There are various angles from which the relationship between legal professions and competitiveness can be viewed.
In the first place, the influence of the functionality of the legal system, understood as a system of rules and mechanisms for their application, with respect to the functioning of the economy. Here we know that our country is far behind: both in terms of the quality of the rules and in the enforcement system. Even if the cause of this is not directly attributable to the advocacy, but to normative confusion (example: multiplication of rituals; confusion on competence - competition between four different civil offices) and administrative insufficiencies (from the distribution of judicial offices to the lack of staff and resources), it can play an important role of pressure and stimulus.
Secondly, the capacity of the legal system to represent itself a source of new opportunities for those who work in the sector and for the economic system. I am thinking in particular, in an integrated world, of the ability to present itself as a privileged forum for the settlement of particularly complex disputes (for example, in my sector, the English jurisdiction as a forum for disputes relating to antitrust damages). The language enters, the speed of the procedures, but also the propensity to seize opportunities.
Finally, the capacity of the legal system itself to contribute to the growth and competitiveness of the economic system, providing businesses and households with quality services in an efficient manner.
I would like to dwell in particular on the last aspect, which naturally calls into question the structure of the profession and the prospects for reform: bearing in mind, however, that in my opinion this structure is not indifferent also as regards the other aspects, and in particular the choices that the legal profession, as a professional representation, proposes to public opinion, the legislator and the government.
In the first place, I would like to observe that, speaking of the structure and reform of the legal profession, it is essential to get out of a strictly national vision: the issue of adapting the legal professions regulations has arisen in recent decades in all countries and is the consequence of the evolution and growing complexity of the issues that have accompanied the development of economic and social relations.
Various factors contribute to determining a continuous evolution of our profession: the exponential growth of what we can call "legal traffic"; the emergence of new issues, from economic law to the rights of the person; the consequent need for specialisation; the emergence of new types of offer, also represented by new economic-legal professions; the possibility of reorganizing the methods of offering services that have become standardized and repetitive; the articulation of the demand, which in various areas and sectors is characterized by subjects such as companies who are able to evaluate professionals and their proposals; the integration and expansion of the market beyond national spaces.
In this more complex context, can the rules that have traditionally governed the profession remain unchanged or should they not rather be updated? And in particular, in this context, to what extent can the rules that prevent the functioning of the market and in particular competition between professionals within the same profession and between different types of profession still be considered current and how much should they be revised in the light of the changed context?
Perhaps it is good to take a step back, and ask why these limits have been placed.
In the first place, for a vision of the profession focused on the purposes of public interest that it pursues, in particular on its centrality in ensuring the functioning of justice pursuant to Art. 24 of the Constitution, which justifies the particular treatment of legal professional activities and which would suggest that this activity is removed from competitive pressures which could limit the independence of judgment and the quality in the lawyer's performance: a view which is the basis of the affirmation that the legal profession is not a business activity and that it cannot be configured as an economic activity.
It is an approach which certainly has foundations in the origins of the history of the forensic activity, but which must be re-interpreted in the light of the evolution of the legal and economic context.
As far as the legal context is concerned, the provisions of Community law are particularly relevant, which have an impact for at least two aspects.
From a first point of view, in relation to the freedom to provide services and establishment, as it establishes the right of those who are authorized to carry out an activity in a member country to carry it out and to establish themselves in all the countries of the Union, and indeed, for our profession it establishes common disciplines. And this principle also questions many of the constraints on the functioning of the market that can characterize the national legal system (Cipolla case and maximum tariffs), insofar as they affect these freedoms.
From a second point of view since according to Community law legal services, although aimed at a public interest, still represent an economic activity and as such are subject to the rules that are established for economic subjects, companies. Exceptions to these rules must be justified by the general interest objectives pursued and must be proportional to them.
As far as the economic context is concerned, the traditional approach is based on the fear that competition can take place at the expense of quality. However, the market evolves, the types of subjects change, and the contractual and legal service supply methods change: rules that might seem adequate in the context of an agricultural company or small industry, and with studies of a family nature, can no longer be so in a much more articulated society, with subjects able to get information and with a vast articulation of the offer of legal services by subjects who can create their own reputation. In this context, competition can provide a powerful stimulus for selection and quality improvement: favoring specialization and comparison, suggesting new ways of offering the service.
These considerations do not only apply to the legal profession, but to all professions. In particular, the crucial role of legal activities has meant that in recent decades in almost all countries there has been much discussion about the rules governing the functioning of forensic activity and the limits they place on the functioning of the competitive market.
This review concerned various issues: the extent of the role to be attributed to self-regulatory bodies, the exclusivity; the criteria for access to the profession; rates; other constraints on competition, in particular advertising; the forms of organization of the profession, in particular the corporate form. I would like to dwell on some of these issues below, and then conclude with some observations on the process under way in our country. These aspects cannot be considered individually but as components of an overall reform process:
1. Self-regulation – Firstly, in many jurisdictions the very role of self-regulation is under discussion, the traditional form in which recognized professional orders and associations in all jurisdictions set the rules for carrying out the profession and ensure compliance with them. In general, it has been recognized that self-regulation mechanisms have many advantages: knowledge of the subject and its problems, information advantages, flexibility in intervention and lower costs.
But there are also disadvantages: in particular, the risk that the regulation acquires a predominantly protective character and could develop without sufficient regard for the protection of third parties, both in general terms, through for example the establishment of rules of conduct that stiffen the market, such as bans on advertising or the methods of determining tariffs, both in specific terms, in particular in their role of protection as guarantors of professional ethics: is there a tendency of the exponents of the "corporation" to protect its members?
It is a consideration which, for example in Great Britain, has led to a reform of the guarantee mechanisms which has led to considerable transparency and the presence of third parties in the control mechanisms, third parties who are traditionally found in other jurisdictions with a more traditional structure . In Italy, proposals in this sense were made by the Antitrust Authority as early as the 90s, in relation both to the control bodies and to the methods of access.
My impression is there is a correlation between the profession's sensitivity to the needs of other interests, and its ability to vindicate the need for high standards of quality exercised responsibly vis-à-vis the client.
2. Exclusives and interprofessional competition – One of the proposals contained in the fact-finding survey conducted in 1997 by the AGCM was the revision of the professional exclusivity, from two points of view: to examine which activities were actually of public interest, and therefore deserving of reserve to the regulated professions (reserve), and therefore to what extent they should be removed from inter-branch (exclusive) competition.
I believe that this proposal points in the right direction.
There seems to be little doubt that legal aid requires exclusive jurisdiction. And yet, the question can and has arisen in relation to the type of judgement, the size of the deal, the types of proceedings Jurisdictions without the obligation of legal defense (justice of the peace up to euro; media-conciliation).
But the question of exclusivity mainly concerns inter-professional competition: meanwhile in the field of consultancy. The development of specific legal professions, from accountants to labor consultants, to social security consultants, as well as the admissibility of consultancy on an occasional basis even by qualified individuals not belonging to protected professions, sanctioned by the Cassation, appears to be a more reasonable solution than the strict reserve that a large part of the lawyers intends to introduce.
But inter-professional competition and private practice review can also be to the advocacy's advantage. One may wonder whether the need for protection, for example the certainty of legal traffic, in the case of notaries, cannot be mitigated for certain types of transactions, or whether the development of sophisticated IT technologies does not call into question the exclusivity of consultants of work. This could open up spaces for inter-professional competition.
3. The constraints on intra-professional competition: tariffs and advertising – The discussion on self-regulation also includes that on tariffs and advertising, on which the controversy has centered in the last period. In this regard, since at least for tariffs the question will be the subject of discussion in the coming weeks, perhaps it is appropriate to fix a few points.
First, the rates. Setting maximum or minimum rates is not a necessary feature of the professional activity. There is no tariff in France, Great Britain or Spain.
Secondly, the setting of tariffs falls within the scope of the free competition law: given the Community definition of the professions as an economic activity and of the orders as professional associations, the setting of economic conditions, including tariffs and information activities, by the orders, representing business associations, constitutes an infringement of the competition rules. Even if the setting of tariffs by the Public Administration, as specified by the Arduino Judgment, is compatible with the competition law if it is necessary and proportional to the purposes of public interest pursued by the law, and in particular are necessary to guarantee the quality of service and protection of rights.
However, competition law is not the only Community law to which the determination of tariffs is subject. No less relevant are the regulations relating to the freedom to provide services and establishment: in the Cipolla Judgment, the European Court of Justice argued that minimum tariffs limit in principle the freedom to provide services since they prevent operators in the Member States from taking advantage of their efficiency. The same Court did not consider that maximum tariffs present the same risk even if from the point of view of competition they could be considered restrictive since they give rise to information on the performance of the service.
Legal considerations aside, the question really is to what extent tariff-fixing should be considered justified in the current economic environment. The traditional approach is based on the idea that the evaluation of the professional activity cannot be carried out easily by the market, since it is very difficult, in a condition of information asymmetry for the client, to appreciate the quality of the service and the market mechanism can lead to deterioration in quality.
From this point of view it is necessary to overcome the idea of a market of uniform legal services, for which everything poses a need to avoid information problems that give rise to a deterioration in the quality of the service. In reality, different segments can be identified.
There is a market in which businesses and professional studios operate in which clearly those who purchase services make a well-informed choice based on market considerations, while the studios that offer them try to qualify, whether they are large networks or boutiques, through a specific connotation of their services. It does not seem to me that there are any problems in this market that need to be solved by fixing tariffs.
On the other hand, problems can arise for a less specialized clientele, in which however the opening of the information market, and perhaps new ways of offering the service, perhaps even extending access to consultancy, can make it no longer necessary to resort at the binding rate. Of course, for this clientele a non-binding reference tariff could instead be useful, which could even facilitate the comparison of dispersed users who may have difficulty in gathering information. And this especially in areas of great social importance such as family or labor law.
In this regard, the competition authorities also tend to look at the reference tariffs with hostility, and there are various cases of proceedings being undertaken in this regard, both in Italy and in France. However, a reflection could be proposed, if one were to leave a position of absolute negation of the comparison.
The same considerations can be made for the ban on the advertising of services which is traditionally connected, in all legal systems, to the non-economic nature of professional services, and to the opportunity to therefore limit competition between studios.
Naturally, in relation to this theme, delicate questions arise regarding the type of information that can be disseminated and the correctness of advertising. The abolition of the prohibition in our legal system, which took place in 2006, reflects trends already implemented in the other Community legal systems, even if the interpretation regarding the limits of information is very different in the various legal systems. All in all, the interpretation given by the National Forensic Council of the legislation seems to represent the right balance.
4. The Accesses – I would say that access must be open but very selective. And from this point of view, the issue for our profession seems to me to be whether the Italian system is sufficiently selective. With the exception of the Spanish system, the other legal systems provide for mechanisms of strong selection in access to forensic practice or to the university itself. The access mechanisms are then no less selective than those that characterize our country.
However, if selectivity is claimed, it is also necessary to address the question of traineeship in a coherent manner, which so far in our country takes place in a much less structured way than in other legal systems and does not guarantee trainees forms of remuneration. Recent proposals tend to shorten the internship and allow part of it to be done during university studies. In reality, the Italian system is the only one that requires five years of university preparation, while generally the required university period is shorter and equal to four years. It would then seem reasonable that part of the practice should take place during the period of study: the point is that the university structures currently appear completely unprepared to handle a task of this kind.
Finally, the question of access also arises in relation to the return to the profession of those who decide to carry out the activity in an administrative company.
5. What organization for advocacy? – The development of the economic and social environment raises the question of the character that the legal profession must have. Traditionally, advocacy has been seen as an activity on an individual scale: the advocate is a craftsman or artist, if you prefer, of the profession. However, the growing complexity and diversification of the problems faced by the lawyer requires a transition towards the activity more characterized by specialization and organization.
The development of complex professional organizations, with hundreds and sometimes thousands of lawyers, is characteristic not only of Anglo-Saxon countries but also of many continental countries. These are realities that obviously respond to the objective of providing a vast range of services, in various sectors, with international presence or connections, which facilitate businesses on the markets, and together they create a reputation of quality that can be recognized by customers in various territorial contexts.
Naturally, the growth in size of the firms is not an inevitable fact: even in the area of corporate law there are smaller firms or individual professionals who enjoy a very high reputation in their sector. However, the point is that the methods of carrying out the legal profession should be such as to allow for the widest range of organizational methods. Among these, the possibility of carrying out the activity not only by associating with lawyers, but with professional figures that are not necessarily regulated.
These considerations explain the emphasis placed by the reforms underway in our country and elsewhere on professional societies. The corporate organization actually represents an opportunity for articulation and strengthening of the traditional structure of the studios which I personally consider to be of great importance. It raises the problem of the relationship between partners and other professionals and the entirely prospective question of the possibility that professionals with stable collaboration relationships can collaborate in the company: in a perspective that could be considered favourably, for example, by younger professionals.
There is also the problem of access to the capital company of non-professional partners and in particular of capital partners. It is clear that this offers interesting opportunities for strengthening the capital of the Studios and, in this way, for financing expansion. However, there is the delicate balancing of the obligations of confidentiality and independence of the professionals and the interests of the capital shareholder. It is very possible that these are not incompatible with each other: but in principle I don't see great advantages in pushing the industrialization of the profession to the point of making it an activity of pure capitalist investment.
6. Conclusion: the reform project and the current situation – I would like to conclude by spending a few words on the process of revising the legislation relating to the legal professions in our country: the least that can be said is that it reveals a problem of method: substantially it appears to be guided by extemporaneous initiatives (even appreciable) rather than by an overall design .
On the other hand, this also seems to depend on the ways in which the debate on the subject has been developing in our country in the last fifteen years, since, in 1997, the AGCM completed its fact-finding investigation, in which it proposed an overall revision of the of the professions, reviewing exclusivity criteria, regulation criteria and limits to the functioning of the market.
There followed some proposals for the overall reform of the system of professions, which had no parliamentary approval. Instead, a reconsideration of the legislation relating to the legal profession, which dates back to 1933, was initiated, also at the instigation of the lawyers. However, the text that was finally approved by the Senate last year, and which largely reflects the demands of professional bodies, appears to have taken a very conservative and status quo position. In a nutshell, it seems to me that it essentially reflects a somewhat archaic vision of the profession, still centered on the individual professional, in a context that is not very open to external developments.
The draft (almost) law now appears to be deeply questioned by the measures that this government and the previous one have set since last July, in particular as regards tariffs, advertising, duration of the internship, consequent access to the profession and organizational form , liable to extend to the joint-stock company controlled by a capitalist shareholder, the need for orders to adapt their forecasts within a short time to the regulatory provisions.
As mentioned, these are measures that identify a direction, but do not fall within a systemic vision of reform of professional activities.
It is therefore a question of seeing how the profession can position itself with respect to the challenge posed by the legislator: if, as it seems, in an exclusively oppositional position, counting on political alliances that can give rise to steps backwards. Or does he rather not want to take the opportunity to direct the reform towards a different role and perspective of the profession. Which leads to a more general reflection on the criteria for carrying out professional activities.
