Market overview

The dynamics of the Hungarian legal services market have continued along much the same lines as last year, with an increasing disparity emerging between the relative success of foreign international law firms and most domestic outfits. Most of the international law firms surveyed are enjoying a second successive year of growth, which has been significant in some cases as transactional activity begins to rise at the top end of the market. 

However, most of the domestic law firms surveyed experienced further contraction during the past 12 months, as the mid-to-lower-tier transactional space continued to feel the pinch from an increasingly dominant and controlling state. The domestic firms that grew were typically those working closely with the government – which has fuelled allegations of corruption and cronyism in the procurement process.

Most of the international law firms surveyed have enjoyed a revival in transactional activity, primarily boosted by the quickly recovering real estate sector. While Prime Minister Viktor Orbán’s activist government continues to target new sectors with populist, isolationist policies and fresh taxation, its focus on the banking sector receded in the wake of the state’s acquisition of a number of banks. Consequently, several participants report an uptick in activity in this area as the sector begins to settle after a period of major upheaval. 

Compensation and human resources

Associate compensation trends

Based on the latest Budapest survey, like-for-like average base compensation among fee-earners of the same level at the international firms surveyed tended to increase, by an average of 7% on the past year. It remains fairly standard for individual associates’ base compensation to increase annually within international law firms, based on increasing seniority. The average annual step increase is 8% during the first 10 years of fully qualified professional practice.

Headcount growth trends

Total staff headcount

  • Percentage of firms that increased total staff headcount during the past year: 13%
  • Mean net percentage headcount change (among all firms): -5%
  • Median net percentage headcount change (among all firms): -3%

Fee-earner headcount

  • Percentage of firms that increased total staff headcount during the past year: 20%
  • Mean net percentage headcount change (among all firms): -2%
  • Median net percentage headcount change (among all firms): -3%

Support staff headcount

  • Percentage of firms that increased total staff headcount during the past year: 0%
  • Mean net percentage headcount change (among all firms): -4%
  • Median net percentage headcount change (among all firms): -3%

Billing

Overview

Based on the latest Budapest survey, like-for-like average hourly billing rates among associates of the same level at the international firms surveyed tended to increase slightly, by an average of nearly 4% on 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 4% during the first nine years of fully qualified professional practice.

Billing rates and realisation

  • Average hourly billing rate recorded internally during last financial year (international firms): €239
  • Average rate billed to clients during last financial year (international firms): €157

Fee-earner efficiency

  • Average annual work hour target for associates: 1,851 hours
  • Average annual billable hour target for associates: 1,367 hours
  • Average number of billable hours clocked by associates during last financial year: 1,254 hours
  • Average number of billable hours clocked by associates during current financial year (projected): 1,327 hours

The above article contains extracts from the Budapest 2017 Legal Market Intelligence reportThe full version of this report contains further data, including detailed compensation, benefit and billing rate benchmarking tables for all levels of fee-earners and business support staff.  For further details and pricing contact Gwilym Davies at gdavies@GlobeBMG.com or on +44 (0) 20 7940 6858.