Italy's new fair compensionation legislation

17 apr 2023

Avv. Marco Andrea Baudino Bessone


What is changing in the lawyer-client relationship

Seventeen years after the entry into force of the infamous Bersani Law No. 248/2006, which had "swept away" the system of minimum fee limits for professional fees, the legislature has taken a step backward, wisely reintroducing the principle of "equity" in the compensation owed to the professional by the client. 
 
This was intended to remedy some serious distortions that the total liberalization of professional fees had generated. In fact, on the one hand, and contrary to what were the intentions of the reform, such liberalization had been able and successful in benefiting not so much private citizens, but, above all, large financial, insurance and industrial groups: which, taking advantage of their position of strength, have often been able to impose fees and/or contractual conditions on the professionals with whom they collaborate that are particularly onerous for the latter.  
 
On the other hand, the excessive reduction of professional fees, the result of the system of free competition, has led to a corresponding progressive reduction in the average level of quality of professional services of the various categories involved; a negative development that has been to the detriment of all clients, regardless of the category to which they belong (individuals, small and medium-sized businesses, large companies and public bodies).          
The "fair compensation" legislation, which was finally approved by the Chamber of Deputies at its session on April 12, 2023 and is awaiting promulgation by the Head of State, therefore aims to remedy these distortions. 
 
Let's briefly see how. 
  1. Scope of application. The new regulations apply in relations between professionals, on the one hand, and public entities, investee companies, and large businesses (banks, insurance companies, and companies with a turnover of more than ten million euros annually and/or with more than fifty employees), on the other. Therefore, it does not apply to private clients and small and medium-sized enterprises that do not reach the size limits indicated above. Also excluded, and therefore exempt from the application of the regulations, are securitization special purpose vehicles (of bank credits) and those that are contractors for the collection of tax credits.   
  2. Principle of non-derogation in peius. The legislation reintroduces the principle of non-derogation in pejus of the parameters set for judicial liquidation of professional fees dictated by current ministerial decrees. Specific to what lawyers are interested in, these are the tariffs currently established by Ministerial Decree 147 of 13/8/2022. In the event that lower than professional fees are agreed upon, they are automatically replaced by the latter. 
  3. Vexatious clauses. The sanction of nullity is also provided for certain clauses of vexatious content, which are identified as
  4. Nullity. Nullity is relative (in the sense that it operates in the interest of the professional only); it is detectable ex officio; and it entails the nullity only of the clause and not that of the contract and the professional relationship. 
  5. Disciplinary sanctions. It is also and conversely provided for the possibility for professional orders, to apply disciplinary sanctions to those professionals who agree with their clients, falling into the above-mentioned categories (public bodies and large companies) fees lower than those stipulated in the professional tariffs. This is for the obvious purpose of discouraging dumping activities by professionals who agree to work "below cost" in order to grab clients. 
 

Conclusions 

It should also be pointed out that the legislation under comment, which applies (by express transitional provision) only to agreements entered into after the entry into force of the law (and therefore makes an exception for those entered into before that date) contains, however, two additional provisions of considerable relevance to all professionals, and which appear to be applicable in relations with all clients (and not only to those targeted by the fair compensation legislation). 
 
The first provision concerns the commencement of the ten-year limitation period for professional liability: a period that is made to run from the conduct that determines the onset of the professional's liability (and not from the moment of the client's knowledge of the same and/or from the occurrence of the damaging event, as the jurisprudence of the Court of Cassation, with consolidated guidance, had come to affirm). 
 
The second is the attribution of enforceable title (as well as finality in the case of failure to oppose within forty days) to professional fees settled with an opinion of conformity by the Councils of Professional Associations. This solution gives professionals a simplified path in the recovery of their professional credits and relieves the Courts of the burden of today's significant litigation often motivated only by dilatory purposes on the part of the former client. 
 
In conclusion, from the point of view of the writer, and therefore of the professional, the first judgment on the novelties introduced by this legislative reform (or rather, "counter-reform") is undoubtedly positive. Moreover, the hope is that the awarding of more congruous fees to professionals will be a reason for a recovery of greater dignity of the category and an elevation of the average level of professional services.
 
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