‘The future is Pan-Baltic!’ says Vilius Bernatonis, managing partner of TGS Baltic’s Lithuania branch. He is referring to the integration goals of Baltic states’ major firms, which aim to ensure that legal expertise from a firm’s office in one Baltic nation will be readily available to its client in another. But his words have a broader resonance. Though distinct, Estonia, Latvia and Lithuania co-operate at nearly every economic level, investing in the infrastructure, energy and technology of one another to foster shared growth and development. They do so because in numbers there is strength. In numbers, there is safety.
Looking at the structure of the Baltic legal market in general terms, at the top is the pan-Baltic bracket comprising Ellex, TGS Baltic, Cobalt and Sorainen, all of which offer full-service, cross-border practices covering all areas of law in Estonia, Lithuania and Latvia. According to Liga Merwin, managing partner at Ellex [Latvia], ‘the pan-Baltic firms remain largely unchallenged’.
The second bracket, which includes WALLESS, features large-to-mid-sized firms that have notable attorneys and a high spectrum of work in the Baltics, with some international capability. The third bracket of firms includes international firms and consultancy firms such as Eversheds Sutherland, KPMG Law, and PricewaterhouseCoopers, which benefit from their established international reputations and can draw upon their expertise from across the globe to provide specialist services, using their shared networks with their other offices. However, the strength of the pan-Baltic firms has largely kept international firms out of the market and Eversheds, for example, franchises to standout local lawyers, such as Jonas Saladzius, Agris Bitāns and Maivi Ots.
‘By 2025 the Baltic states will have no energy connections with Russia and Belarus – Poland has a huge role to play, but it is not integration with Poland that is the goal, it is integration with Europe.’ Vilius Bernatonis, TGS Baltic
Early 2022 saw the end of the restrictions of the Covid-19 pandemic and the start of the war between Russia and Ukraine, which led to several issues for the Baltic states as they share a land border with Russia and are close to the conflict. In the banking, finance and corporate space, there was a fear early on that the war would collapse the entire market, leading to a recession and market crash reminiscent of 2008. Instead, to the surprise of many of the region’s lawyers, the opposite occurred; while a few investors left the regions, a number of new ones moved in to fill the gap.
However, other sectors have suffered. In the real estate, construction and energy space, the rise in gas prices and the current energy crisis has led to high costs being passed onto the population. The inability to get certain materials from Ukraine and Belarus has led to a high volume of public procurement disputes, as prices rocket far beyond the pre-agreed contractual fees. As a response to these problems, the governments have expanded their relationships and ties with each other and neighbouring countries as they break their dependency on Russia, and particularly its gas, and accelerate towards a more sustainable future. Poland and Lithuania, historically closely aligned, have been jointly constructing an LNG pipeline. As Bernatonis says: ‘By 2025 the three Baltic states will have no energy connections with Russia and Belarus – Poland has a huge role to play here, but it is not integration with Poland that is the goal, it is integration with Europe.’
One silver lining in these troubled times is the rapid development and growth of renewable energies in the Baltic region. Energy independence from Russia means finding your own supply and, in contrast to some other parts of the world where fracking has been considered, the Baltics have chosen to do it green. The Lithuanian seaport of Klaipeda is a hub of activity with the building of wind turbines and the establishment of the necessary infrastructure to construct, operate and sustain offshore wind farms. In Latvia, too, wind farms are under construction, particularly in the coastal areas around Tukums. As early as 2020, Latvia led the way in clean energy financing, with sustainability and green bonds being issued first by state-owned energy companies and then the government itself. Lithuania and Estonia have since followed suit. Noticeably, the Baltic states have heavily invested in each other’s renewables initiatives, with the markets seeing an increased level of M&A and numerous joint ventures between energy companies from different nations. The environment is an important consideration in the Baltics and this trend extends beyond the realms of energy production and supply, with a significant amount of legal disputes now concerning pollution.
There has been a palpable tussle for talent between law firms and the emergent IT startups and unicorns that have entered the region, with staff and potential trainees migrating to smaller tech-based startups for a variety of issues. These include offering a friendlier and attractive workspace, flexible work environments, to more lucrative contracts being offered. This has provided a unique challenge for the traditional law firm as they have had to strategise and adapt to the changes in the modern employment climate to compete, with Bernatonis noting that tech startups are doing this to ‘build their in-house teams’. Interestingly enough, only Lithuania and Estonia have faced this issue, with Latvian law firms still being the premier offering for attorneys and trainees.
Looking to the future, although the Baltic markets face an uncertain road ahead, new growth opportunities continue to appear. Within the banking and finance and corporate arenas, investors are slowly over time returning to the region, and within the energy sector, the prioritisation of renewable energy sources, coupled with the close business ties with Poland via the GIPL pipeline, will see the region remove its dependency from Russian fuel sources. LB
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| Rank (by Legal 500 ranking) | Firm name | Region | Total lawyers | Total partners | Promotions | Offices | Partner hires |
|---|---|---|---|---|---|---|---|
| 28 | Ellex | Baltics | 206 | 49 | 8 | 3 | 3 |
| 29 | Cobalt | Baltics | 96 | 18 | 3 | 8 | 5 |
| 32 | Sorainen | Baltics | 250 | 45 | 1 | 4 | 2 |
| 36 | TGS Baltic | Baltics | 128 | 34 | 7 | 4 | 4 |
| 48 | WALLESS | Baltics | 120 | 28 | 2 | 4 | 1 |