Are you sure?

Business is picking up

Partners from some of Budapest’s law firms discuss the market and key legislation.

Gabriella Ormai,

Managing Partner, CMS Cameron McKenna LLP

How is business in general? Are you busy these days and with what kind of work?

We had a very promising start to 2015, and our teams are kept busy on a continuous basis. The nature of the work varies, as we provide full service to our clients, but of all the practice areas, I would definitely highlight M&A work within the banking sector (bank sales and purchases, portfolio transfers etc.), as well as disputes as a booming area, and recently real estate seems to be picking up, which is a really good sign after all those years. There are also some success stories, such as Apollo Tyres’ investment in Hungary, which requires significant resources and a coordinated approach of various practice areas across the firm.

Are there any legal changes that have occurred recently that impact your business? Do you anticipate such changes soon?

I would slightly turn this questions around, as I feel that the recent legislative changes most affect the operation of the businesses of our clients, which results in substantial additional work. One of our strengths, I would say, is providing quality regulatory advice to our clients. Such assistance and support is continuous and strengthens the relationship as clients do seek trusted advisors when it comes to regulatory requirements.

How is your law firm especially equipped to handle the particular challenges posed by doing business in Hungary? 

Most importantly our full service offering is a great advantage, as we can advise in all areas of business law and therefore are best placed to assess the possibilities and challenges of doing business in Hungary (e.g. from a tax point of view) and come up with real solutions. For instance, when providing strategic advice we tend to involve our disputes team from the very beginning with the purpose of recognizing and handling possible disputes in a preventive way.

András Posztl,

Country Managing Partner, Horváth & Partners DLA Piper

How is business in general? Are you busy these days and with what kind of work?

Investors are turning positive again on Hungarian assets; recent forecasts from the EU, IMF and credit rating agencies are indicating the improving performance of the economy. The International Monetary Fund raised its forecast for Hungary’s 2015 economic growth, the overall picture has become much brighter. However, the government’s interventionist policies and the extra tax burdens levied on certain sectors remain factors that can discourage private investors. M&A transactions, complex litigation and large infrastructural projects keep us busy – close to the pre-crisis level.

Are there any legal changes that have occurred recently that impact your business? Do you anticipate such changes soon?

As a result of the very  “active” economic policy of the government, both in regulatory and ownership aspects, the public sector has become one of the largest sources of legal work for many local and some international law firms. As public sector clients often require a different type of client care, one can see a clear segmentation among these legal service providers’ quality, responsiveness and application of international professional rules, such as FCPA or the U.K. Bribery Act. The government’s rumored efforts to set up one or more centralized legal panels in order to replace the currently highly mixed legal adviser pool with a more coherent and select group of quality advisors can be interpreted both as an opportunity and a challenge: It is a great opportunity for those law firms that can get on these panels, but one can imagine how fierce the competition will be to achieve this.

How is your law firm especially equipped to handle the particular challenges posed by doing business in Hungary?

Horváth and Partners DLA Piper is one of the largest business law firms in Hungary, among the very few that can provide legal services in all aspects of business law. Our office contains professionals with extensive experience gained while working for premier international, regional and local firms, as well as the government and other public sector entities. Thanks to our expertise, supported by the global network and knowledge of DLA Piper and our experience with a very wide range of clients, we are well equipped for future challenges. Tailor-made client care and a deep understanding of our partners’ commercial needs help distinguish us from our competitors.

Zsolt Cseledi, 

Partner, Oppenheim

How is business in general? Are you busy these days and with what kind of work?

Transactional work is tending to come back and it is likely that 2015 will bring more of this type of work than in recent years. After several years of downturn, the market is still very tough and competition is strong. It shows in the hourly rates too. There are international firms that are said to go under the €100 hourly rate, even in transactional work. Oppenheim looks optimistically toward 2015 after a successful 2014, which was a positive trend setter. We hope we can maintain the upward trend.

Are there any legal changes that have occurred recently that impact your business? Do you anticipate such changes soon?

No. We hope there will be no changes in the regulatory environment for law firms in the future. Some have foreseen some kind of a sectoral tax for lawyers, but we have seen no sign to that end thus far.

How is your law firm especially equipped to handle the particular challenges posed by doing business in Hungary?

We are a local firm with strong international ties. Strategy is set locally and the business plan is prepared locally. Therefore we are more flexible in responding to the ever-changing client needs than international organizations.

Zsolt Fábián, Partner, Erős Ügyvédi Iroda/Squire Patton Boggs (US) LLP

How is business in general? Are you busy these days and with what kind of work?

The business went through significant changes in the last couple of years – the financial crisis and budgetary constraints just to name a few – that create constant challenges for all law professionals. Due to the healthy mixture of our client base, we can handle such changes fairly well. We have more commercial work; more cross-border M&A and less local M&A these days.

Are there any legal changes that have occurred recently that impact your business? Do you anticipate such changes soon?

The Civil Code that became effective last year introduced new institutions in several areas. Those impact most of our clients. 

How is your law firm especially equipped to handle the particular challenges posed by doing business in Hungary?

Following the legal developments and attending the forums where future changes are discussed is key for a law firm operating in Hungary. We monitor the changes and discuss them within the firm. It is a never-ending exercise we simply cannot afford to avoid.

Kinga Hetényi, Managing Partner, Schoenherr Hetényi Attorneys at Law

How is business in general? Are you busy these days and with what kind of work?

Business is absolutely booming since the second half of last year – and especially since the beginning of this year.  The M&A market is roaring, the real estate sector has risen from the dead and even work related to the founding of new companies is back again. Due to the fact that the Competition Authority has recently become more active, we have also received quite a number of new competition-law related mandates. There is a very strong upward trend in food law and life sciences, reflecting the fact that evermore companies are entering the Hungarian market and starting to import wellness and health related products into Hungary. 

Are there any legal changes that have occurred recently that impact your business? Do you anticipate such changes soon?

In addition to the recent developments mentioned above, the new Hungarian Civil Code, the restriction on the acquisition of arable land, the preparatory works for a new Code on Civil Procedure, the introduction of the EKAER system (electronic road transport control for VAT purposes), the draft new public procurement act, and numerous other legal and regulatory developments have helped to keep us exceptionally busy in handling our clients’ requests and needs. 

How is your law firm especially equipped to handle the particular challenges posed by doing business in Hungary?

Schoenherr has a well-integrated team of lawyers with diversified knowledge. We hire specialists for the various legal areas, and help them to further develop their expertise and skills by regularly taking part in internal and external training. Our memberships in AmCham, DUIHK, JVSZ allow us to receive draft laws in time and comment thereon. We follow and use all the business development methods available to law firms to provide the most efficient and highest-standard legal services. The international know-how base of all Schoenherr offices also helps us to obtain the best practices from all jurisdictions in the entire CEE.

David Dederick, Managing Partner, Weil, Gotshal & Manges LLP

How is business in general? Are you busy these days and with what kind of work?

Business has been very good.  2014 was our best year in the past four years, and this trend has continued into 2015.  Our M&A, Dispute Resolution and Real Estate practices have been especially busy. One notable development is the recovery of the commercial real estate market.  Following the crisis in 2008, real estate development and investment activity saw a dramatic decline.  This especially affected a number of law firms that were dependent on real estate business. During the past year or so, we have seen a noticeable uptick in activity and the arrival of new players. However, continuing problems in the banking sector and reluctance of banks in Hungary to lend may hamper the recovery.  

Are there any legal changes that have occurred recently that impact your business? Do you anticipate such changes soon?

Since the current government came to power in 2010, there have been very significant changes in the legal environment.  These include a new Constitution, new Civil Code and new Labor Code, not to mention a raft of other legislation.  Such sweeping changes always generate opportunities for lawyers, and law firms in Hungary are no exception. The Hungarian State has also become an important participant in areas previously dominated by the private sector, in particular by making acquisitions in banking, energy and communications. This trend is likely to continue at least until 2018.

How is your law firm especially equipped to handle the particular challenges posed by doing business in Hungary?

Most international law firms that came to Hungary were primarily focused on transactional work, heavily driven by inward investment, privatization and development projects.  Nowadays, privatization is no longer relevant and inward investment has diminished.  Indeed, some foreign investors are leaving. We recognized these trends early, and almost a decade ago began to transition our business to a more balanced practice portfolio that includes dispute resolution (litigation and international arbitration), regulatory work and regional opportunities.  These practices are now quite substantial.  At any given time, dispute resolution can make up approximately a third of our production. Likewise, regional opportunities have grown.  From Budapest, we generally cover the Southeast Europe region, where we work with our network of “best friend” corresponding counsel law firms.  Some of our biggest projects in recent years have been in countries such as Romania, Croatia and Montenegro.