Influenced by geopolitics and the ongoing state of emergency measures, Lithuania is dealing with high construction prices and a decreasing number of investments, according to Noor Managing Partner Giedrius Murauskas.
"We have direct borders with Russia and Belarus and, of course, we are deeply affected by the geopolitical situation," Murauskas begins. "Lithuania has an active start-up market but, these days, some of the projects are on hold. Investors from the UK and the US see us as a conflict-bordering country and are more cautious about their investments. Our close neighbors – Latvia, Estonia, and Poland – on the other hand, have a less radical view of the situation. But in their case, there is an issue of available finances."
"Immediately after the war broke out, the oil and construction material prices increased drastically," Murauskas adds. "It took us some time to renegotiate contracts for clients, as it was impossible to continue contracts with the initially allocated prices. It was also a challenge for governmental institutions to renegotiate ongoing projects." Yet, according to him, only a few cases ended up in courts, as the majority of them were resolved peacefully.
Murauskas highlights that state of emergency measures are still in place in Lithuania. "In practice, it does not have many implications – we don’t have soldiers on the streets," he notes, adding that, "however, it allows the state to allocate resources differently and send funding wherever it is needed the most. This is not very pleasant for foreign investors and is negatively affecting the market."
"Other than that," Murauskas says, "unrelated to the geopolitical situation, we have seen an increasing number of cases on the GDPR. Certain instances of databases being breached and data being leaked have resulted in various litigations between consumers and companies. The government is closely supervising these particular areas as well, and looking into potential fines, to ensure the future protection of consumer rights."
"Interestingly, Lithuania recently liberalized the energy market – consumers can now choose between six suppliers who will provide electricity," Murauskas adds. "Many companies initiated large PR campaigns to promote their products and prices. This has led to some practical issues as, on the one hand, some schemes are quite complex and create challenges for consumers." On the other hand, he notes, "just last week we witnessed an interesting development – a company which had already signed agreements with 180,000 customers announced that it cannot provide the service according to the planned prices. There are some talks about initiating a class action against the company, with the government also considering imposing certain sanctions." For him, the company’s bankruptcy is a distinct possibility.
"Overall," Murauskas says, "there are noticeable changes in the Lithuanian legal market. The SPC Legal and Wint merger to form Noor is definitely among the bigger events – we're hoping it will change the legal services market landscape in Lithuania." Another noteworthy change, according to him, is the significant increase in the prices of legal services. "The trend is quite obvious, as some law firms have already increased prices twice since the war started. Of course, inflation affects the legal services market and it will likely continue to do so, depending on how deep the recession will be," Murauskas concludes.