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Overview
Hungary’s once-buoyant economy is now overshadowed by the global economic downturn. The government had already introduced austerity measures to bring its budget under control and enable it to join the euro in due course, but in 2008 it was forced to turn to the IMF for a loan.
International law firms first came to Hungary during the privatisations of the 1990s and, for some, the Central European country remains significant. Budapest, as capital, is a convenient base from which to handle investment into the Balkans as well as Russia and the Ukraine. International firms represented in Budapest include London firms Morley Allen & Overy Iroda, Köves Clifford Chance and CMS Cameron McKenna LLP, as well as US firms Réczicza White & Case LLP, Martonyi és Kajtár Baker & McKenzie, and Siegler Law Office/Weil, Gotshal & Manges. Large continental European firms with offices in Budapest include Germany’s Radnóczy & Mészáros Nörr Stiefenhofer Lutz and France’s Gide Loyrette Nouel – Ferenczy.
Offices across Central Europe are no longer a priority for some others, however. Most recently, Magic Circle firms Freshfields Bruckhaus Deringer, in 2007, and Linklaters, in 2008, left the country. Both firms continue to work closely with their former legal offices, which now operate as domestic law firms, respectively Oppenheim and Andrékó Kinstellar. So far it seems both offices, which are staffed as before, have continued to attract the same level of clients. Arguably they will continue to do so for while some of the larger firms are pulling out, a new trend for purely regional networks capable of handling transactions across Central and Eastern Europe is evolving. One such is Andrékó Kinstellar: the former Linklaters offices in the region have formed a new network with offices in Bucharest, Bratislava and Prague. Other regional networks that have expanded into Budapest include Austrian firm Wolf Theiss, which last year opened under Zoltán Faludi, a former Köves Clifford Chance partner, as Faludi Wolf Theiss Ügyvédi Iroda / Attorneys at Law and Schönherr through its partnership with the former CHSH Cerha Hempel Spiegelfeld Hlawati team at Szécsényi Ügyvédi Iroda law firm. UK IP firm Bird & Bird is also following the trend, opening a regional network of four Central European offices including one in Budapest, Simándi Bird & Bird. The new network of PRK Partners/Bellák was created through the merger of Czech firm Procházka Randl Kubr and Hungary’s Bellák & Partners in September 2008. It has offices in Bratislava, Budapest and Prague.
Meanwhile, international clients are ever more willing to instruct local firms on their Hungarian domestic work as they look for better rates. Hungarian firms such as M&A boutique Forgó, Varga & Partners Law Firm and D&P (Dezsö & Partners) are benefiting, winning ever larger instructions from both international clients and from Hungarian corporates doing business across the region. Firms that can demonstrate a specialist capability are also benefiting on such transactions. That’s long been true for domestic litigators such as Péter Nagy at Nagy és Trócsányi, and András Szecskay of Szecskay Attorneys at Law; large IP firms such as Danubia, SBG & K Patent and Law Offices; and real estate firms include D&P (Dezsö & Partners); Kõvári, Tercsák Salans Ügyvédi Iroda and Szabo Kelemen & Partners Attorneys. However, many clients still demand international capability on cross-border transactions, and this may be where the new breed of regional networks will come into its own.
In the wake of the economic slowdown, restructuring work seems likely to increase and a new breed of clients is expected, as cash-rich investors such as private equity firms start to see opportunities in a deflated Central Eastern European market.