Budapest Bar regulations push Shearman & Sterling into changing name of office

US firm Shearman & Sterling has fallen foul of restrictions on foreign law firms in Hungary and been forced to change the name of its Budapest office.

Local Bar rules mean that the firm has had to set up a separate Hungarian firm staffed by its Hungarian lawyers. The new firm is called Ban S Szabo & Partners, and will be headed by local lawyer Chrysta Ban.

The new firm will retain an association with Shearman & Sterling. John Baltay, head of Shearman & Sterling in Budapest, will be retained as the new firm's international counsel.

Ban S Szabo & Partners has also recruited Peter Szabo from Bogsch & Partners to join Ban in running the operation.

A partner at Budapest-based McKenna Ormai said: "To practice local law, you need to be registered with the Bar organisation and qualified in Hungarian law. However, if a foreign firm practising international law hires a Hungarian lawyer, the local lawyer has to give up his or her Bar registration, so they can no longer practice. This is why all the foreign law firms form partnerships with local firms."

McKenna Ormai is described as a civil law association positioned between McKenna & Co and the Hungarian lawyers Dr Gabriella Ormani and Dr Istvan Kovai.

The partner said: "Everyone is waiting for a new act which will affect foreign lawyers, but it will not be discussed in parliament until the latter part of the year, so it will not be enacted until at least the start of the next year."

The partner said the spirit of the act was still unclear because there were pressures on parliament from many quarters, including the demand for the act to conform to EC regulations.