Firms mount bid to block restrictive Hungarian law

FOREIGN lawyers in Bud-apest have launched a last-ditch effort to persuade the Hungarian government to rethink a proposed new law restricting their ability to practise in the country.

The proposed law is currently before a parliamentary committee, which is expected to decide the final shape of the bill. As it stands, the ruling would require a foreign law firm to form an association with a local firm, share premises with it and reflect the local association in its operating title.

George Gluck, resident partner at the Budapest office of US firm Weil Gotshal & Manges, said: “Our main objection is that even if a foreign law firm was practising the law of its home jurisdiction it would still be required to enter into a formal relationship with a Hungarian law firm.”

The issue is particularly sensitive for most US firms in the capital. Most run small offices and do not want to increase their investment in Hungary at a time when privatisation work – a main source of revenue – is shrinking.

David Hickock, a partner at US firm Debevoise & Plimpton, said that whether his firm kept its office open “really depends on what happens with the law”. He added if it goes through in its present shape, “We'd have to consider what to do”.

The firm recently lost its two Hungarian lawyers to Baker & McKenzie. It is now staffed on a part-time basis by lawyers flying in from the US or UK.

Meanwhile, official protests have intensified. Both the US and UK embassies have raised the matter with the government. The English Law Society has gone as far as to complain to the European Commission.

Two weeks ago, Gluck appeared before the committee to contest the bill on behalf of the US Chamber of Commerce. He managed to secure an adjournment. The bill is expected to be discussed again later this week.

Some firms have not joined in the protest, however. Stephen Forster, resident partner at Cameron McKenna in Budapest, said: “We feel that we pretty much comply with the law as it stands.”

Three UK firms are represented in Budapest. Cameron McKenna operates as Cameron McKenna Ormai in association with Veroci & Ormai & Partners. Clifford Chance is linked to Koves & Partners. The third, Allen & Overy, which until last year had an association with lawyer Bela Deri, has since taken on three local lawyers and is the only UK firm actively opposing the new law.

Stephen Denyer, the Allen & Overy partner in charge of central European practice, said: “We have expressed reservations about the law and we have written to the authorities.”

He added that the firm objected to the law “on principle” as it was “out of line with the EU requirements”.