Italy: Access To Counsel And Law Firm Independence

Last Updated: 28 June 2005
Article by Eleonora Ballarino

When in September 2004 many Italian lawyers came back from vacation, they found themselves a little less independent, even though they may not be aware of that. What happened? The managing partner of an important Italian firm, which is advising the governmentappointed administrator in a very highprofile insolvency scandal but will not take any part in pending disputes with a number of banks, has apparently declared to the international press: "We indicated to [the administrator] that, as a result of our relationships with Italian and international banks, we did not wish to act against the banks. [...] Our agreement... was that we would advise on the restructuring plan but not pursue litigation other than against the [compamy] directors or in administrative actions. [...] Firms like ours... do not want to take a position affecting the rights [read "interests" here, as "rights" not being affected anyway] of other clients or potential clients".

Why did he believe it necessary to issue such a statement? The reason may be a worry to dispel the idea that his firm had been excluded from the litigation team rather than having excluded itself; but whatever the purpose of the statement, it remains that Art. 11 of Royal Law Decree no. 1578/1933 (the Italian "Lawyers Law") expressly provides that "No attorney shall refuse his services unless for a legitimate reason".

It has also been argued that such a position may conflict with Art. 10 of the Italian National Bar Council Ethical Rules ("In the practice of law a lawyer has the duty to preserve its independence and to protect its freeedom from external influences and pressures. The lawyer shall not take into account personal interests"), Art. 6 ("A lawyer shall perform its professonal duties with loyalty and integrity"), Art. 7 ("It is a duty for the lawyer to practise loyally [to his client]", Art. 36 ("A lawyer has the duty to protect the interests of the party he advises in the best way possible..."). Be it as it may, it remains that the Italian Bar, similar in that to the English and other European Bars, is legally subject to a "cabrank rule" (see for instance para. 601 of the English Bar Code of Conduct).

Of course, enforcement of such rule is rarely required which may explain why the very awareness of its existence has weakened along the years. Nobody wants to be represented by reluctant counsel, right? Especially in countries where, as in Italy, the explosion in the number of those admitted to practise law makes for dozens of thousand of lawyers craving the opportunity to sue anybody on any ground whatsoever... Yet, a few cases where the rule had to be invoked have always existed.

For instance, until 1997, in Italy, when civil litigation was concerned, one needed to instruct a local attorney to perform some formal tasks in the judicial district concerned. In small provincial courts, where all lawyers were on a firstname basis and the competitive pressure amongst them was very low, it was not necessarily easy to find an attorney available to sue a fellow local lawyer, be it for a mere debt recovery, let alone a malpractice case. Other similar situations occurred at the apogee of the Red Brigades military power, when their militants refused legal representation and threatened the life of counsel who might accept the appointment by the court, an appointment which was necessary to celebrate a valid trial under the Italian criminal procedure. Again, until recently, a relatively benign protective device employed by a number of large companies and banks was that of... establishing conflicts for everybody, making sure that at any time anybody with a name in the market had at least one very minor matter pending upon the company's instruction. As a consequence, the lawyer concerned had to decline instruction against the same company and his duty to be loyal to his services to clients ceased face to a symmetrical duty towards another client.

If some Italian lawyers may be today under the delusion of being unconditionally free to accept or not instruction, the perception that the cabrank rule imposes a significant burden on their freedom to contract, and to handle their practice as they see it best, is largely unfonded. Traditionally, legitimate reasons to refuse nonfrivolous instructions (other than, obviously, the existence of an actual conflict of interest) can be summarised as follows: "i) "I have a personal enmity towards you which would prevent me from performing at my best"; ii) "I am not competent to deal with the matter at hand; iii) "I am currently too busy"; iv) "you do not accept to pay the price and the other terms I demand for this work".

This covers much of the conceivable territory why a lawyer can reasonably wish to refrain from the representation of a given client.

On the other hand, in the case in point, the first reason was clearly inapplicable, given that the administrator was already represented by the firm concerned.

The second reason would be hard to invoke for a firm who publicly claims to be a fullservice business law firm providing seamless global services to Italian and foreign clients and boasts "to enjoy a formidable reputation in a range of practice areas including banking and finance,... litigation and arbitration,... reorganisations".

The third is hardly applicable these days to any large business firm, which is expected to have the critical mass and the shortterm flexibility to accomodate whatever demand for its services it is able to raise. In addition, Italian civil proceedings of this nature are lengthy affairs, dealt mostly in writing, so that it is even theoretically possible to recruit and train the necessary additional resources in time for the actual trial!

As far as "price" is concerned, we are speaking here of the governmentmandated administration of a major public company, who has been reportedly paying without flinching fees in the region of one million Euro per month for the advice of the firm concerned. This makes it hard for the latter to request seriously a price high enough to deter the client who obviously believes to have good reasons to work with them rather than with other lawyers.

Thus comes the candid admission that to sue the banks is out of the question because it would simply not be in the interest of the firm's other current and prospective clients, hence in the firm's own interest. Admittedly, the firm concerned is mostly a "deal factory", and while it claims to have a litigation practice, contentious work is indeed not believed by anybody to be their main area of practice. It is also true that in its stricter sense, the "right to counsel" consecrated by Art. 24 of the Italian Constitution is hardly affected, given the large number of lawyer who would be most happy to represent the administration in the related disputes including for free. Nevertheless, one wonders whether "right to counsel" simply means "right to one counsel, any counsel", and not to a counsel of one's choice, in particular to a provider of legal services which be perceived to have the resources, the advocacy skills, the insurance coverage or any other feature which are deemed to be appropriate to the matter at hand.

This is a very concrete issue, given that further to the recent polarisation of the Italian market, the top tier of the market includes no more than ten or fifteen firms, which are obviously believed by the market to provide some added value in comparison with "ordinary" legal assistance.

In fact, this case exemplifies very well why the cabrank rule is mainly a protection of the independence of lawyers. When a competitor of mine makes it clear to the world that in taking his decision on whom he accepts to sue he is available to take into consideration what prospective clients might think of his lessened popularity with the financial entity involved, this encourages and allows entities such as merchant banks (or insurance companies, for that matter) to "blacklist" law firms, and to dissuade discreetly their clients from instructing them if they want to keep the relationship smooth and make things easier. It does not really matter whether actual pressures or blackmail takes place. The perception of the possibility is enough.

What am I going to tell to one of my clients, or of my partners, if he or she accordingly concludes that any given company requiring financial assistance is better off choosing a lawyer who knows his place in the world, and would not dare to piss off the powersthatbe? Given the darwinian nature of the legal business, the theory of games predicts that those who do not will soon become extinct, at least as players in the market concerned.

There is just but one small step to cross to admit that a lawyer can return a brief when he discovers that his own or his other clients' interest might be adversely affected, as a consequence of his continued representation of a given party. The English rule which makes it an ethical duty for a barrister to provide his services when legally requested is traditionally believed to have originated exactly from such a case, and namely from the refusal of a famous eighteenth century barrister, Thomas Erskine, to drop its defence of a Thomas Paine who had offended the King in a pamphlet. In fact, Erskine thoroughly disapproved of Paine and his writings but he was determined to represent him because he thought it was his duty to do so, and was punished for that by the King, who removed him from the very valuable office that he held of AttorneyGeneral to the Prince of Wales. Henceforth, the Bar inferred his members' very interest in such a duty being considered a disciplinary issue, so that no counsel could be blamed anymore for an "unfortunate choice of clients".

It must also be taken into account that independence is already structurally endangered in markets, such as the Italian markets, where much is determined by one's participation to financialpoliticalindustrialmediaticacademic cartels, so that true independence already carries a price tag even for a lawyer. This may be less important for single, highly specialised professionals, but it is becoming more and more true for practices doing (also) largescale transactional work, such as that pertaining to negotiations, due diligence and corporate finance in major corporate deals. It is therefore of little surprise that one who does not belong to a given tribe may find oneself with a higherthanaverage percentage of foreign clients in these fields, if he is active in them at all (even in times of globalisation, a client is more likely not be bound by tribal rules in foreign jurisdictions, and to focus instead on obtaining the best service at the best price).

Sure, English solicitors do not have a cabrank rule, and are entirely free to select their cases and clients, if they can afford it, as they see it best. As a consequence, most "magic circle" firms makes it a policy not to participate in proceedings against certain defendants, in the defence of clients sued by the latter, or for that matter to be involved in any unpopular or politicallysensitive matter, especially on the "wrong" side; so that one of their partners might not think much of the issues discussed herein. In fact, the only magic circle firm who has a strong focus on contentious work on the "industrialcorporate" (as opposed to the financialbanking) side of the world has been perceived to pay a price for that exceeding the mere increased likeliness of conflicts, and according to the specialised press the issue has been for years a subject of debate amongst its partners.

I strongly suspect however that the peculiar position of English firms has much to do with the existence of a split legal profession, where solicitors have been for a long time allowed to be in private employment, to work in true partnerships, to pick their clients, etc, but a critical part of contentious work which is the most delicate issue, given that in most countries lawyers have an exclusivity on its performance was dealt with by other lawyers governed by a different, and sometimes opposite, set of rules.

An obliteration of the cabrank rule is therefore likely to lead to a market scenario closer to that of the United States than to that of the United Kingdom, where the lawyers are much more closely identified with their (typical) clients interests and positions. The American experience shows that this works at multiple level, which vastly exceed the scope of topnotch business work or, for instance, the traditional reluctance of many Italian criminal law specialists to represent victims of alleged crimes, as this bring them to support the defendant's prosecution and possibly to argue for the limitations of his rights.

In such a system, not only is a lawyer more exposed to environmental pressures, but he ends up having as well to "take sides" along social and ideological lines. In particular, a lawyer is expected to "choose" whether he is an "establishment lawyer", a "plaintiff lawyer", a "drug lawyer", a "consumer lawyer", a "women lawyer", a "husband lawyer", a "union lawyer" and so forth.

The related loss of independence takes place not only with respect to single powerful entities and cartels thereof; but also face to the public opinion and what the "political correctness" of the time (or of the lawyer personal environment) dictates, as Alan Dershovitz had the opportunity to realise when he accepted the defence of Mr. von Bülow. In this contexts, to accept the defence of a polluter or rapist, a money launderer or a war criminal, may still be statement in favour of the right to counsel, but as notes Richard Posner, it carries in average a heavier stigma than it does in Europe. And for sure the decision to represent an alleged communist during the McCarthy era was very likely to be interpreted by all parties concerned, lawyer included, as some kind of endorsement of his or her politics. This is partially compensated by the highly pluralistic nature of the American society and by the the sheer size and competitiveness of the local market, but some features which many European lawyers might consider distorsive inevitably emerge nevertheless. One is for instance a further reduction of the options opened to a given party: if I am indicted for drug trafficking, I am supposed to go to see a drug lawyer, as nobody else would touch me. In turn, if my lawyer is known to be a drug lawyer, there is a reasonable expectation by anybody in the know that I am actually a drug trafficker. Even admitting that trial by a jury of laymen may mitigate this problem in the United States, such mitigation does not exist at all in continental Europe, and is not applicable anymore to English business disputes. In addition, given that a drug lawyer is likely to be sought mostly by organised crime dealing with drugs, he is all the more likely to end up in the dubious position of a fulltime, house consigliere of criminal organisations.

In the most famous novel of Italian literature, Manzoni's The Betrothed, the peasant whose wedding is hindered by a 1600s signore is sent to see a famous lawyer called Azzeccagarbugli ("Quibblefinder"). After a lengthy discussion of the matter, Renzo, the peasant, is dismissed so quickly when the lawyer learns of the identity of the other party, that he realises what was happening only when he is given back the two capons he has brough along as a "retainer".

It has taken a while since to understand that the lawyer's legal freedom to choose his clients out of whims or discrimination or personal interest amounts to a a loss of his practical freedom to accept instruction in whatever matter he is competent to take; and namely a loss of his (at least relative) freedom from the blame and blackmail possibly related to the acceptance of the specific brief concerned. But and the end of this process, the English and continental gentlemen instructing Sir Edward Marshall Hall or Francesco Carnelutti to look after their business in court had no reason to feel tainted by the highly controversial criminal matters both were dealing with, or to fear that their briefs could be selectioned depending on the relative importance of the party to be sued.

American judges swear that in the performance of their duties they will "not know of any person". Continental lawyers had better remember, in their own interest, their analogous obligation.

Eleonora Ballarino is an Italian litigator, and a partner of the Company Commercial Law Dept. of Studio Legale Sutti in Rome and Milan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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