Hungarian law to force foreign firms to form local alliances

Foreign law firms in Hungary could soon be forced to change their names and form associations with local firms, under laws being considered by the Hungarian parliament.

The draft Act on Lawyers, which could become law by the end of the year, states that any foreign lawyer working in Hungary would have to formally link up with a domestic firm or lawyer. The name of any foreign office would have to contain the name of the associated local firm or lawyer. Only Hungarian-qualified lawyers would be allowed to practice domestic law.

One partner at a UK firm in Budapest said the law could lead to an exodus of foreign law firms, particularly US firms who have not recruited enough Hungarian lawyers.

The partner said: "Most US firms have hired US lawyers. Also, the pace of privatisation is slowing down. As all this happens a number of firms will probably pull out."

But lawyers at other firms in Hungary said the Act would make little difference and was merely a formalisation of practices already in place.

Eva Hegedus, the senior lawyer at Allen & Overy's Budapest office, said her office was already largely staffed by locally-qualified lawyers and she was "not particularly worried" by the changes. "Changing the firm's name is not a big issue," she said.

US firm Debevoise & Plimpton's resident attorney in Budapest Vera Losonci said only slight modifications would need to be made to existing arrangements. "These changes should not affect us very much because most of them are already in place," she said.