After I was asked to write this Guest Editorial for CEELM Magazine I realized that this year marks my 25th year in the legal business in Hungary.
The 1990s: I graduated in 1994 and started working at our law firm in 1996, which makes me a lawyer who has not changed workplaces during the last 23 years. I guess this might seem odd to some of today’s junior lawyers, who change workplaces much more frequently. In the 1990s there was a completely different working environment for a junior lawyer; we worked day and night and during weekends. I remember once, working on our fifth weekend in a row, we tried to explain to our partner that we were tired – and being told to drink more coffee. Those were the years of privatizations and frequent due diligence exercises, most of them based on physical data rooms(!). Those were the golden years. Most of the businessmen and lawyers were not used to regular transactions back then, so on many occasions the meetings were endless. It was normal to have meetings until very late. My record meeting lasted until 5:00 a.m., after which I travelled to Tatabanya for another meeting at 9:00 a.m. Those were not great years, salary-wise, but we gained experience – sometimes more than we desired. I believe that in that period a CEE junior lawyer’s life was not very different than it was for American or other international lawyers, despite the differences in the legal systems. I remember how well we understood the miserable life of young lawyers depicted in John Grisham’s books.
The 2000s: I became a partner in 2002 and started to enjoy my life and my law career. There were numerous mid- and small-sized transactions as Hungary was heading to join the EU (which it did in 2004) and life became solid. Also, there was work making sure clients complied with EU laws. The legal market in Budapest became more competitive, and while some international firms left, others remained, building the structure to stay long-term. Compared to the 90s, the international firms that decided to stay in Budapest hired more Hungarian lawyers, familiar with Hungarian law, and started to practice Hungarian law properly rather than simply using international standards while having no clue about local law. Also in the 2000s, some lawyers with international law firm backgrounds decided to establish and build their own firms. We started to communicate via e-mail and long memoranda and long faxes slowly disappeared. In 2008, the financial crisis that hit the world impacted the Budapest legal market as well, lasting for the next several years.
The 2010s: After the crisis, the Budapest legal market became even more competitive. Some international firms competed with ever-lower fees, gaining market share but destroying fee levels forever. This period was about effectiveness and project management. Clients became more sophisticated in Hungary and they gained a better understanding of what they needed from lawyers. I think today Hungarian lawyers face problems that are not solely local, but rather international. Globalization, outsourcing, and commoditization are issues that we need to address in our strategies. We also need to focus on and invest in digitalization, IT, and data protection, as they have become unavoidable. We not only use e-mails now but communicate with courts and authorities electronically. Physical data rooms are long gone. What may be unique in Hungary is the rapid increase in the complexity of legislation, not to mention the way legal rules are formed – sometimes new rules are made in so called “omnibus acts” when one law amends thousands of legal rules – making it increasingly difficult to keep tabs on changes in legislation. To find the right young talent has become a great challenge, and law firms must now look attractive and market heavily in multiple communication channels instead of sitting back, relaxedly waiting for CVs to arrive. I disagree with those lawyers who complain about the Z generation; I think they are smart people who require a different approach.
The Next Decade: We are slowly heading into the next decade, during which AI and digitalization will continue their trend-setting development. According to Richard Susskind, “lawyers will less and less simply advise clients; they will build systems that will, in turn, advise clients.” In Hungary, these changes may come somewhat more slowly … but they will definitely come.
By Peter Berethalmi, Partner, Nagy es Trocsanyi.
This Article was originally published in Issue 6.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.