English Law, Business-as-usual, Film Financing, and the Future of AI

Eszter Török

An English-qualified finance and corporate lawyer, Török works in the Finance and Corporate groups.

BBJ: How come you are dual-qualified in England and Hungary?

Eszter Török: I went to university in Oxford in the United Kingdom and was a trainee in what was then known as McKenna & Co in London. So, I qualified in the U.K. first, and years later, when Hungary joined the EU and the U.K. was still part of it, it was possible to qualify in other member states. I have been a dual qualified since 2007.

Initially, I was a trainee in London in the late ’90s. I was then seconded to the Budapest office as part of my traineeship, and I sort of stayed here and never made it back to London. I was an associate in the corporate team for 10 years. Then I left and was general counsel at a pharma company for 10 years. I returned in 2015 and have worked in the banking and finance and corporate teams since.

BBJ: How useful is it to be able to offer English legal advice in CEE? Has Brexit changed this?

ET: It’s definitely useful. A lot of transactions in the region are under English law. Quite a few clients, mainly international financial institutions, have a policy of only contracting under English law, subject to certain exceptions like local security agreements. They don’t always want to go to large City firms in London, especially for their mid-sized transactions. There’s a strong argument for approaching us rather than a City law firm in terms of commercial viability. And we know the region and the players, and I speak the language.

As to Brexit, it transpired quite early on that it’s not really an issue because a new piece of U.K. legislation provides that a contract will be governed by the law chosen by the parties, based on the principle of party autonomy.

Ágnes Sólyom

As a partner, she is responsible for CMS’ Managed Legal Services Hub in Budapest. An IP and entertainment law specialist, Sólyom works in the Commercial, IP and TMT groups.

BBJ: What is the Managed Legal Services Hub?

Ágnes Sólyom: It’s a relatively new business line that we have been running since 2019. We support repeated work streams that an in-house legal team would otherwise provide. CMS brings together not just lawyers but also innovation, technology, and project management teams, as well as deep sector expertise from our global network.

We could see in-house legal teams struggling with an unprecedented change in the market. There has been this regulatory tsunami in the last five years, not just in the digital market but also in every industry. In-house lawyers could not follow the new laws, identify the changes needed in their internal processes, do the day-to-day job, and focus on strategic work. With the MLS team, we can take away some of the business-as-usual workstreams and basically give our clients their time back. We will have a team of lawyers dedicated to a specific client, trained for their specifics. We have multi-jurisdictional lawyers who are U.K.-, U.S.-, or Chinese-qualified and cover a lot of languages from the Budapest hub.

As part of the MLS service, we focus also on what we call a “continuous improvement” stream. As we learn more data and gain more insight, we can advise the client on improving their template sets, prepare fallback positions, and so on.

BBJ: You are also involved with film production, a growing field for CMS. How does that come about?

AS: I’ve always been an intellectual property lawyer; that’s my specialization. We have been expanding our work for IP in film production as Hungary is the second largest shooting country in Europe after the United Kingdom (because Hungary has a very generous tax rebate system for film shooting, there are a lot of productions). It’s a fascinating word, as you can imagine. The whole contractual structure of productions is quite different from what we’re used to in, say, businesses-as-usual IP contracts. Since time is of essence in productions, we are used to provide business friendly but legally accurate support within relatively short time periods

Katalin Horváth

As a technology law expert, she works in the Commercial, IP and TMT groups. Horváth’s areas of expertise are emerging technologies, banktech, fintech, software, IT and AI.

BBJ: Do you just cover Hungary, or do you work across the CMS network?

Katalin Horváth: We advise multinational companies across the whole EU on different cybersecurity, open finance, AI, or other banking technology issues that have an EU-level legislative background. Good examples are GDPR, the new cybersecurity regulation for the finance sector, the EU AI Act, the NIS2 directive, the new payment service regulation, new EU provisions on sharing financial data and the new EU crypto regulation. And there are jurisdictionally-agnostic issues, such as cyberattacks, or, for example, digital transformation and paperless projects where I can support my clients cross-border. On one side, I’m advising multinational big tech companies, banking and finance suppliers, IT companies and practically every type of businesses, because every company is a tech company with everyday technology related legal issues. And, on the other side, I am also advising the banks and other financial entities on technology law issues. It is good that we can connect banking and finance law with technology law. I’m kind of a bridge here in Budapest between our technology team and the banking and finance team.

BBJ: What are the latest trends in bank tech?

KH: From the process side, the hottest trend is now the digital transformation of financial entities, meaning online onboarding and electronic contracting processes, online AML processes, electronic customer authentication, e-signature issues. From the technology side, the trend is still cloud computing; blockchain and AI also have a big impact on the banking and finance sector. It’s fascinating how software development changed from a code-heavy to a low-code or no-code development style. And we need to follow those trends in the contracts as well.

I need to learn new things every day in technology, for example, decentralized finance, or microservices and containerization, which together as containerized microservices are essential to cloud migration and digital transformation and will replace the monolithic legacy systems. If I don’t understand the essence of the technology, I can’t draft a good contract about it, and I can’t properly advise the client.

BBJ: Is there a dystopian future where AI replaces lawyers?

KH: Lawyers – and humans – will always be needed, even if AI will do the majority of the tasks. AI can’t assess and understand subjective things in law like good faith, bad faith, fairness or damage compensation law issues, such as who is responsible for what; and AI can’t decide whether a creative work, for example a novel, a painting, or a piece of software has individual, original characteristics which ensure copyright protection.

This article was first published in the Budapest Business Journal print issue of May 31, 2024.