Clifford Chance spins off Hungarian office
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Clifford Chance is to pull out of Hungary, with the lawyers in its office there set to form a standalone firm.
Budapest managing partner Péter Lakatos will run the spin-off firm, which will launch at the end of July and will be called Lakatos Köves & Partners. The firm will maintain a referral relationship with Clifford Chance.
Clifford Chance’s Budapest office was one of a handful at the firm to operate a lower lockstep than the rest of the network. While most of the firm’s equity partners progress through a 40 to 100 point equity ladder, those in locations such as Budapest, Poland and the Czech Republic were put onto a lockstep that ran from 30 to 70 points (13 August 2007).
According to Lakatos, by spinning off into a standalone firm the Budapest partners will have greater flexibility to develop their practice.
He added: “We’ll continue to work closely with Clifford Chance and to benefit from its network, such as training for our lawyers and access to know-how.
“Our best friend arrangement will guarantee Clifford Chance’s clients the same level of service they have been used to in Hungary.”
The news comes less than a year after Clifford Chance merged with its Romanian ally, Badea & Asociatii (17 December 2008).
According to firmwide managing partner David Childs (pictured) the firm decided to spin off its Hungarian operation because the country is no longer key to its international clients.
“Our strategy is to develop our Firm in those areas that are most important to our major international clients and this is where we must concentrate our investment,” he said.
“While our Budapest office is a successful, highly-regarded, top tier practice that has been involved in most of Hungary’s ground-breaking transactions over the years, we believe that a standalone Clifford Chance operation is no longer needed in Hungary and that we’ll be best able to meet the needs of our strategic clients through this best friends arrangement.”
Clifford Chance’s magic circle rival Linklaters also ditched its Budapest office last year, spinning off a number of Eastern European offices to form a standalone practice named Kinstellar (6 October 2008).
Kinstellar, which has offices in Bratislava, Bucharest, Buda pest and Prague, is run by former Linklaters managing partner for Central and Eastern Europe Jason Mogg and maintains close referral ties with Linklaters.
Readers' comments (5)
Joe | 30-Jun-2009 7:24 pm
Joe the plumber
This is a anther copy of Linklaters spine off last years when links closed 4 offices in EU.
Magic Circle firm are very much copying each other when ruining the business!
Indeed, as the law firm profession is copying as using templates and precedents!
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Dirt | 1-Jul-2009 10:31 am
I don't think CC are profit-sharing with Romania, are they? I don't really understand why CC didn't just quietly spin Hungary off into a separate profit pool but keep their brand there. Come to think of it, I don't know why Links didn't do that with Mogg's offices as well (unless Mogg refused).
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Anonymous | 1-Jul-2009 3:40 pm
Long overdue, the Budapest office was in steady decline for a while, and CC was bleeding talent to other firms. Why not leave the name? Liability concerns presumably, which are understandable. Anyway, economically dead country and dying firm, so ditching it made perfect sense
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Anonymous | 1-Jul-2009 7:59 pm
Dirt has a good point. Having invested the money, CC should surely have looked for a way of keeping the flag flying there for longer. Perhaps the proplem is their simplistic lockstep, which only has two tiers. Why not have three, four or more tiers so that differently performing offices can be rewarded more in keeping with their true financial performance and at the same time create the justification for making up more equity partners in some of the minor offices?
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Anonymous | 2-Jul-2009 1:25 pm
As far as I know, there have been mass exoduses over the last three years from CC Budapest, which do not reflect well on the management. They have been unable to attract talent from top tier firms (only from tier 3 firms). They have few if any big, local clients, thus they were too heavily dependent on the network - from which much less work can be expected these days. The question is what happens to A&O which has an operation that is helf the size of that of CC Budapest?
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