawyers to partners to co-managing partners of a firm with four offices across Italy. In 2006, we established LabLaw, which has since been recognised as a leading labour and employment (L&E) law firm in Italy.

How did we get here? Over the years, after crossing paths on many occasions in court and at national and international trade events, we had built up a close friendship. In 2005, we found ourselves heading up our own L&E law practices in traditional multi-practice law firms – roles that we had been engaged in for several years.

At the same time, we found ourselves dealing with very similar challenges that these traditional multi-practice structures present to in-house L&E law professionals.

In the early years of the new millennium, the corporate and finance departments (which had multi-million-euro revenues from large-scale mergers and acquisitions) were the darlings of the traditional multi-practice law firms that we were working within. Employment law was viewed as an ‘extra service’ of these departments.

However, L&E law is more than providing due diligence on merger and acquisitions – and much more than creating hiring contracts and dismissal procedures. This is no more evident than now, in the midst of the current financial market uncertainty, with companies looking for progressive strategies to reduce costs, manage their workforces and keep staff motivated.

We knew very well then, from over 30 years of combined experience in the L&E law sector, that human resource management is a fundamental part of any business operation – nationally or internationally. In the current uncertain business market, both firms and companies alike have found a new appreciation of the language of L&E law – and its important role in helping businesses in the good and bad times.

In 2005, we were still very much in the midst of a corporate, banking and finance law boom in Italy – a boom which tended to sideline the activities of in-house L&E law departments. We asked ourselves: could we break the mould that was professionally limiting to us? Could we create a new legal reality for Italian L&E law?

Positioning the firm

Before even trying to create a new structure, we needed to study what already existed in the market.

What we found was that there were many strong L&E law teams in the established traditional national and international multi-practice firms. However, when speaking to our colleagues within these organisations, we discovered that many were being fed a large portion of their work from their firms’ corporate and banking practices: they were largely existing on a diet of cross-selling. In addition, the work they tended to undertake was reactionary: there was little counsel being given to clients on HR management and preventative strategies.

The other structure which we investigated was that of the boutique. At the time, there were three or four very well known and '¨highly respected L&E law boutiques in '¨Italy. These were the firms that were doing the type of work that all L&E law professionals should be doing. However, there seemed to be a drawback to this structure for our purposes.

The existing L&E law boutiques of 2005 appeared to have one principal star – the founding (and name) partner of the firm – along with perhaps one or two other lucky partners who were also able to make their presence known.

We were three partners (ourselves and Angelo Zambelli), who were already well known and recognised in national and international markets. How could three ‘stars’ come together and lead one structure? The structure would have to become the star.

We were fortunate in that, when we were making the preparations to launch our new firm, the Italian legal market was on the dawn of a new liberalisation brought about by the introduction of the Bersani Decree in 2006.

In 2005, law firms in Italy had to use the surnames of the founding partners in the name of the law firm. The introduction of the Bersani Decree opened the doors for law firms to use fantasy names – that is, to create a brand.

However, as we know, a firm is more than a name and much more than a brand. Further information about the market was needed to understand what clients were really looking for – and how a new legal reality could provide it for them.

We spent a five-figure sum on professional market research (which for law firms was unheard of at the time), which included a survey of over 100 medium to large businesses.

The survey confirmed that both national and international businesses with operations in Italy preferred to use specialised legal boutiques to handle their L&E law issues. This research confirmed that the boutique model was the one to follow. The name of the new firm – LabLaw – came from this same research process.

From managers to co-leaders

When we launched our firm on 1 January 2006, we took the Italian legal market by surprise. We were viewed as the three tigers of the Italian L&E law scene that had just joined forces to create a new legal powerhouse. The question on the market’s mind was: how could three tigers manage one firm?

This was a very good question. We all had several years’ experience in managing our own individual teams, but none of us had experience in managing a firm – let alone managing a firm collectively. We were very good at the law of business, but would we be good at the business of law?

Instinctively, we divided the firm’s management into three distinctive segments (national development, international development, internal management and development), with one partner taking the more visible outward-facing public role as managing partner.

With this structure, the firm began to grow – and within three years was recognised by Legal 500 as one of the top three L&E law firms in Italy. During this time, we were still learning the ropes of our jobs and the scope of our duties as we slowly transformed from legal professionals into managers.

However, being tigers, we also realised – as our managerial skills developed and the business grew – the importance of aligning our thoughts. This was quite important as we needed to ensure that, as the three faces of the business, we were heading in the same direction. As a result of an aligned project, the business continued to grow.

Part of the way through our great adventure, we had to change our plans quite rapidly. At the end of 2008, we had a sudden surprise when Zambelli, our co-founding partner who had stepped into the managing partner role, decided to return to a more traditional multi-practice law firm from January 2009.

With this move, many in the market said that they heard the ringing of the death knell for LabLaw. But instead something else happened: the firm flourished and started winning awards.

We have asked ourselves many times – what changed? The answer is that the spirit of the firm changed. As we became the new co-managing partners of the firm – really for the first time – we concentrated on infusing our decades of experience of providing HR management counsel into the firm.

We realised that running a law firm is very similar to running any other sort of business. We are in a service business, so the professionals we hire and manage play a fundamental role in the firm’s success. It is important to have the right team and, even more importantly, to have a motivated team.

We hate to say this, but there are still law firms out there that do not consider their lawyers as the free professionals they really are, and tend to treat them instead as machines for producing, producing, producing, or worse. If you follow this path, you will eventually kill any passion they may have for their jobs, which will ultimately affect the work they do for clients under your firm’s name.

It would be great to say that all of the awards that LabLaw has won in the past three years are down to us as the co-managing partners – but we can’t. It’s down to the team and what we have accomplished together: the firm is the star.

You never hear the manager of a winning World Cup football team saying “I won the game” – because it is in fact the team that has won the game. The manager cannot win the game without the team – and the team cannot win the game without the skill of the manager to pick the right players, develop them, motivate them and give them the winning strategies to play. It is a symbiotic relationship, one which we are continually learning about and developing even today.

One of our advantages is being able to share the role of managing partner, instead of having all of the responsibility on one person’s head. This dual role has been one of the instrumental factors in our success, as it gives us the ability and freedom to focus independently on specific areas of the business.

More importantly, we have become each other’s mentors, providing feedback and guidance to each other as we further discover the managing partner role together. When important business decisions need to be made, in this way we also ensure that any new initiatives will truly be in the best interests of our team and business.

Before taking on the co-managing partner role, we spent 80 per cent of our time on client work and 20 per cent on business development and management. This balance has slowly reworked itself. We now spend 70 per cent of our time on business management and development issues, and 30 per cent on client matters.

We have split the responsibilities of the managing partner role as follows.

Francesco Rotondi focuses on managing the firm’s internal workings – including the working relationships of our 40 legal professionals and 20 support staff. He is also in charge of managing the firm’s national activities, which includes business development activities, client meetings and trade union negotiations (70 per cent of the firm’s work currently involves trade union activities).

Luca Failla is responsible for developing the firm’s national and international strategy. He is responsible for lateral hires and new office openings in Italy, as well as the identification and development of other strategic initiatives that will enhance the firm’s service offering. He is also in charge of the firm’s international business development.

Looking ahead

LabLaw was launched on the eve of the liberalisation of the Italian legal market. Since then, we have exceeded our initial plans for the development of the firm.

The largest expansion of the firm’s revenues, number of professionals and offices occurred in the past three years. Revenues jumped by 28 per cent between 2009 and 2010. And, in the past 24 months, we have opened three new '¨offices in Italy and become a founding member of the international L&E law alliance L&E Global.

In 2012, there will be even more reforms affecting law firms in Italy. There is talk of new provisions regarding law practices, such as the abolishing of minimum and maximum tariffs for lawyers, and allowing law firms to become registered companies instead of the traditional structure of an association between lawyers. We are currently studying the provisions of the new legislation to see how to best maximise '¨it for the firm’s future development.

It is important that we continue to study, learn, grow, be flexible and evolve in this ever-changing market. We know that change is inevitable and so will continue to face the new changes and the challenges they bring for our team, our clients and the firm’s future.

l.failla@lablaw.com

'¨f.rotondi@lablaw.com