IFLR 1000
The Guide to the World's Leading Financial Law Firms

Iceland, despite and indeed perhaps because of its diminutive stature, has suffered just as much as any other country from the global economic crisis. After the bank collapses of 2008, it was hoped every year by those active within the market that things would pick up, and last year was no different.

Unfortunately, any chinks of light that might signal the end of the tunnel are still fairly weak, with finance unsurprisingly hard to come by. "The banks haven't really got started with lending. They are in the process of preparing for it," says one partner, while work for firms, while plentiful, is still of a distressed nature.

"The work has come from the economic collapse. This work is ongoing and rigorous, and we have been dealing with a lot of bankruptcies and restructurings," says one partner on his deal flow, while the corporate side is not exactly thriving either: "In general, M&A work is still of a distressed nature. For instance, preparing companies to be sold on behalf of the banks. It's been mainly to Icelandic buyers too."

"There is no real corporate work to speak of, no M&A. Just restructuring," adds a corporate practitioner, while another confirms this prevailing trend: "Corporate and M&A is limited, but there is some. It is mostly disposal of assets, banks selling to others though."

A significant opinion that has emerged among people in the market is that some believe that the government is actually stifling the economy's recovery, rather than aiding it.

"They are restricting the recovery of the market. They have to explore other methods. For me the trouble wasn't with the regulations as they were in line with the rest of the EU," comments one partner, while another agrees: "It is my personal opinion that the government has an over-emphasis on themselves steering the market and economy. The government should be looking at other methods too."

"Government now is a bit obstructive to business. Business is not being allowed to go on," adds another frustrated partner.

While it is understandable that the Icelandic government would like to get hold of the market and so try to prevent what befell them before, it is a potentially worry for investors that those within Iceland are not optimistic. "It could be a long way back," remarks a partner.

Levels of investment reflect this relatively pessimistic attitude too. "There have not been many new projects and no new foreign investments," says a lawyer, while another agrees with this summation: "No, there hasn't been too much investment at all, though we hope it is going to turn around by the end of the year."

Those of a more optimistic disposition are trying to find the diamonds among the rough though, mainly looking toward investors looking for cheap deals. "There has been some new work, with a number of foreign players looking to get involved. It is a difficult environment but prices are good," says one.

Others see far more change, and are hoping this year could be one where more positive moves are made. "The market is gradually gaining strength, and is becoming more and more interesting as an option."

A highly professional outfit, BBA Legal is one of the top firms that outside investors and players look to when they wish to become involved in Iceland.

"They do a lot of work with foreign creditors. BBA Legal is a very strong firm," admits a competitor.

The firm is invariably described as "strong", and is renowned for its M&A capabilities in particular: "BBA Legal is very active, and very strong in corporate. They are also gaining strength in litigation," says a partner.

"BBA are a good, solid firm. They are small, but good," opines another lawyer.

Those who have engaged BBA are also quick to praise the legal creativity of the team in Reykjavik: "The transaction we worked on has seen several changes in Icelandic law and an unprecedented financial and political background, so they had to be innovative," comments a legal client.

This reputation is borne out by their ongoing work on the Icesave dispute, advising huge clients such as the UK Treasury and no fewer than 16 Dutch municipalities.

Despite the litigation and wrangling over the bank collapses, there have been some other nice deals for BBA this year. Displaying their aforementioned corporate abilities, a team headed up by leading lawyer Einar Baldvin Arnason acted for Bluestar Silicones Investment with regard to the acquisition of Norwegian environmentally friendly materials producer Elkem. The firm conducted due diligence and gave legal advice on the Icelandic aspect of this deal, which closed in April 2011 for around $2 billion.

Another big M&A deal was advising Titan Investment Company, which was representing a larger body of investors who were looking to acquire all the domestic and Lithuanian concerns of MP Banki. Once more Arnason was involved, and the deal reached a successful conclusion in April 2011 for a sum of €300 million.

The team also conducted some banking work, mainly restructurings. In one standout deal they advised Bayerische Landesbank on the restructuring of Exista, an insurance underwriter and asset financier. Einar Baldvin Arnason and fellow leading lawyer Asgeir Ragnarsson led the team here, and closed the deal in late 2010 for an approximate figure of €500 million.

The market view of Logos Legal services from the past 12 months is that it is clearly a top tier firm. By far the largest firm in the country, it has also found itself working on a lot of interesting deals.

"We are used to seeing Logos up there. They are a very good firm," admits a competitor, while another adds: "Logos are the biggest, are always around and are very good."

Clients seem most impressed by the financing and banking sides of the firm, as one comments: "Logos's technical ability is very good. Their team is very professional and is comprised of a good mixture of legal specialisation, commercial knowledge and a very good knowledge of the banking sector."

"They have a good ability to resolve problems that come up and could be considered to be as innovative as lawyers can be," says another client.

As is to be expected, the firm's deal flow was replete with restructuring work and a couple in particular are definitely worth mentioning. Two leading lawyers, Gudmundur J Oddsson and Helga Melkorka Óttarsdóttir, led a team that acted on the mammoth Actavis restructuring. The work on the pharmaceutical company represented the single most sizeable restructuring of an Icelandic company to date, completing in June 2010 for €5.6 billion.

Another large deal was the firm's work on the financial restructuring of the holding company Exista, owner of some of Iceland's most important companies. Exista also owned an approximate 25% stake in the troubled Kaupthing bank. This restructuring too was successful, and closed out in the latter stages of 2010 for a figure of €2 billion.

Logos was also active on the corporate side, advising on Iceland Enterprise Fund's acquisition of Vestia on the buyer's side, a transaction worth an eventual €119 million upon its January 2011 completion.

The firm also gained one partner and regained another this year, with Óttar Pálsson, former CEO of Straumur-Burdarás Investment Bank, and Gudmundur J Oddsson, who returned from a sabbatical in the summer of 2010, joining the team.

Landslog is one of a pair of firms that are getting stronger by the year. The completion of its merger with LM Logmenn led to a move to larger premises and a partner headcount that now reaches 12, and market opinion is very positive about its capabilities and future.

"Landslog are small but good, and have partners that are very much involved in financial and corporate matters. They are gaining strength. They used to be not so involved, but they are now," comments a competitor.

The firm is heavily engaged with the Ministry of Finance, which is one of its biggest clients. It has represented them in terms of claims by creditors of BYR Savings Bank and of Keflavik Savings Bank as they were restructured and refinanced.

A team from Landslog also performed due diligence on the Vestia acquisition by the Icelandic Investment Fund, a deal worth almost €120 million.

Landslog also maintains a highly reputable client list, including The Financial Supervisory Authority, Islandsbanki, Arion Bank, NBI Landsbankinn, energy company HS Orka and all manner of governmental bodies too.

Another ambitious and ever-expanding firm, Lex Law Offices is a confident outfit with a good pedigree that have their sights set on the top tier.

"Lex Law is growing. They are an old firm, and are very competitive," says one partner, and another competitor echoes this sentiment: "Lex Law is always growing, always competing to be a top local firm."

This growth has also entailed the firm hiring another partner, Gunnar Vidar, who joined from Landsbankinn this year.

Interestingly, the bulk of the highlight deals for the firm this year have actually come from Landsbankinn itself. A team led by Vidar acted on the large Vestia acquisition, worth €120 million overall, and he is currently also advising on a due diligence mandate for the bank relating to the acquisition of the savings bank SpKef.

Elsewhere, Ólafur Haraldsson and Gudmundur Ingvi Sigurdsson worked on the restructuring and refinancing of Bakkavor, an Icelandic food manufacturing company. An intensely complicated deal, on completion the transaction will represent a value of around €117 million.

Lex Law also advised Landsbankinn on an investment they made into Enterprise Investment Fund, which is comprised of 16 other pension funds. The eventual investment was 30% of the total stake in the fund, for a value of €114 million. The transaction was finalised in January 2011.

ADVEL is the brand new face of Fulltingi Legal Services, and despite being a relative newcomer to the market the firm is working hard to carve itself a niche within it.

"ADVEL is a newish firm. It is still trying to demonstrate its capabilities in this field. It is trying to establish itself and probably will," comments a competitor.

Clients are more than satisfied with the service they are receiving, as one says: "They have their eye on the ball and the advice given is based on in-depth knowledge of the industry and our requirements. We find their employees to have diverse expertise, which complements each other, in providing comprehensive legal services."

The firm is also continuing to grow, with partners Sigurdur Valgeir Gudjonsson and Dora Sif Tynes joining the team this year from Capacent Glacial and Teymi respectively.

A key deal saw the firm advising on one of the largest oil competition cases ever seen in Iceland. They are advising Esso Iceland with regards to a cartel dispute, which also involves two other large oil companies, Skeljungur (Shell) and Olís. This work is still ongoing to date.

In finance, Sigurdur Valgeir Gudjonsson was instructed to act for Reykjaneshafnir, owners and operators of five harbours around Iceland. In this case it wished to refinance the harbour at Reykjanes, a transaction that will be worth €35 million on completion.

The firm also showed its corporate capabilities, advising the controlling and minority shareholders, Kjalar and Benson respectively, in the sale of Iceland Seafood International (ISI) to the Luxembourgian company International Seafood Holdings. ISI is a sales and marketing company with a record dating back to the 1930s, and while the completion figure is being kept confidential it is expected this deal will go through sometime in May 2011.