It is easy to underestimate Estonia. The country’s population of just 1.34 million is dwarfed by most major European cities and its location, nestled between Finland, Latvia and Russia, also makes the jurisdiction peripheral, at least geographically.

In reality, and economically, Estonia has certainly punched above its weight however. The country enjoyed double-digit growth in the run up to the recession in 2007. It is practically energy independent, unlike many former Soviet states. Estonia’s average gross domestic product per capita is actually higher than larger economies such as Poland, Russia and Turkey.

As such, the decision this week to allow Estonia to ditch the kroon and replace it with the euro (in January 2011) is being seen as a major advancement in the country’s economic destiny. No surprise that Estonian lawyers are very pleased with the news. Indeed, if there was any doubt over the importance of the region one need not look any further than the legal profession. There are over a dozen recognised commercial practices in Estonia. Not bad for a country with a population roughly the same in size as Milan.

The crucial point is that, where Estonia is set to lead, Latvia and Lithuania (and maybe even Belarus) are set to follow. This is where the intriguing aspect of the Baltic market comes into play. There are few stand-alone Estonian firms. Most are part of a pan-Baltic alliance, such as Lepik & Luhaäär LAWIN, Tark & Co and Sorainen. Others are further enforced by a Nordic network, mainly in Finland (where the euro is the main currency). Examples include Luiga Mody Hääl Borenius (linked with Borenius & Kemppinen) and Raidla Lejins & Norcous (linked with Roschier).

As has been seen with Greece, being a member of the euro comes with a safety net when a crisis arises. For Estonia, being part of the eurozone would provide added protection at time when the public debt is under pressure and there is a threat of devaluation of its own currency. In addition, the euro would make foreign investment in Estonia substantially easier and boost its attractiveness as a business destination.

Those law firms that have not taken much notice of Estonia may well find the country on their radar at the start of next year. Judging from the strength and constitution of the current Baltic legal market, however, it may well be too late to profit.