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Traditional Italian lawyers are beginning to adapt to competition from larger overseas firms. The believe they must follow the English and American model while retaining Italian characteristics. Barbara Galli reports

US firms Skadden, Arps, Slate, Meagher and Flom, and Shearman & Sterling have scooped the worlds's largest deal: the merger between Travelers Group and Citicorp, estimated at $166 billion. The merger announcement was expected to speed up plans for reform of US banking law, which prohibits bank holding companies from involvement in insurance business. Shearman & Sterling is representing Citicorp. Senior partner Stephen Volk and corporate specialist David Heleniak are leading the team.

UK firm Freshfields is starting a joint venture with a Japanese lawyer, or bengoshi. The joint venture is the closest form of cooperation allowed by Japanese bar rules between bengoshi and foreign firms. Freshfields will become the fifth law firm to form a joint venture, after French firm Gide Loyrette Nouel and US firms Baker & McKenzie, Sullivan & Cromwell and White & Case. Restrictive legal rules mean foreign law firms in Tokyo are forbidden from employing bengoshi, or offering them partnerships. The joint venture allows firms to share offices and other expenses, but they must keep all income separate. There are many foreign law firms in Japan but joint ventures are rare because foreign lawyers think the system is flawed. Ruth Markland, Freshfields' managing partner in Asia agrees to a point. "It is unsatisfactory because it would be ideal to be able to offer full partnership," she says. "But we feel the time is right to have a Japanese capability and this is the structure that is allowed." Markland expects the planned economic reform will lead to greater demand for legal services in Tokyo.

• In London, US firm Akin, Gump, Strauss, Hauer & Feld has poached three lawyers from US rivals in the city. Kaamil Ansar, Andrew Thomas and Elisha Flax are being hired to expand the firm's London project finance team. Ansar, a dual-qualified project finance specialist, joins the firm as partner from Jones, Day, Reavis & Pogue. Thomas and Flax, both UK solicitors, join as counsel and associate from Chadbourne & Parke. • US firm Winthrop, Stimson, Putnam & Roberts has also added to its project finance team two partners from rival New York firm Verner, Liipfert, Bernhard, McPherson and Hand. Roy Bowman and Douglas Ochs Alder will join the firm's Washington DC office. Bowman was a shareholder in Verner, Liipfert and chaired the firm's international transactions and trade practice. The firm has also poached project finance partner Jay Fortin from Watson, Farley & Williams.

UK firm Linklaters & Paines has formally ended its two year association with German firm Schön Nolte Finkelnburg & Clemm and is now setting up to work with Oppenhoff & Rädler, the German member of the Alliance of European Lawyers. According to Linklaters' press release the office is set to continue as the Frankfurt branch of Schön Nolte. But the three Linklaters lawyers who will remain in Frankfurt have been offered new premises — coincidentally belonging to Oppenhoff. "They are moving into office space which Oppenhoff has made available to them," confirms Linklaters' managing partner Terence Kyle. So what of full Alliance membership? "We have an entirely open mind," says Kyle of Linklaters' European strategy and he is quick to point out that the firm itself has never declared any intention to join the Alliance.

The Commission proposed a Directive to eliminate withholding taxes on payments of interest and royalties between associated companies in different member states. Taxes levied at source either by deduction or assessment can involve time-consuming formalities, cash-flow losses and double taxation for companies engaged in cross-border business. The Commission therefore proposed that taxes on payments of interest and royalties should be levied only in the member states where the companies receiving the payments are located. Commissioner Monti says this would remove a 'significant tax handicap' to companies' cross-border operations.

The Supreme Court has confirmed a decision passed by an Appellate Commercial Court in June 1995 In re NL SA v Bull Argentina SA, challenging the validity of agreements entered into among shareholders of Argentine corporations.

On March 5 1998 the Reserve Bank of New Zealand implemented a real-time gross settlement (RTGS) system for high value interbank transactions (including those in the wholesale securities and foreign exchange markets). The value of such transactions settled through the new Zealand banking system now averages more than NZ$30 billion (US$17.5 billion) a day. Previously, these interbank obligations were netted and settled overnight through each bank's settlement account with the Reserve Bank.

In February 1998 amendments to acts regarding the financial sector were proposed. They included the following:

After currency devaluation in Asia, lenders and borrowers are scrutinizing material adverse change (MAC) clauses to determine their respective positions. By Richard M Gray of Milbank, Tweed, Hadley & McCloy, Singapore