ALLEN & Overy is to split with its Hungarian partner in Budapest amid bitter recriminations from the Hungarian side.
The City firm and Hungarian two-partner practice Deri & Co, with six fee earners in total, are to separate their offices and have ended their exclusivity referral contract after four years.
Bela Deri, Deri & Co's senior partner, said Allen & Overy based only one lawyer he described as “junior” in the Hungarian office, but never an ex-patriot partner.
“We always expected someone more senior to try to build up work,” he said. “It is extremely difficult without such a person.
“If you look at the other foreign firms here – Clifford Chance, Baker & McKenzie – they all have more credible lawyers from London or from other overseas offices. They didn't want to spend one penny. I hired secretaries and support staff at my own risk.”
Allen & Overy's managing partner John Rink said: “We paid the rent, we were responsible to the lessees for the lease and we sublet the office to Bela. He's going to move out on 1 September.”
He added: “We have one lawyer out there – he's not a junior. We're committed to staying in Budapest.”
The two firms said they will continue to have a relationship, and Deri said he was grateful to Allen & Overy for helping establish his reputation.
However, Deri claimed Allen & Overy “never really had enough clients on the ground here to make it worthwhile to have exclusive referrals with them”.
Rink denied this: “The work flow came; we just concluded that our customers were better served by not acting selectively with one person in Hungary, but by acting with whoever our client requested in the given circumstances.”
Allen & Overy's Warsaw office and Prague offices were opened in late 1991 and early 1992 in association with French firm Gide Loyrette Nouel, which has a large office in Budapest. Rink said Gide would be a natural choice for referrals “to the extent that we need outside help”.
Another shake-up in Budapest has come with the closure of the office of US firm McDowell Rice and Smith. The Kansas City-based firm closed its office after staff defections, including lawyer Kornelia Nagy Koppany, who moved across the city to set up rival US firm Hogan & Hartson's Budapest office. Nabarro Nathanson and Theodore Goddard both lost their presence in Budapest recently when associations with US law firms with offices there ended.