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Traditional work like bank lending and syndicated loans has declined considerably in Lithuania. Gone are the days of advising on financing for multiple projects at the same time....

Traditional work like bank lending and syndicated loans has declined considerably in Lithuania. Gone are the days of advising on financing for multiple projects at the same time. "Restructuring is the key word now" says one partner.

Restructuring work is different to the type of mandates before, with commentators noting that the complexity of the work has increased considerably. Law firms are effectively acting as trouble-shooters for both lenders and borrowers, unlike before when firms were setting up standard M&A and finance transactions every week.

Given the inability of some borrowers to repay debts, banks' asset portfolios are going to increase. Banks are going to have to start parking assets internally. This will cause much grief, but could be a source of work for firms as they look to unload assets.

The Lithuanian government has launched some Eurobonds, creating work for firms with expertise in that practice area. One partner describes this work as exciting. His reason? Because the credit rating agencies have cut Lithuania's ratings on a number of occasions in 2009 and 2008, Lithuanian Eurobonds are less attractive to investors, increasing the need for quality work. Any other capital markets work is likely to be either sovereign or related to foreign issues.

Lithuania is no different to its Baltic neighbours, or indeed Europe, with little happening in the formerly burgeoning M&A market. "The market is dormant," says one partner....

Lithuania is no different to its Baltic neighbours, or indeed Europe, with little happening in the formerly burgeoning M&A market. "The market is dormant," says one partner. "Everybody is waiting to see how it will develop, when the bottom will come."

Joint ventures, between retailers for example, are the most common transactions now. Often, the merger is a mechanism for companies to survive due to the lack of finance and credit available. The biggest merger of 2008 was between energy companies, and this sector is the most likely to provide opportunities for bigger deals in the next year.

Distressed sales have started to pop up and are expected to grow as more companies hit the wall, which means transactions are getting more complex. "For [straight] M&A the work was commoditised. You would get certain groups involved. Now we can forget about that, the work is far more complicated."

Sources of cash for deals won't come from private-equity funds as they are finding it hard to get leverage, so strategic investors are the main potential buyers in this market; a position likely to remain the same for the foreseeable future.