I have been the managing partner of the pan-Baltic law firm Lextal – with offices in Estonia, Latvia, and Lithuania – for six years. During this time the market has changed considerably.
Law firms are consolidating and are thereby creating bigger firms. According to CEE Legal Matters’ CEE by the Numbers issue (December 2021), the period of 2019 to 2021 has marked a general decrease in the number of offices ranked across the region. This is also felt in the market twofold. Firms are always looking to merge. Clients are looking for a larger firm. Both are driven by the same core understanding – bigger teams are better.
Another thing to mention (also confirmed by CEE by the Numbers) is that, due to the small size of Estonia, most of our law firms are domestic. There are only a handful of regional firms and only a few truly international ones.
What I have noticed and is also supported by the numbers published by CEE Legal Matters, is that the Estonian market is still too small for the big international law firms (in Estonia the total turnover of law firms in 2020 was EUR 108 million and the estimate for 2021 is about EUR 120 million). Usually, the big names of international repute opt for a simpler strategy in such a small market: work with the best independent law firms in each jurisdiction or smaller region. This has led to a clear increase of regional firms in the Baltic states.
The third interesting development is that the total number of lawyers compared to 2019 has been on a steady decline. The decrease is considerable: Estonia - 152, Austria - 222, the Czech Republic - 74, Bulgaria - 67, Lithuania - 65, Croatia - 39, Latvia - 13. Why are we losing lawyers from the ranked law firms?
The answer is simple: start-ups and next-generation companies are in many cases a much more appealing option, for both young and old lawyers.
Estonia is very active in the start-up business, fintech, and e-services, being Europe’s (and, depending on the methodology and the metrics used, probably the world’s) number one in terms of the number of unicorns per capita. So far there are seven unicorns founded by Estonians (skype.com; playtech.com; wise.com; bolt.com; pipedrive.com, zego.com; ID.me) and there is huge pressure from this sector on the lawyers of law firms.
During the last three years, many law firms have ‘lost’ good people to start-ups, who flatter lawyers with high salaries, option pools, huge benefits programs, and a focus on one big goal to achieve instead of having multiple cases to address simultaneously, as in a law firm. And rightly so! As law firms, we need to step up our game if we are to compete for the top brains.
The fact is, there is a new generation of lawyers in (and coming to) law firms. This is not bad; we just need to take a moment to understand the next generation and be ready to offer them proper conditions if we want to be successful in this changing world.
So be ready to offer the best team, the best facilities, an option pool, personal coaching, soft values, table-tennis, food and drinks at the office, many joint trips and social events, remote work from Bali or Miami or whencesoever, all possible benefits and support – including a psychologist and physiotherapist – and, after all that, you might succeed in keeping and onboarding good next-generation brains.
Hope you are ready to take on the big challenge of 2022!
By Marge Manniko, Managing Partner, Lextal Estonia
This Article was originally published in Issue 8.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.