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Legal Market Overview

Estonia has maintained its strong transactional environment despite concerns over an economic downturn, with the country’s favourable regulatory environment remaining attractive for foreign and domestic businesses.

While Prime Minister Jüri Ratas remains in office following the March 2019 election, his second administration is much-changed, with the right-wing populist Conservative People’s Party (EKRE) joining the government and securing control of the finance ministry. This has sparked concerns that Estonia’s light-touch approach to regulation and business affairs may change, though no major alterations have been made at present.

M&A and real estate transactions have somewhat decreased after a boom last year, though investors remain optimistic, with a notable increase in outside investment from Asia. Blackstone’s acquisition of a majority share in Luminor Bank is now complete, with the fund tipped to play a leading role in banking and financing work in future. The downturn in real estate transactions can be traced to a lack of supply. Following the money-laundering scandal, Danske Bank has dissolved its Estonian operations, with its assets purchased by several former competitors.

The after-effects of the money-laundering scandal, notably a tightening of residency requirements for new bank accounts alongside renewed due diligence for investors, have led to a boom in alternative payment services, with many fintech companies seeking banking licenses and establishing payment platforms. This innovation can also be seen in financing work, with ICOs, crypto, and crowdfunding transactions increasingly common. These developments have worked to the benefit of smaller firms focused on growth clients, though traditional powerhouse firms have also seen plenty of work.

The slight downturn in M&A transactions has incurred an increase in disputes, with many businesses seeking to consolidate, while real estate-related disputes are also on the rise for similar reasons. Additionally, actions against state authorities have increased thanks to new policies on tax and public transport pricing. Arbitration has become more popular as a dispute resolution mechanism, something previously less common in Estonia. Other prominent pieces of litigation include anti-money laundering (AML), corporate malfeasance, and public corruption cases, with the Edgar Sarvisaar and Port of Tallinn cases particularly prominent.

The end of the GDPR rollout has seen firms re-orient to work on data protection more broadly on behalf of corporate clients, alongside Estonia’s traditional focus on start-ups and growth companies. Additionally, the alignment of Estonia’s trade mark system with the European Union is now complete, leading to a new wave of mandates relating to trade marks and copyrights.

After several years of upheaval the legal market has remained relatively stable, with the most notable development being the creation of Cuesta Law Office by two former litigation partners at LEADELL Pilv.