While across Europe the center-right , far-right and green parties are celebrating their election victories with the center-left suffering a historic defeat. In Estonia the big winners are the center- left party and an independent candidate, with the greens and center right showing weak results.
This may seem quite odd to most Europeans and may be written off as further proof to some of failed integration of Eastern Europe, but actually the result makes perfect sense when put into perspective through the local political context. Like elsewhere in Europe the voters voted with their pocket books – the state of the economy was the central issue.
Center-left party (Keskerakond) won the election with 103 525 votes. Their campaign capitalized on the dissatisfaction with the ruling coalition’s inability to deal with the economic crisis which has resulted with drastic pre-election buget cuts of popular programs.
The same protest vote that showed the extent of voter anger and frustration with the continuing economic crisis and high unemployment fueling gains by far right in Italy, Netherlands, Austria, Hungary, Denmark, Slovakia and Finland was the force also behind the independent candidate Indrek Tarand’s 102 509 votes. Estonia has a fairly small foreign-labor population (no Turkish, Polish or Algerian laborers here to blame for high-unemployment) so the anti-foreigner anti-immigrant theme was not picked up by any parties for their election propaganda.
The center-right (Reform and IRL) parties’ coalition has been in power since before the beginning of the economic crisis. The right wing parties that were elected into office under the promise to get “Estonia into the top 5 wealthiest nations in Europe in 5 years” were punished by the voters facing the stark reality of salary, pension and benefit cuts. Therefore, it was inevitable that the voters blame the center-right for its inability to deal with the economic crisis, and the draconian budget cuts that have now been implemented. This voter backlash explains why the right wing parties did not triumph in Estonian elections, but were glad to just hang on to their seats. In the final tally the Reform party received 60 899 votes and IRL 48 489 votes.
The Green party is still seen by the average Estonian voter as a one-issue novelty group than a legitimate political force that can realistically propose and drive through a full platform of economic and social reforms for the entire nation. Many people also associate the Greens with their leader Marek Strandberg who is seen as a good public speaker as well as a vocal and intelligent critic, but unable to find the necessary political compromises to actually execute strategies.
In the end the Greens were unable to convince the voters that their ideas would bring back jobs and rapidly improve the Estonian economy, rather than making growth based on clean energy, agriculture and manufacturing slower and more expensive. As a result their votes totaled a mere 10 845.
Just like elsewhere in Europe voter turnout continued to fall as ever less people use their democratic rights to elect representatives. Only 43% of Estonia’s eligible voters voted (more than in 2004, but still rather low), on par with the low European turnout of 43%. Although it should be noted that Estonia pioneered Internet voting for these elections, and the electorate seems to have enthusiastically adopted the e-vote with over 14% of the voters casting their vote electronically.
I have noticed over the past few months at various business conferences and networking events a curiously steady rise in attendance by legal professionals. Where before 2007 many top professionals were too booked-up to spend time trawling for new clients, now client relations, conference appearances and networking are back in vouge.
Alan Heuer has an insightful story in the New York Times describing the downsizing taking place at New York top firms. Associates and partners are being let go to adjust to the drop in business.
The recession is crashing the business model for NY full service commercial law firms, which in good times used to compete amongst each other for the right to pay first year incoming baby-lawyers $160,000 per year plus bonuses. With the Lehman Brothers collapse, CDO catastrophy, and surrounding economic crisis the capital markets transactional work dried up. The transactional deal-flow ran down to a trickle, and there had already been a long drought of IPO work.
Lawfirms work mostly on a cash on hand basis, and do not carry large reserves. As such, very quickly there is not enough money to keep the large numbers of associates waiting for new work. The firms have been forced into firing both partners and associates and telling new recruits their start date will be delayed by a year. Heuer Reports:
In the first quarter of 2009, demand for legal services in New York decreased by nearly 10 percent over 2008, according to the Hildebrandt International Peer Monitor Index. At least 10,000 employees at major firms across the country have lost their jobs so far this year, according to the macabre but wildly popular “Layoff Tracker” run by another blog, lawshucks.com.
Steve Verrier a Partner at White & Case (2,000 lawyers in 34 offices in 23 countries) described his choices upon assuming the management of the firm as follows:
Do nothing, which risked the firm’s survival; couch layoffs as decisions based on poor performance; or own up to the crisis and bid large numbers of lawyers a harsh but needed goodbye.
They decided for the layoffs. A partner at White&Case explained the atmosphere has changed significantly at the large firms: “The problem is we’re supposed to all be in this together. But at some point, you stop and think: ‘Well, maybe we’re not.’ ”
Clients are beginning to look ever more closely at the legal bills they receive. Large businesses have started to employ legal auditing service companies. Essentially they audit the clients’ legal bills, identifying incorrect entries as well as inefficiencies and possible over-billing. The company gets paid a percentage of the “savings” achieved. As one can imagine, the performance fee structure ensures sufficient motivation to find mistakes and cost-cutting opportunities. For example, Stuart Maue saved Kmart $15 million in legal and professional fees in the bankruptcy proceedings.
Denver based Law firm Watson& Associates just announced that it is now offering a flat-price full-service packages for businesses. The reasoning is as follows:
The firm hopes its innovative approach to helping clients reduce the staggering fees typically associated with legal advice will strengthen the firm’s position as a business partner, rather than a line item in the budget.
We are hoping that law firms will also recognize their role in bringing the economy back, by offering legal services to startup companies which hope to rapidly grow their business on a discount basis, or in exchange for some equity (where this structure is allowed by the bar) or structured on growth basis. By sharing in the risk with the entrepreneurs, the law firms are creating a network of grateful and loyal entrepreneurial customers and their referrals, but also are investing into ensuring the survival of their own future client base.
This is an opportunity for lawyers to help out seed and early-stage companies by giving them some basic services and business contract forms cheap or free, instead of charging heavy fees later by telling the company about the damage done to the valuation, money lost to overtaxation, or intellectual property lost because they could not afford lawyers and failed to use proper legal forms.