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

Latvia is another Baltic market that has struggled to shake off the after-effects of the financial crisis. The country has almost served as a less dramatic version of the story in Greece, with the introduction of tough new laws to help address its mounting debt problems. "We have toughed it out with the austerity measures," says a partner, "and most people acknowledge that they were necessary."

Things are still very difficult in Latvia though, with those active in the market very downbeat. "I am not so optimistic about the Latvian legal market as a whole. We still feel the crisis," comments one partner glumly.

The endemic political instability also adds to an uncertain climate in the country: "There will always be some form of political instability because of our system. There are too many parties and it is hard to get a majority," says one practitioner, while another explains the issue of why getting investment is difficult: "It's the dilemma of a small market, whether there is a valid reason to locate here. There is no critical mass, so in places like Russia and Poland they can afford loose ends - they have a toleration of uncertainty."

"It's a constant battle, as deals are fragile and clients are sensitive to risk and fees," says another partner.

There is something to cling to in terms of investment though, with a traditional trading partner with Latvia showing signs of interest in certain areas: "There is to be a certain amount of investment directed at infrastructure, port and transportation. Russia is very interested here."

Overall though, the economy has been slow, but it hasn't been a complete write-off for firms, with the banks becoming slightly more open to providing financing.

"Banks are beginning to lend again. They make the case that they were always open to lending but they wanted it going to the right people with the correct business plan," says one lawyer, while another agrees: "Proper credit isn't a problem, easy credit is."

"There has been new money coming in over the last nine months. There was some political pressure to get banks lending again. This has helped the economy get back on its feet," explains one partner. There is also a trend for venture capital providing funding in this area, challenging the banks.

As was the case in Estonia, some people active within the market actually believe that the government is inhibiting attempts to help the economy recover. "I, and the public, are critical of how the government conducts this situation. They are squeezing our business people and making sure there is no new employment. They are stopping us making things better," says one partner, while another says: "Strong legislation has increased taxes and put in place cuts, which does affect the economy of course."

This spate of new legislation has brought some positives however. "There is a new business rescue and insolvency law. Latvian law before didn't provide for bank rescues and this remedied that," explains a practitioner.

Another bright spot is Latvia's re-entry in the bond markets, raising almost €345 million in an offering this year. "Latvia is back in the bond market, so that shows where we are," comments a partner. This is seen as a positive step, and it will be hoped that this signals an increase in investor trust in the Latvian market over the coming 12 months.

All in all, it's been a year where firms have tried to hold ground and consolidate, leading to a bit of stasis in the legal market. "You know, there hasn't been too much activity or movement in the market so things are stable," comments a partner, while another concurs: "There is a type of market equilibrium here, in that not much has changed."

A long-standing force in the Latvian legal market, Lawin once again confirms its tier one position, with competitors acknowledging that the firm more than merits its place despite a reported shortfall of work.

"Lawin in the past few years is a little bit slower," comments a partner, while another adds: "Lawin are having a tough year, there has been a drop-off of work." This however could be explained by the overall lack of movement in the market, and looking at the firm's deal list it is clear they are still active on a number of interesting transactions.

One big M&A deal saw it advising electronics giant Sony, who had launched 'Project Rise', a drive to restructure and transfer the marketing and sales capability of the European aspects of its business to new branches of Sony United Kingdom. Leading lawyer Raymond Slaidins advised on this mandate, which was completed fully in April 2011.

Another noteworthy M&A transaction saw the team advise the Stockholm School of Economics (SSE) on a restructuring and change of ownership of its Riga campus. SSE and the Latvian government were stakeholders in the school, which will now be owned by a not-for-profit organisation. Another leading lawyer, Filip Klavins, worked on this deal, which completed in July 2010 for a figure of almost €1.3 million.

Undoubtedly, the firm's biggest banking work this year was for the European Bank for Reconstruction and Development (EBRD), in relation to an investment they made into Parex bank, which had collapsed during the economic crisis. The EBRD wished to restructure this investment, as Parex was divided into 'good' and 'bad' banks, with the 'good' side taking away the positive assets to continue trading. The deal was agreed in July 2010, and officially closed in the December, for a figure of around €132 million.

Raidla is a respected and highly active firm and one that seems to enjoy a very healthy reputation among its competitors.

"Raidla is our main competitor, but we have a good cooperation with them," says one, while another adds: "Raidla is the one we see in serious transactions. We respect them and give them our conflicted work."

Another points to the firm's cross-border abilities and expereince as a reason for its success: "Raidla is doing well. It has its pan-Baltic network and is plugged in from the old days."

The real highlights for Raidla this year has come from its banking and finance practice and those teams are currently active on a handful of multimillion Euro deals that are currently confidential.

A similar deal saw the team advise Riga city council's finance department with regard to a tender for account, management, banking and payment services. This deal represented a value of around €500 million on completion, which came in September 2010.

Another interesting mandate was the firm advising a banking syndicate, comprised of the Hungarian MKB Bank and Latvian outfits SEB Banka and UniCredit, on the restructuring of a construction and investment loan extended to SIA Diksna. This company is itself a subsidiary of the large Plaza Centers NV Group, an American concern that develops shopping malls and entertainment spaces. The deal completed successfully in June 2010 for €83 million, and leading lawyer Andrejs Lielkalns led on both this and the Riga council deal too.

Despite the sluggishness of the corporate market, the team at Raidla did manage to work on some sizeable deals. In one particularly noteworthy deal a team headed up by leading lawyer Dace Silava-Tomsone acted as the local legal representatives for MISC Berhad's subsidiary, MTTI Sdn Bhd, as Malaysia's leading shipping line acquired fully half the shares in VTTI BV, an oil logistics company, from Dutch energy concern Vitol Group. The share purchase agreement was signed in June 2010, with the total global value of the deal coming to around €521 million.

In line with all the other Baltic firms under the aegis of the Borenius brand, Liepa Skopina has abbreviated its name to 'Borenius', as part of a branding strategy to make the alliance of firms more uniform.

In almost every other sense though, the firm is the same, with just a change of the sign over the door. It maintains a solid second tier position here by continuing its steady deal flow and by being seen to push itself above others in the market.

"We have a good opinion of Borenius as lawyers. They are better and more active than in a lot of other firms," concedes one competitor partner.

The firm's M&A team provided the major, standout deal this year. In this a team including partner Indrikis Liepa advised Abbott Laboratories on the Latvian legal aspects of its acquisition of the Belgian-based Solvay Pharmaceuticals. The total deal value was a significant €4.5 billion and it closed just before Christmas 2010.

In banking and finance, Borenius took on a series of big clients. In one deal they advised American Express on the transfer of its portfolio from Parex Banka to a newer institution, Citadele Banka and also acted for Hypo Real Estate Holding, Deutsche Pfandbriefbank and DEPFA Bank in a similar transfer of assets and liabilities. The former deal completed in September, while the latter was a little more protracted, stretching from March to July 2010.

A team, led by the active Edgars Lodzins, also took on an advisory role to the Financial and Capital Market Commission. This body was looking at ways to ameliorate and improve the insolvency process for credit institutions in the country, and the firm was involved in this.

Eversheds Bitans is one of a very small number of international firms that have made a mark in Latvia and this year positive market feedback about the firm sees it promoted to tier two.

"Eversheds have been more visible over the last two years. They are rising," comments a partner, and another practitioner agrees: "I would say that Eversheds has to go up. It's just that we see them a lot more than others in the market."

"Eversheds has more of a presence and is far more professional," concedes another competitor, showing it is quality as well as visibility that gives them promotion this year.

Being part of an international network has certainly aided the firm, especially in M&A, as it has taken on both local and international clients. In one noteworthy piece of work, the team is acting for Russian Transport Lines on putting together joint ventures and partnerships with regard to a development project for the construction of Ventspils Northern Port. This is still an ongoing concern and with a value of around €498 million this project represents a significant investment in Latvia.

The banking practice was not lagging behind in terms of important deals either this year. One mandate came from the Latvian Ministry of Finance, with a team led by partner Maris Vainovskis developing, in conjunction with PricewaterhouseCoopers, a study into PPP (public-private partnerships) and cohesion fund financing. This was intended to lead to a more efficacious use of any EU funding, and the projects looked into would be worth around €178 million when the research closed in February 2011.

In terms of financing, a good deal was the firm's advising of Titan Invest on the restructuring and securitisation of the finance related to a department store in Riga. The deal was notable for its involvement of UK investors, and will represent a value of €50 million when it completes.

"Eversheds do keep a small office," comments one partner, but they have this year taken on four new associates, so the team in Riga is continually growing.

Sorainen is the other truly international firm that is active in Latvia, but despite its evident qualities it is an office that divides opinion.

"Sorainen is good, and it did an excellent job of representing the state in the Parex proceedings," says one peer and this view is borne out by their interesting and varied deal flow and the fact that some feel it is a firm pushing towards the top tier.

However, there is a certain train of thought that takes aim at the firm's modern, aggressive approach to its marketing. "Sorainen's marketing is superb, but whether it matches its quality [of work] is up for debate," comments one partner and another agrees: "Sorainen is active in M&A from time to time, but the firm markets hard and I think it might just be that," adds another corporate competitor.

Putting aside this promotional debate though, the firm has had a satisfactory year in difficult circumstances and so retains its tier two placing. The M&A team is a particular strength within the firm, with numerous market analysts putting it up there for both value and number of deals. One highlight saw leading lawyer and managing partner Eva Berlaus leading a team advising the largest Latvian cable television company Baltkom in the sale of a majority stake in the concern to a duo of buyers, Axa Private Equity and Resource Partners. This deal entailed the entry of the two buyers into the market and was completed in May 2011 for an undisclosed sum.

Sorainen was also heavily involved with the Parex collapse and its aftermath. One deal in relation to this was split into two phases. In the first, a team from the firm acted for the State Joint Stock Company Privatisation Agency, whose shareholder is the Latvian republic itself, with respect to the sale of a quarter stake, plus one share, of Parex Banka to the European Bank of Reconstruction and Devlopment (EBRD).

This then necessitated a wholesale restructuring of the new bank, in which the EBRD then reduced its interest in Parex to 19% by selling a tranche of shares to the Latvian Privatisation Agency, advised again by Sorainen. The deal closed in late July 2010, for an overall value of €36 million. Eva Berlaus again was very much involved, working on both of these deals.

Kronbergs & Cukste operate a streamlined but respected office. "They are good, and have good connections," comments one partner, but the firm is trying to push forward from this by now working under the Baltic Legal Services group umbrella. This maximises its network in the Baltics, and is seen as a positive move.

Restructurings have made up the bulk of the firm's notable deals this year, with two mandates still running to date. In one a team is advising SEB Enskilda regarding the now state-owned Mortgage and Land Bank, a deal which should be worth €500 million when completed.

The other deal is acting for the government-owned energy company Latvenergo on its restructuring. There are certain parallels between the two deals, both being worth around €500 million when they finalise and both featuring teams led by partner Imants Jansons.