International law firms in Hungary are doing well enough. Despite some headaches over the shortage of committed workforce supply and a little moaning about the rapidly-changing regulatory environment, the biggest are not afraid of losing their market positions. How can their efficacy be further increased and what challenges are expected?
Hungary’s legal system has faced fundamental changes in the past years – there seems to be no debate about this among the country’s leading law firms. Dozens of altered financial and procedural regulations as well as the new Civil Code in 2016 pose challenges not only to businesses but also to law firms. “Unpredictability is probably unwelcome by the entire legal market while it also draws back the country’s competitiveness,” András László at Szecskay Attorneys at Law points out to the Budapest Business Journal.
Still, most legal offices see the changes as an inevitable process and believe that stability will arrive sooner or later. Investors, indeed, saw higher risks in the lawmaking dump between 2010-2014, which pushed law professionals to make even stronger efforts to keep their knowledge up-to-date, says Csilla Andrékó, managing partner at Andrékó Kinstellar, adding that legislation still runs at a relatively high speed but it is more of a challenge than a disincentive.
“We have to go through these stages that, we hope, will finally deliver a legal system that meets modern requirements,” Zoltán Hegymegi-Barakonyi of Hegymegi-Barakonyi és Társa Baker&McKenzie says.
Regarding the spectrum of work, the nine major law firms the BBJ has interviewed have not reported any drastic changes in the past year. Though, as legal tasks usually reflect the general economic tendencies, real estate and finance practices show particularly positive trends. Cross-border M&A transactions and deals in fields that are strongly connected to subsidies, such as renewable energy, are also said to be on the rise. Advisory work on data protection is also of increasing popularity as the EU’s General Data Protection Regulation will come into effect just in one year’s time.
Having such an open professional playing field requires a good range of qualified employees. Finding the best new supplies might be even a bigger challenge on the legal market than elsewhere.
While law firms mostly agree that schools deliver a high number of graduates every year, they also stress that quality should come ahead of quantity. “Volume is one thing, but we have always been targeting those entrants, who have an interest in economic law and are committed, talented, ambitious and foreign language-speaking,” Péter Lakatos at Lakatos, Köves and Társai says. “It is increasingly difficult to find those who are really well-prepared and ready to work hard, invest time and energy into their professional development,” he adds.
István Réczicza, the leading partner of Dentons’ Budapest office sees this fact as partly a result of lawyer education still lacking a practical focus. Still, it is inevitable for Dentons, too, to keep finding the best ones as “the human factor plays the biggest role in the practice of law,” he points out.
The generation gap is also often mentioned as a headache. “Workplace expectations of ‘Millennials’ or ‘Generation Z’ associates pose quite a pack of challenges to law firms, which are fiercely competing for those handful of most brilliant, who are hence not really competing with the great majority of law school graduates,” János Tóth, partner at Faludi Wolf Theiss says. Konrád Siegler, partner at Weil, Gotshal & Manges agrees. “The new lawyer generations have different preferences and lifestyle needs than those who graduated one or two decades ago,” he says adding that law is, at the same time, still clearly among the most prestigious professions. However, young professionals, Siegler explains, encounter fewer opportunities nowadays than in the past couple of decades. For example, it is much more difficult to become a partner at an international law firm than 10-15 years ago, as “the Hungarian legal landscape has become generally much more competitive since then,” he says.
Yet, nothing is impossible. Áron László, who started to work with Oppenheim during his final university years, was elected a partner of the company this year. Oppenheim employs a paralegal program including a summer student scheme and is present at the job fair of Eötvös Loránd University, where it has developed a unique case study based contest, which requires creativity and high English language skills.
Andrékó Kistellar also seeks talents among students. The firm has an internship program, where “undergraduates can prove their professional capabilities through real work,” Andrékó says.
Good professional prospects come only to those who start building their career during law school, according to Gabriella Ormai, managing partner at CMS Cameron McKenna. “A CV with an internship at an international law firm or at a reputed company, topped with a semester abroad or some foreign work experience can multiply opportunities,” she says. Lakatos also notes the importance of international experience. “Everyone should go and gain some foreign experience,” he suggests, although he also acknowledges the risk of losing capable workforce this way. “Really ambitious souls and intelligent minds need permanent challenges,” he says, adding that Hungary is too much on the periphery to be able to offer the same scale of exciting cases as some other countries.
Still, given the significant differences among the various legal systems and the rigorous qualification requirements, legal diplomas are not as painlessly transposable as some others, and so workforce migration does not really affect this profession.
Yet, the staff in Hungary’s offices is usually international. All the big law firms employ some foreign colleagues, too, in order to be able to handle cross-border cases at the highest professional standards. This practice often has further benefits too. “Our managing partner, for example, comes from Austria and we are indebted to her for one of our longest and most popular office traditions: The annual ski holiday organized every winter in our Western neighbor,” Oppenheim’s partner Zoltán Marosi explains. Keeping the legal language as simple and understandable as possible is an aim among some major firms. “An easily understandable legal language is a key to ensuring equal access to justice for all,” points out Ulrike Rein, partner at Oppenheim’s Budapest office. Still, legal texts often have to be translated from Hungarian to Hungarian, she complains.
A partner of Szecskay was once even half-jokingly asked if he really was an attorney as the client, otherwise highly qualified in non-legal fields, was so surprised about being able to understand every word the lawyer said about the given regulatory issue.
Ormai agrees. “It is not the overuse of legal jargon that will prove that we are credible and genuine professionals, but the fact that we are speaking our clients’ language: That is how well we know their business and understand their business needs” she says.
Staying clear is “a challenge for both lawmakers and lawyers, especially at times when people hardly read texts which are too long to fit the screen of their smart phones,” Baker & McKenzie’s Hegymegi-Barakonyi points out. At the same time, Wolf Theiss’ Tóth already sees the new Hungarian Civil Code as a good example for understandable language: it “offers rules formulated with everyday words wrapped in simplest grammar. It’s an effort worth every drop of sweat,” he says.
However, Réczicza warns that the aim for simplicity should never reach disrespectfulness or reduce professional standards or exactitude. Siegler even says that complex legal concepts require specific and precise vocabulary. “Legal parlance nowadays is accessible and understandable enough for legal professionals, but will never be fully simplified for laymen,” he says.
The idea of reducing bureaucracy has been on the government’s table for several years. Most recently, the National Competitiveness Council recapped the results on its May 18 meeting, and also set new targets including the revision of legal fees.
“Simplifying legal practice, rationalizing procedures and so making them more cost-effective is vital in both regional and global competition,” Hegymegi-Barakonyi says. Others, however, underline that legal fees in Hungary are considered low by European comparison and, most importantly, are set by competition rather than central will. If speaking about fee regulation, Réczicza would rather suggest the inauguration of a minimal fee instead of maximizing prices.
When it comes to the level of bureaucracy, while some even doubt that it has a downward tendency as, according to Réczicza, “lawmaking has to react to an increasingly complex economic environment,” and often, as Szecskay’s László points out, “one bureaucratic verification procedure is followed by another and the related regulations keep changing quicker and quicker,” others stress that efforts to reduce red tape are highly welcome. “Simplifying administrative procedures and cutting back bureaucracy, an effort much awaited in Hungary since the fall of the Iron Curtain basically, is not something against practitioners in law,” Tóth points out.
Also, law firms are not afraid of losing markets as a result of a simpler legal environment. Moreover, “the increased competitiveness of Hungary due to less bureaucracy is in our best interest, too,” says Ormai, as the resulting higher productivity of the country and increased investor activity mean more opportunities for law firms too.