Pioneering change: Developing a new business model

Cristiano Cominotto discusses why he broke with Italian market tradition in co-founding Assistenza Legale

 

Key takeaway points:

1. Always be a first mover. To be one step ahead of the others, think of something different to existing organisations and rules.

2. Don’t be afraid of challenging the rules. If you believe in something and have honestly assessed your ideas, then do it.

3. Don’t be in a hurry. When you do something new, in the first few years it may seem as if you are wasting time and money – but one day you’ll discover that the machine is starting to work.

4. Never surrender. When you create something new, everyone will say that you are wrong until you reach your goal. At that point, everyone will say that they never had any doubt about it.

5. Make history. You can make history by being an innovating force for change.

 

Assistenza Legale (AL) is Italy’s first national high street law firm. It was founded in January 2008 with the intention of creating a new legal model – and at the same time a new legal market – in Italy. Today, AL has over 50 lawyers in 15 offices throughout Italy.

Let’s start at the beginning. My co-founding partner Francesca Passerini and I met in 2006 on a business trip in China organised by the Milan Chamber of Commerce. At the time, we were both running our own independent traditional law firms.

Francesca was on the trip as a member of the board of the Milan Bar Association. She was also (and still is) a founding partner of her own private law firm, which specialises in family law and real estate issues. I also have my own private firm specialising in '¨civil and labour law, and was on the trip '¨to develop new contacts in China.

We will always remember this as the '¨trip that created a lasting friendship, a professional collaboration and sowed '¨the seeds for a revolution in the Italian '¨legal market.

It was during this trip that we both witnessed in Beijing the rapid expansion of a growing city and a booming economy. It made us think very profoundly about the growing international community in Italy.

We realised that there were no notable law firms catering specifically to the needs of foreigners living and working in Italy. Then we realised that there was actually no national firm in Italy that catered to the legal needs of both foreigners and regular Italians.

We decided that we wanted to create a law firm that was easily accessible to people – whether they be foreigners or Italians – with private or business matters.

We had many challenges on our hands. What would such a law firm look like? Where would it be based? How would it be structured? What we did know for sure was that it would have to be something that we had never before seen in Italy.

At that time, the Italian legal market and law firm model had been virtually unchanged for decades. The traditional corporate law firm model only makes up a relatively small percentage of the Italian legal market.

Apart from large international law firms that had been practising in Italy for 15 to 20 years and a few rare examples of Italian national law firms (with Anglo-Saxon models) that had become bigger, the traditional Italian firm appeared to be virtually impermeable '¨to change.

Approximately 80 per cent of the Italian legal sector is made up of law firms of less than ten people. From our experience of founding our own independent firms, we were perfect examples of the traditional Italian law firm model. These types of structures would typically be made up of one or two partners, a secretary and a few paralegals or trainees getting their two years of work experience before being permitted to practice.

Competition at this small traditional law firm model level is also quite fierce. Italy has the highest number of lawyers per capita in all of Europe – an estimated 300,000 legal professionals. In Milan alone, there are about 20,000 lawyers. By comparison, France '¨has an estimated 47,000 lawyers across '¨the entire country.

Building a firm

We extensively researched different law firm business models – both those for large national (and usually very corporate structures), as well as different types of traditional law firm models. We wanted to find out how small traditional Italian firms could compete with big national and international firms with extensive capital, and how traditional Italian firms could compete at a national level.

The big corporate law firms usually start up offices in larger cities such as Milan, Rome, Turin and Genoa. If we really wanted to provide legal assistance for all, then the market was exponentially bigger than what the corporate firms where targeting in the big cities. If fact, our '¨target market was a bit of an unknown: what is and how big is ‘for all’?

A report published by the Italian National Institute of Statistics provided '¨a good overview of the market for our needs. It reported in 2007 that there '¨were 4.5 million businesses in the Italian service and industrial sectors. Of these, 95 per cent (or an estimated 4.2 million) employed ten people or less.

Even more interesting was the fact that over half of these businesses were run by just one person. Italy is a country made up of micro-businesses. There was no law firm at the national level providing services to these small to medium-sized businesses. We quickly realised that there was a huge virgin territory out there to be conquered.

In January 2008, Francesca and I opened our first office in Milan on a highly-trafficked pedestrian street just 50 metres from a subway station. The office was at the street level. Covering the entirety of '¨the front window of the office was the firm’s logo with a list of our practice '¨areas and a notice advising people that their first consultation would be free.

Anyone who needed legal advice would just have to ring the doorbell and could speak directly to a lawyer. There were no secretaries and no need to fix an appointment. And, to maintain transparency, clients would be provided with an estimate for their work in writing.

The firm was founded on three fundamental principles:

1. legal assistance is a right for all;

2. the law is equal for everyone; and

3. everyone has the right to exercise '¨their rights.

The opening of our first office took the Italian legal market by surprise. It was something new and innovative and garnered lots of media coverage throughout the country. The overall reaction was quite positive.

In fact, by the end of the year, over 1,000 lawyers throughout the country '¨had contacted us about opening an '¨office in their local community. To date, over 3,000 professionals have contacted us about opening an office.

Resisting the temptation to accept every offer, Francesca and I decided to carefully develop a national footprint to ensure that the level of professionalism and quality of service was kept high. '¨Today, our Italian team comprises over '¨50 lawyers in 15 offices across Italy.

When we opened our first office in Milan, we didn’t quite know how big our project was going to be. We knew that '¨we wanted to open more offices. In fact, we were being continually questioned '¨by journalists as to the number of offices that we would be opening.

Initially, we thought of opening our '¨own offices around the country. However, as it was a totally new concept in Italy which had never been undertaken before, we really had no exact plan to follow. The plan had to evolve as we discovered the market together.

In the end, instead of opening our own offices, we realised that it would be more efficient, in order to expand AL’s footprint around the country, to have the individual offices independently owned and operated by local professionals.

With this plan, we commenced with a business model based around a hybrid network-traditional law firm model. However, over time this model has evolved.

Today, Francesca and I are the vice president and president of an association whose membership is made up of individual offices, which today are still all locally owned and operated. Having said that, we know that in the coming months the structure will most likely be evolving again in order to take advantage of changing market conditions.

A bumpy ride

There is an old expression that you can always tell who the pioneers are: they are the ones with the arrows in their backs. We too experienced something similar to this. While on the one hand our project was being welcomed with open arms as '¨a great innovation for the Italian legal market, the other hand was closed and '¨not so welcoming to change.

The first challenge we faced came from the bar association of Brescia. It expressed displeasure that AL offered a first consultation for free and that this offer was also printed on the big picture window of every office in Italy. The bar association said it was a breach of the ethical codes which govern lawyers in Italy and eventually penalised both Francesca and I, with sanctions.

The bar association also had an issue with the firm’s original name, Assistenza Legale per Tutti. Unfortunately, we were eventually ordered by the courts to change the firm’s name to Assistenza Legale because it was thought that the acronym ALT (which also means ‘halt’ in Italian) could be considered subliminal advertising that may entice people to stop.

In a market as traditional and conservative as Italy’s legal market, it is no surprise that some people may be hesitant towards or look suspiciously upon change.

The Italian anti-trust authorities are now looking into this case to see if the bar association’s actions against ALT – now AL – may be restrictive to competition. We expect there to be a ruling on this case by the end of 2012. It is going to be quite an important ruling, not just for AL but potentially for the entire legal sector, as its outcome could possibly impact all of the local bar associations in Italy.

Of course, everything will depend upon the final ruling of the anti-trust authorities. However, if it is found that the bar association has engaged in anti-competitive behaviour, then it could '¨create a precedent that could potentially impede bar associations from making judgements on certain types of law firm business practices.

Change is in the air

The one mistake that the Italian advocacy has often made is to be resistant to change, especially change stemming from the needs of society. We cannot practise law in the same manner as we did 30 years ago because society has changed, the way we do business has changed and the market has changed. There is a need for change and, for this reason, Francesca and I are committed to pioneering a new way forward.

With or without the support of the local bar associations, the Italian legal market is changing. We have started a movement from below. Now the Italian government is starting a movement from above.

In the autumn of 2011, the '¨government passed the Legge di '¨Stabilità (the stability law), which '¨foresees the further liberalisation of '¨the Italian legal sector.
Although the final details of the '¨new law will not be available until '¨possibly this autumn, it has been '¨stated that among the new '¨regulations will be provisions for '¨alternative business structures and, '¨in particular, the possibility for law '¨firms to form companies with up to '¨33 per cent non-lawyer ownership.

AL is a learning organisation and '¨so we are well aware that our model '¨must remain flexible in order to take advantage of not just changing market conditions but also the opportunities '¨that further liberalisation may bring to '¨our business structure.

Was the risk worth it?

We firmly say yes. Our experience '¨has made an important impact on '¨the delivery of legal services in Italy. '¨We have shown that it is possible to '¨create and forge new paths. We have shown that there is not only a need for change, but there is a market for change.

I think that the courage and '¨the determination with which we '¨expressed our ideas was an example '¨for everyone in Italy who has an idea '¨and wants to make a change. It also '¨sends the message that it’s okay '¨to be different. It’s okay to take a '¨different path.

Being an innovator is always '¨a big responsibility, as you must '¨always demonstrate that you are '¨one step ahead of the market. Being '¨an innovator also means sticking your '¨neck out and taking the risk to either '¨win or lose.

Along our journey, we have done '¨both. We have lost on some points and gained on others. The gains definitely '¨make up for the losses. We have also '¨won several awards for our pioneering '¨and innovative approach.

Our future is still unfolding ahead '¨of us and there are certainly more wins and losses to come. This is a process we welcome because we know that, through '¨it all, we are playing a part in the making of a new history for the Italian legal market.

info@alassistenzalegale.it