The below article contains extracts from the Lexology Insights 2019/20 Budapest law firm compensation, benefits and billing report. The full report contains compensation, benefit and billing benchmarking data for all levels of fee-earners and business support staff.  

A summary of the full report can be found here. To purchase the report or for more details contact Gwilym Davies at GDavies@GlobeBMG.com or call +44 (0) 20 7940 6858.

Legal market trends and conditions – Hungary (Budapest)

After a decade spent yo-yoing between recovery and recession, the Hungarian economy is now enjoying a period of sustained stability, having seen nearly two successive years of healthy growth. Annualised GDP growth currently stands at 5.1% on a national economy valued at $139 billion – albeit one whose total worth is still yet to reach the 2008 pre-crisis highwater mark of $158 billion. While current market conditions are proving a boon for many of the law firms surveyed, the economic turbulence of the past decade has nonetheless taken a heavy toll on the Budapest legal services market; recent years have seen numerous departures from what was once a vibrant and promising new marketplace for international law firms. Indeed, exits from the market are still taking place, with Squire Patton Boggs being the latest international outfit to close doors in Budapest in February 2019. Only a handful of international law firms now remain, but those that departed were mostly high-end firms with expensive overheads, which typically lacked the flexible cost and pricing structures needed to adapt to the dynamic demands of the post-crisis central and eastern European marketplace.

For those remaining international law firms – as well as the domestic law firms surveyed – the past two years have proved a refreshing tonic from the economic malaise of much of the last decade, with many firms reporting double-digit revenue growth for a second successive year. Booms within the areas of real estate, banking, finance and greenfield investment have caused transactional activity to reach levels unseen in over a decade. Meanwhile, modest rises in average billed rates have generally been attributed to a gradual willingness among clients to pay more for complex legal services after a decade of fee stagnation and aggressive discounting.

Compensation and human resources – Hungary (Budapest)

Provided that associates meet performance targets, they will typically advance up a seniority level in lockstep compensation grids annually. The average annual salary increase for an associate advancing up a level on a lockstep grid in Budapest during the first 9 years of fully qualified practice is 10%. 

Headcount growth – Hungary (Budapest)

Fee-earners

  • Mean annual headcount turnover: 26%
  • Percentage of firms that increased total staff headcount during the past year: 50%
  • Mean net percentage headcount change: +3.6%
  • Median net percentage headcount change: +4.5%

Support staff

  • Mean annual headcount turnover: 16%
  • Percentage of firms that increased total staff headcount during the past year: 50%
  • Mean net percentage headcount change: +4.7%
  • Median net percentage headcount change: +2.3%

Billing trends – Hungary (Budapest)

Based on the latest Budapest survey, like-for-like average standard hourly billing rates among associates of the same level at the international law firms surveyed tended to increase, by an average of 5% in the past year. It remains fairly standard for individual associates’ billing rates to increase annually, based on increasing seniority. The average annual step increase is 7.6% during the first nine years of fully qualified professional practice.

  • Mean hourly billing rate recorded internally by law firms surveyed during last financial year: €247
  • Average rate billed to clients by law firms surveyed during last financial year: €164

Average current realisation percentage among by law firms surveyed (actual billed rates/standard rates): 64%