CEELMDirect Profile Pick: A series of interviews with partners and firms with profiles on the new CEELMDirect online legal directory. Today’s interview: Toomas Prangli, Partner at Sorainen in Estonia.
CEELMDirect: Toomas, this year marks your 25th year with Sorainen – which you first joined as a trainee back in 1997. How have you seen the firm, and the Estonian market, change in that quarter-century?
Prangli: I joined Sorainen not because it was known (in fact, almost nobody had heard about it at the time), but based on my wish to join an internationally oriented team with a strategy to expand. Sorainen was the first law firm with the ambition to operate in all Baltic countries and still is one of the very few with a “one-firm” strategy in the region. Since 1997, we have grown from a five-lawyer firm into a leading firm in the region, with 300+ lawyers – but our strategy and values have not really changed. I think that this is the main reason for the success of Sorainen and what has kept me in the firm.
The legal market was very different in the 1990s compared to now. In my view, the firms which have controlled their egos and given more freedom to the younger generation have proven to be most successful over time. It is also incredible – and quite unique – how competing law firms collaborate with each other in order to develop the local ecosystem and improve regulations and market practice, and thus the investment climate of the country. For example, firms make joint efforts to collect and discuss market trends through a biannual Baltic Private M&A Deal Points Study (which is available online), compose and develop joint model documents, and so on. This has helped to increase confidence for foreign investors and is one of the reasons why the deal market is so active and why Baltic law firms top the league tables in the Nordic region and CEE.
The local M&A market has grown tremendously over the years and, even within the last three years, growth has been unprecedented. For example, within the first four months of 2022, Estonian start-ups raised a total of EUR 1 billion in capital, whereas a total of EUR 962 million was raised in all of 2021, and EUR 464 million in 2020. On the frontline of raising capital is Bolt, the European rival of Uber. To date, Bolt owns the record for the three biggest funding rounds in the history of the Baltics: EUR 150 million in December 2020, EUR 600 million in August 2021, and EUR 628 million in January 2022 (which was the largest-ever funding round in both Bolt and Baltic history). It has been a true honor to be part of the Sorainen team that served as the sole legal advisor to Bolt throughout all of these record-breaking funding rounds, which put our region on the international private equity map.
CEELMDirect: Despite spending your entire professional career with Sorainen, you’ve spent time in a number of European capitals, including two years in Minsk managing and integrating Sorainen’s Belarus office, a year at CEU in Budapest obtaining an LLM degree, and another year obtaining an Executive MBA at the University of Vienna. How have those international experiences affected your personal practice, and your ability to assist clients?
Prangli: In order to see the bigger picture and understand different viewpoints, one has to experience a variety of cultures. I have received three university degrees in four countries and worked in three European capitals but, most importantly, I have always loved to travel to places where the package tours won’t take you. Seeing so many beautiful and unexpected things has helped me be prepared for – or at least not be frightened by – all sorts of surprises. This is a valuable skill as a business manager, team leader, and dealmaker, where one often needs to stay calm in stressful and unexpected circumstances.
CEELMDirect: These are unique times in the Baltics, with military conflict nearby, not to mention the recent experience with COVID and the current fluctuations of the economy. How is all of that affecting your own business, these days, and your clients’ businesses?
Prangli: Indeed, it has been a rollercoaster ride since 2020. However, I try to find good things in every bad (or tragic) circumstance. When COVID-19 hit Europe, a shock-wave of uncertainty hit the economy. After the initial one-two month slowdown, the local M&A market again became active and tech fundraising activity boomed like never before. The Baltics are heavily tech-driven and this was a good opportunity for Baltic-founded international companies to seize the moment. In fact, our team has never been busier than during COVID times. What is also interesting is how deal-making has become increasingly virtual, more fluid, and faster. Even the more conservative legal sector realized that lawyers can work remotely and still be as or even more efficient.
The Ukrainian War has had a different impact. A number of Baltic M&A transactions were suspended as the conflict escalated. These primarily involved transactions where part of the business or value chain (e.g., suppliers) were connected to Ukraine, or to the sanctioned Russia or Belarus. There were also some transactions that, although not directly connected to these countries, were nonetheless suspended due to the uncertainties related to geopolitical security and their impact on the economy. Some of these transactions have since started to move forward again after the scope of the Ukrainian war was confined to parts of Ukraine rather than the whole country. Although the market seems to be somewhat less busy than predicted at the beginning of the year, it has gradually picked up over the past months. In fact, the sense of security has oddly increased in the Baltics, because we feel that the Western world is more aligned in its opinion of how to deal with Russia – that the rest of the world is finally speaking the same language as the Baltics. The expected accession of Finland and Sweden to NATO should further boost international security in the Baltic Sea region. Thus, what really affects the market is the unprecedented decline of (tech) stock markets in the whole world, which has postponed the appetite for fundraising.
Prangli: I believe that the CEELMDirect website brings value to all market players. For us, it will surely become an important tool in keeping up-to-date with developments in legal markets across CEE, as well as serve as a valuable opportunity to promote and showcase our expertise as a firm within CEE, a key market for Sorainen. A trusted platform that highlights market developments in the region has been long overdue and will help provide valuable insight for the entire market. Thank you for providing this!
CEELMDirect: Have there been any recent changes or developments at Sorainen Estonia that you’re excited about and would like to share?
Prangli: The past few years have been great for Sorainen as a firm, as well as our Estonian office, both in terms of financial results and organizational culture. This January, Sorainen had the biggest number of partner promotions in the history of the entire Baltic legal market, with nine lawyers joining the partnership – all of whom were home-grown and internally developed leaders. In Estonia, the new partners are Kaido Kunnapas, a vocal proponent of modern and fair tax laws and the leading expert on designing employee incentive plans in Estonia, and Katlin Krisak, who works with Finance & Insurance matters, having recently advised, among others, the book-runners of the Enefit Green IPO: the IPO with the largest number of subscribers in the history of the Baltics, which was awarded the CEE Legal Matters’ 2021 Deal of the Year for Estonia.
In total, in 2022 we increased the total number of Sorainen partners from 33 to 44, an unprecedented number in the region.
As I am focused on M&A, Sorainen’s receipt of CEE Legal Matters’ Baltic Deal of the Year for its advice to Fortum on the sale of its district heating business in the Baltics to Partners Group – the largest M&A transaction in the Baltics in 2021 (which I had the pleasure of leading together with our Of Counsel Isabella Barbara Tisenhusen) – was a very special moment, as was being named CEE M&A Legal Adviser of the Year 2021 by Mergermarket, both for the entire Baltic region, which has grown much faster than other European regions in recent years, and for our team, speaking to the high level of trust from the market and quality of service we are able to provide. Furthermore, with excellence and innovation among the core values of Sorainen, it was a true honor for Sorainen to be shortlisted by the Financial Times as the Most Innovative Law Firm In Europe (non-UK), making it the first-ever law firm from the Baltics and Belarus to earn that recognition.
Looking at the future, I am most excited about our start-up sector group, as well as our new sector focuses, such as our dedicated team for private clients, as well as our latest addition, the defense sector group, which we launched in response to increasing market need in light of investments in defense rapidly growing in the Baltics due to the ongoing war in Ukraine.
CEELMDirect: Thank you, Toomas. It was a pleasure talking to you, and continued success in the months and years to come!