The Buzz in Lithuania, according to Ellex Valiunas Partner Ramunas Petravicius, focuses on several newly-adopted laws "that are important for all commercial law practitioners.”
The first he mentions is the country’s new Labor Code, which was adopted last fall. It encountered huge resistance from labor unions, and was ultimately postponed for July 1, 2017, to allow for revised provisions on labor conditions. These new provisions have been discussed with and accepted by the labor unions, and the Code will be amended accordingly; it is thus expected to enter into force in July as planned. Among the new provisions is one making it easier to hire and fire employees in case of redundancy, with the previous severance payments of between 1-6 monthly salaries reduced to .5-2, and prior notice periods also shortened from 2-4 months to, normally, only 1. Labor unions have accepted that the changes were necessary to improve the country’s productivity and competitiveness — “some of them are quite rational,” Petravicius says — and as the old Labor Code was already incredibly pro-labor, had left them no room to negotiate.
Petravicius calls the new Code "very good," because it incentivizes new investment. "As a small country we have to be competitive,” he says, "and we have to be transparent and clear in our procedures.” in addition, at least in the short term it will increase the work of law firms, "because companies will not know the law and will need to be informed and educated and have policies brought into compliance.”
The second law Petravicius refers to is Lithuania’s new Competition Law that came into effect on February 1, implementing the EU’s Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for damages under national law for infringements of competition law provisions. The major change, Petravicius says, is the creation of private enforcement procedures for abuses by companies — meaning that "consumers and other damaged parties can now more easily challenge undertakings that have abused competition law in court”— and new statutes of limitation. As the law should result in increased litigation, it would appear to also mean more work for lawyers.
Third, Petravicius refers to the new Law for Public Procurement that is scheduled to come into force on July 1st if it is not vetoed (which "should significantly simplify procedures”), and Lithuania’s implementation of the EU’s General Data Protection Regulation (Regulation (EU) 2016/679), which "creates new requirements especially for retail and banks and other consumer-facing industries.”
Turning away from purely legislative developments, Petravicius claims that, following England’s Brexit referendum, many financial services suppliers are looking to minimize the risks by accessing the single EU market, and — according to Petravicius — many financial technology (“FinTech”) companies are making Lithuania one of their target countries, as it has a very FinTech- and innovation-friendly regulator and provides attractive infrastructure solutions. In identifying the country’s advantages, Petravicius cites: (i) fast procedures (an e-money or payment license that is available in three months, with one week pre-approval); (ii) the ability to satisfy Know Your Client obligations remotely, by video; (iii) no regulatory sanctions for FinTech startups for the first year (a so-called “sandbox”); (iv) both banks and other payment institutions (which Petravicius explains include “a certain category of non-bank payment service providers which emerged after 2009 as a result of the enactment of the Payment Services Directive”) are allowed to access payment systems in the Single Euro Payments Area infrastructure; and (v) a specialized bank regime that became effective in January 2017 which requires only EUR 1 million of initial capital (five time less than that required for regular banks).
Ultimately, Petravicius reports, business is good in Lithuania, as the country is showing “consistent growth in GDP.” Petravicius notes that he and his colleagues have noticed pick up in M&As and real estate transactions, and they are hopeful about the rest of the year. He reports that things are going well for lawyers in the market as well, though he points to increasing competition and notes “changing habits in the market,” including the increasing use of tenders for law firm work, which "push down prices”. Some law firms wish taking work at any cost in order to enter the client or earn experience in certain new field, on the other hand clients always distinguish quality and punish those suppliers who are not able to deliver. Finally, several smaller law firms past years merged with bigger, and reduced number of players affects positively law firms’ behavior in the market.”