Italy focus - Exploring new paths in finance roles
2017 has already produced an air of positivity across the legal sector in Italy. In this article, our consultant Miriam Morbelli, focuses on the current market demand for finance lawyers which has historically evolved along the same lines as economic and financial developments.
So far this year we have seen a change in demand for M&A, tax and regulatory lawyers at all levels of seniority. But more than anything else, there has been an increase in demand for finance lawyers, a real change from 2016. The end of last year did see a slow down for finance roles particularly in traditional banking and finance and capital markets. This could be directly linked to the decrease in the number of traditional loan transactions and plain vanilla capital markets deals during recent years.
Since the global financial crisis banks have become more and more reluctant to lend to businesses; therefore businesses began to seek alternative sources of financing. In 2012 the Italian Stock Exchange started the so called Elite Program, which helps Italian businesses by offering them the industrial, financial and organisational skills they need to address the challenges of international markets. Also, while the UK may consider Brexit a hindrance to cross border alternative funding, Italian borrowers arguably now have a greater opportunity to secure borrowing from alternative finance sources outside of the country. As a European trend, nearly 50% of borrowers expect to increase their use of alternative funding sources over the next five years and Europe is on its way to create a single private placement market. Research also suggests Italian borrowers specifically expect to increase their use of alternative finance over the next five years by 73% (survey by Allen & Overy).
While the investor base is becoming broader, banks continue to play a fundamental role in deal structuring, acting as intermediaries in the context of more flexible funding structures. From the borrowers’ and lawyers’ perspective, banks are well known speakers adding certainty with new forms of financing. In 2016 in Italy, 57% of borrowers raised capital via private placed loans intermediated by regulated lenders; this is compared to 40% in 2015.
Several measures have been taken in Italy over the last few years to allow Italian businesses to secure new sources of financing such as private equity investments, mini-bonds and direct lending. Education of market participants about these new financing structures remains one of the key priorities for the development of a European private placement market alongside legislative changes. Regulatory lawyers play a fundamental role in this and as a result the number of opportunities in the market for lawyers with this experience has increased.
This increase in alternative funding has presented an opportunity for law firms and financial intermediaries and they are looking to hire specialist debt professionals with cross sector experience in traditional lending, capital markets and other alternative forms of finance. We have seen an increase in both in-house and private practice opportunities for those lawyers with flexible finance experience, particularly non-performing loan and high yield experience and structured finance.
We have also noticed that these changes in the market have had a knock on effect into changes to the composition of finance teams. These tend to be more lean and flexible, especially in the domestic and mid-market firms. Professional demand from this kind of law firms has increased and this has been facilitated by the fact that these kinds of firms often have a more streamlined hiring process. They can hire quickly because they do not have the long approval process of the international firms. This is a great positive for candidates but also for the law firms as they can bolster their teams more quickly than their competition.
If you would like more information on the current associate recruitment market in Italy please contact Miriam Morbelli at [email protected]