The European Commission will meet the Hungarian government this week to discuss the new law proscribing the activities of foreign lawyers.
The bill, passed by the Hungarian parliament last Tuesday, requires foreign firms to form an association with a local firm and share its premises. Foreign lawyers will not be allowed to practise Hungarian law.
Objections from US firms and Allen & Overy won one concession foreign firms will not have to include the name of a Hungarian lawyer in their title.
Patrick Oliver of the Law Society in Brussels said: 'The Commission will examine the legislation to see if it is compatible with the EU directive on lawyers' rights of establishment.
'If Hungary wants to join the club, they will have to abide by the rules.'
Firms in Budapest are now considering their position. David Hickock, a partner at US firm Debevoise & Plimpton, said he would need to read the bill before commenting.
He has previously said that the future of the Budapest office 'depends on what happens with the law'.
Stephen Forster, resident partner with Cameron McKenna in Budapest, said: 'The law isn't perfect but we didn't want to object and jeopardise what is an acceptable compromise. We meet all the requirements.'
Ines Radmilovic, a partner with Baker & Mackenzie, commented: 'The law is perfectly reasonable. I've been here for five years but that doesn't make me competent to advise on Hungarian real estate law.'