the insider Law

Created in 2007 when two of the top lawyers from the auditing company Deloitte Latvia broke
36 away to set up on their own, Zelmenis & Liberte tackles a wide range of legal services, from mergers
and acquisitions to finance law. It is also possibly the least secretive of Latvia’s local law firms, and
its clients include the Latvian Economy Ministry.
Partner Janis Zelmenis specializes in tax law, but has also helped negotiate prominent M&A deals.
He is known for his significant contribution to the development of the Latvian Tax Law. Before pur-
suing a career in law, he earned a degree in International Rights at the University of Central Europe
in Budapest and an MA in Law at the Moscow State Institute of International Relations. He speaks
four foreign languages fluently, and is also the Honorary Consul of Malta in Latvia.

T
he recession ended a 10-
year growth spurt in Lat-
via. How would you evalu-

Zelmenis: Legal fees

ate 2009 for the legal ser-
vices business compared to the
previous two years, given that
2007 was a record year in terms

must be applied
of growth?
This is the keyword for the last
two years: recession. It has pro-
voked a reorientation of key ar-

eas of the legal sector. Acquisi-
tions and real estate used to be
the most in-demand part of the
business. Then all of a sudden it
became insolvencies.
Some areas have maintained
their importance, such as tax
planning, for which I now receive
even daily requests for advice.
But for many companies and in-
dividuals the importance of as-
set protection has taken its place.
People quite rightly think: my
core assets are under threat of
being taken by creditors, it’s time
to think about putting my eggs in
separate baskets.
If 2007 was a year of acquisi-
tions, when law firms should have
been able to expect two real es-
tate transactions per month, in
2009 there were suddenly none
at all, while in 2010 there are
perhaps two a year. Meanwhile,
our company saw no corporate or
individual insolvencies in 2007,
yet now we have six pending.
What has been the key to your
own company’s survival?
For this law firm, the key to sur-
vival has been a sustainability of
turnover. In 2009, we saw a turn-
over of just under €2 million, and
this year it is likely to be not far
below this figure.
Right now, I can see clearly four
months ahead and can roughly
say how I will look at Christmas
time. But in spring 2011 it’s im-
possible to say. However, if you
make sure your clients come back
to you it becomes a self-generat-
ing tool and is converted into sus-
taining your turnover.
Do lawyers in Latvia tend to spe-
cialize in one particular area of
flexibly
To get a deeper and more personal insight into how the legal services business is
changing, we spoke to Janis Zelmenis, a partner at the high-profile yet fairly new
law firm Zelmenis & Liberte, at his elegant office in the Art Nouveau district of Riga.
the legal services business, or
do they deal with all aspects?
The Latvian legal market is a
market of generalists, usual-
ly with one very deep specialty
and a good general legal knowl-
edge. Latvia is not a big enough
market for lawyers to specialize
exclusively. You can draw a par-
allel here with medical services
– there are heart surgeons and
pediatricians, but these experts
can also be effective general
practitioners.
I myself am a specialist in tax
planning, but I have negotiat-
ed in the last few years about
30 mergers and acquisitions, 10
of them prominent ones. For
M&A you need a sound knowl-
edge of financial mechanics.
Speaking about the quality of
legal services in Latvia, has it
been affected by the crisis after
having steadily improved over
the previous 10-15 years?
The recession has intensified
competition, and competition
drives quality. At the same time,
clients have become more de-
manding. Quality is a driving
force behind the legal business,
but not all lawyers understand
what it means. Some assume
that first and foremost qual-
ity means impressing the cli-
ent with a white shirt and ex-
pensive tie, as one lawyer once
told me.
One important aspect to re-
member about legal services
is that they often feature quite
highly among people’s needs,
and that rule has continued to
be relevant during the recession
as much as before. If a compa-
ny or individual find himself
in trouble – as so many do at
some point in their lives – they
will certainly look for a good
lawyer.
Zelmenis & Liberte is the only
local law firm with an ISO cer-
tificate; the Finnish-owned com-
pany Sorainen Latvia has one
too. Such an internationally rec-
ognized certificate proves that
By Howard Jarvis
you have defined the process-
es you work with and that you
comply with them. An external
auditor then comes to check
that you do this. It shows the
international maturity of the
business.
It also presents a clear bor-
der between companies that
understand quality and those
that play as well as they can
while understanding the lim-
its of their abilities. Many law
firms don’t see the benefits of
having an ISO certificate. It’s
a bit like having a website and
not changing it for a year, so it
becomes like a piece of dead
wood.
I’ve found that it’s virtually im-
possible to find reliable finan-
cial information about law firms
in Latvia. Why is that?
Normally, Latvian businesses
are quite transparent. Lawyers,
paradoxically, don’t file tax re-
turns or statements, making law
a comparatively secretive busi-
 the insider Law
38
ness. This is partly why there
are so few mergers between law
firms in Latvia, because they
can’t access each other’s finan-
cial arrangements.
You mentioned that people are
as reliant on lawyers for assis-
tance during the recession as
ever before. Would you say that
the legal services business has
been one sector that has man-
aged to capitalize on the reces-
sion?
It’s the firms that are most es-
tablished, those that have been
around for longer, which are
more likely to capitalize and
build on the recession. Clients
will seek out companies with
a strong brand and reputation,
those that are good at what they
do. I would say that the reces-
sion has mostly hit new start-ups
and younger lawyers.
Related to the issue of survival,
there is a clear relationship be-
tween risk and reward. It’s al-
ways more rewarding to venture
into new territory, in any busi-
ness. Even a first-year law stu-
dent can register a limited liabil-
ity company on the commercial
register, and if a law firm spends
most of its time just concentrat-
ing on that then it’s going to find
itself in a more vulnerable po-
sition.
Janis Zelmenis, Partner, Zelmenis & Liberte
Have law firms been forced to
reduce their fees?
That is an obvious assumption,
but I would challenge it. Imag-
ine that you are running a busi-
ness that finds itself in trouble.
Your last resort, after you’ve
tried everything else, is legal as-
“A recession is
interesting because it
introduces urgency.”
sistance, an experienced lawyer.
If the lawyer is effectively go-
ing to get you in the clear, then
a reduction in fees compared to
previous years is not all that im-
portant.
Fees might be down for basic le-
gal functions, but if you can of-
fer something unique to clients,
then not really. A recession is
an interesting period, because
it introduces a certain urgency.
Companies must change or die –
that’s the price of the question.
For law firms, the recession has
changed the position of the
cards on the table. Certain ar-
eas of the legal profession have
become more important, others
less important. Tax planning is
one of those areas that remains
well paid, perhaps even better
paid than before.
One of the new rules that law
firms should be introducing in
this environment is that fees
should be applied flexibly. The
standard hourly rate is now a
fiction. A good lawyer should
be solution-focused, not fee-fo-
cused, and should concentrate
on a positive outcome for the
client rather than on billable
hours.
Is the majority of business in the
legal services field driven by in-
ternational companies active in
Latvia, domestic businesses, or
both?
The Latvian market is a local
market. It’s not big enough to
attract a lot of players in the big
league, the sort of international
names you’ll see in Moscow, Par-
is or London. But if they’re go-
ing to set up in the Baltics then
Riga would be the natural center
where they would open an office.
Among local law firms there is
an idea that in order to be suc-
cessful you have to be pan-Bal-
tic, to have offices in all three
countries. But it’s also true that
each of the Baltic markets is
highly domestic and provincial.
Only in a few cases has pan-
Baltic representation been fully
worthwhile in the legal services
business.
If you approach from the point
of view of profitability, there is
not a great need to be present in
the Latvian market. If you are
precise enough to tick all the
boxes and cross all the t’s, then
yes, it can make financial sense
in the long-term.
For an international company
to be present in Latvia, or for a
Latvian law firm to be visible in
Lithuania and Estonia depends
on your clients’ needs. If they re-
quest it, it may be worthwhile.
We were on the verge of open-
ing an office in Minsk at one
time because one of our clients
had long-term interests in Be-
larus. Now I’m glad we didn’t go
ahead.
Going back a little further in
time, in the early nineties, short-
ly after Latvia regained indepen-
dence, émigrés returned in large
numbers and became active in
every sector of the Latvian econ-
omy. But it’s the local lawyers
who have the skills and the in-
sight, as they are born, educat-
ed and groomed in the local en-
vironment.
What share of the legal servic-
es market is controlled by Lat-
vian firms?
Around 95 percent. If you in-
clude Sorainen, which is Finn-
ish-owned but very much a com-
pany of the Baltic region with
locally licensed lawyers, then
a little more. And more still if
you include foreign-born émi-
gré lawyers who have brought
their businesses over to the Lat-
vian market, such as the Ameri-
can-born Filip Klavins and Rai-
mond Slaidins of Klavins & Slai-
dins LAWIN. But the vast major-
ity of law firms in Latvia are Lat-
vian. I’m not including the fly-in
fly-out lawyers from other coun-
tries, of course.
40 LAW FIRMS IN LATVIA Companies listed in alphabetical order 41
YEAR INTERNATIONAL PERCENT- TOTAL LEGAL SPECIALI- HEAD- FOREIGN HOUR- NO. COR- MAJOR CLIENTS REV- YEAR INTERNATIONAL PERCENT- TOTAL LEGAL SPECIALI- HEAD- FOREIGN HOUR- No. COR- MAJOR CLIENTS REV-
ESTAB- PARTNERS AGE OF EMPLOY- ZATION QUAR- LANGUAG- LY FEE PORATE ENUE, ESTAB- PARTNERS AGE OF EMPLOY- ZATION QUAR- LANGUAG- LY FEE PORATE ENUE,
LISHED LATVIAN EES/ TERS ES SPOKEN CLIENTS, 2009 LISHED LATVIAN EES/ TERS ES SPOKEN CLIENTS, 2009
IN OWNER- LAWYERS LOCA- 2009 IN OWNER- LAWYERS LOCA- 2009
LATVIA SHIP TION LATVIA SHIP TION
BDO Zelmenis & Liberte, tel. +371 6722 2237 O.Cers & J.Jurkans, tel. +371 6736 5865
2007 Member of global 100% 17 em- Tax & asset place- Riga English, Average More than Grindex, Latvian Shipping Com- €1.83 1997 Part of pan-Baltic 100% 17 total Commercial, Riga English, €100- 70 Latvian Shipping Company, LSF €700,000
network BDO Latvian ployees, ment, commercial, Flemish, of €130 150 pany, Logistics Holding, Rietumu million (fy network Hansa Latvian employ- litigation real estate, Russian, 170 Holdings, Foran Real Estate, HC
International 12 lawyers competition, labor, German, Bank, Latvian Economy Ministry, 2009-10, Law Offices, ees, 14 foreign investments, German Betons, Riga City Council, McCann
intellectual property, Portugese, Riga City Council, LatRosTrans, ending members of MSI lawyers insolvency, construc- Erickson, Gros Auto Grupa
dispute resolution, Russian, Domenikss, Euroskor, Eesti Energia, 31-07- Alliance, Begbies tion
PPP, real estate Spanish, Novaturas 2010) Global Network
Swedish
Raidla, Lejins & Norcous, tel. +371 6724 0689
bnt Klauberg Krauklis, tel. +371 6777 0504
1994 Offices in Tallinn 100% 32 total Full-service business Riga Russian, WND More than WND WND
2003 Part of Central/ 100% 16 total Commercial, Riga German, €100- More than FedEx, GAMA Power Systems, WND and Vilnius; Ro- Latvian employ- law firm English, Ger- 250
Eastern European Latvian employ- litigation, corporate, Swedish, 250 100 EPSON, Jungheinrich schier in Helsinki ees, 25 man, French,
law firm bnt ees, 13 finance, intellectual English, Rus- and Stockholm lawyers Lithuanian
lawyers property, transport, sian, French via RoschierRaidla
administrative, alliance
inheritance
Skrastiņš & Dzenis, Tel. +371 6722 6696
Eversheds Bitāns, tel. +371 6728 0102
2001 Partnership with 100% 11 total Commercial, Riga English, €100- 40 JSC Virsi-A, LLC De Laval, LLC WND
1999 Full member of 100% 18 total Full service business Riga English, €100- 164 Parex, Vitol, Samsung, LSF Holdings, WND Hedman Partners, Latvian employ- construction, labor, Russian 150 euro AWK, AIBE, Edelman Affiliate
Eversheds Inter- Latvian employ- law firm: commercial German, 280 Riga City Council, Ventspils Nafta, members of Glo- ees, 9 insolvency, banking, (KA/Edelman), Citadele Asset
national Ltd. ees, 13 & company law, Russian, airBaltic, Riga International Airport, balaw network lawyers litigation, competi- Management
lawyers banking & finance, French Volvo, Danone, AAS Balta (Royal tion
real estate, employ- Sun Alliance)
ment, litigation &
dispute resolution,
Sorainen, tel. +371 6736 5000
intellectual property
1997 Part of Sorainen Pan-Baltic 41 total Full-service business No English, Finn- WND 400 ABB, AGA, AIG, Barclays, BNP WND
Gencs Valters, tel. +371 6724 0090 network that op- ownership employ- law firm specific ish, Estonian, Paribas, British American Tobacco,
erates in Baltics, ees, 26 HQ Lithuanian, Canon, Christian Dior, Citigroup,
2000 Owns offices 100% 14 lawyers Tax, litigation, M&A, Riga English, WND WND McDonald’s, General Motors, Coca- WND Belarus lawyers Spanish, Coca-Cola, Credit Suisse, DHL, DZ
in Estonia and Latvian corporate, immigra- German, Cola, Statoil, Siemens, Scandlines, German, Bank, eBay, ERGO, General Electric,
Lithuania, mem- tion, finance, intel- Russian, L’Oreal, Firebird Republic Funds, Swedish Lukoil, Nordea, Royal Bank of
ber of Multilaw lectual property Swedish American Cyanamid Company, Canada, SEB, Swedbank
association Capstone Turbine Corp., Weath-
erford Tark Grunte Sutkiene, tel. +371 6788 9999
Glimstedt & Partners, tel. +371 6780 3380 1992 Pan-Baltic law Pan-Baltic 14 total Full-service business No Estonian, WND WND Royal Canin, Cemex, Apranga WND
2001 Part of Glimstedt 100% 20 total Financial, commer- Stock- English, €120- 90-110 Tamro, Bosch, TeliaSonera, Finance WND firm ownership employ- law firm; banking & specific Lithuanian, Group, ICON, Clear Channel, ERGO,
franchise with Latvian employ- cial, construction, holm Russian, 180 and Capital Markets Commission, ees, 11 finance, M&A, corpo- HQ English, Rus- Riga City, Council, Swedbank, Dan-
offices in Sweden, ees, 16 energy, telecoms German, General Motors, Lindex, NCC Kon- lawyers rate and commercial, sian, Polish, ske Capital, Latvijas Biznesa Banka
Belarus, Baltics lawyers French strukcija, major Latvian banks dispute resolution Finnish,
German,
French
Kļaviņš & Slaidiņš LAWIN, tel. +371 6781 4848
WND – will not disclose
1992 Offices in Estonia 100% 48 total Banking & finance, Riga English, €100 At least Arcelor, AT&T, Coca-Cola, DVB Bank, WND
and Lithuania; Latvian employ- corporate and M&A, Russian, and up 200 Eesti Energia, EoN Ruhrgas, EBRD,
members of Lex ees, 30 dispute resolution, German, IBM, Renova Group, Stockholm
Mundi, World lawyers industry & regula- French School of Economics, Swedbank,
Services Group, tory, real estate, tax, Unicredit, Vitol
Energy Law energy, restructuring
Group

Kronbergs & Čukste, tel. +371 6704 3803

2000 Founded Baltic 100% 15 total Corporate, M&A, PPP, Riga English, Dis- WND WND WND
Legal Solutions Latvian employ- energy, utilities Russian cussed
with offices in ees, 12 with
Estonia, Lithuania lawyers client
Liepa, Skopiņa, Borenius, tel. +371 6720 1800

2003 Part of Borenius 100% 31 total Full-service business Riga English, €60-280 350 American Express, Glaxo Smith WND
Group, with Latvian employ- law firm Russian, Kline, Deutsche Bank AG, Citigroup
offices in Finland, ees, 26 German Global Markets Limited, Credit
Estonia, Lithuania lawyers Suisse First Boston, GE Money, Mer-
rill Lynch International, Depfa Bank
Plc, Nordea, SEB, Esso Slovensko,
Orlen, Scania
MAQS, tel. +371 6731 3315
2004 Member of MAQS 100% 19 total Corporate, M&A, Copen- English, €100- WND WND WND
Group with of- Latvian employ- real estate, intel- hagen Russian, 200
fices in Sweden, ees, 15 lectual property, Swedish,
Denmark, Baltics lawyers public procurement, Danish
insolvency, litigation