Hungarian Lawyers during the Corona Virus: The effects on their business
By Mate Bende.
The coronavirus has had a deep effect on law services as well as having an impact on other industries. Now we can start to draw conclusions on how deeply this sector has been affected during the last two months.
More than 1000 Hungarian lawyers filled out an anonymous online survey conducted by Pro/Lawyer Consulting, a Hungarian firm specialized in marketing for lawyers and the legal sector. The survey was based on self-declaration, and it examined the changes of the workload, the decrease of income, and the fields of law where the service providers had more or less work.
55% of the respondents work in Budapest, 28% of them work in a large city on the countryside, and 17% of them in a small city. Besides, 73% of the respondents operate as sole practitioners. On the other hand, 18% of the respondents work in an office of a few people, and the rest of them report working in a medium, large or an international law firm. Although the survey was not representative, this rate corresponds with the national partition of the 12,000 lawyers in Hungary.
As you might have guessed, a significant part of the lawyer community has been hard-bitten during the last couple of months. Only 20% has reported that their income has not decreased in the last months because of the pandemic. Conversely, 20% of the survey participants have experienced a decrease between 10% and 30% in revenue; whilst 30% of respondents admitted suffering from a 30-60% decrease, and a further 22% had even bigger stated that they experienced more than 60% decrease on earnings.
In regards to trainee lawyers (who are lawyers but has to work 3 years under an attorney to be eligible for the Bar exam), 67% stated that their salary has not changed in the last months. 14% of them answered that their salary changed in a negative way, many of them are currently on unpaid leave, or work reduced hours.
A source notes, „Everyone thinks that lawyers have sacks of money in this situation, but we have plenty of outlay in addition to liability insurance, bar association fees and the rental fee. A lot of young, entrants, and even lawyers who have been practicing for 1-2 years find themselves in a hopeless situation, even after having spent many years and lots of money to open a law firm.”
Changes in the type of the work – growth and reduction
As one would imagine, the greatest decrease of work was in the field of real estate, as one in four lawyers remarked. Litigation and corporate matters follow second with 15-20% noting that they experienced a reduction. 5% of the respondents noted that the decrease was significant with criminal cases, litigation cases and family law cases.
„The rate of M&A and finance matters were reduced by 5% as well, but the analysis revealed that these fields employed 38% of the workers of large firms – which is understandable, as these transactions are concentrated in large firms.” – says Máté Bende, owner of Pro/Lawyer Consulting.
It came as no surprise that the largest growth was in the field of labour law – as 32% of respondents admitted. It is not surprising either that claim management took the second place on increase of workload.
The survey asked trainee lawyers how their workload has changed in the last few months. Half of them stated that they have less work; 6% has almost no work; and 9% of them lost their jobs. On the other hand, 16% of respondents stated that they have more work than a few months ago.
„It might be that despite the setback, the work has increased overall. This is because with the drop of the billable hours, more marketing-type work is expected from them.” „The workload increased, but this is due to being assigned the work of those colleagues that left the firm as a consequence of the lay-offs.”
Lay-offs and terminations
To the question of what percentage of lawyers is affected negatively by the situation, only 1% of the respondents answered that either no one is affected, or a maximum 10% of them are. 45% believes that everyone or almost everyone has been affected; and a third of them argues that half of the lawyers have been affected.
90% of the lawyers answered that there were no lay-offs in the last few months – this is because the majority of the lawyers who filled out the survey work as sole practitioners. In the firms where there were lay-offs, this mostly affected the administrative staff, but 4% stated that they had to dismiss lawyers as well.
It is interesting to compare the answers of lawyers with the answers of trainees. Trainee lawyers declared that 29% of the firm had lay-offs. As 23% of the trainees work in a one-person firm, it is clear that the lay-offs affected medium-sized or large firms, where typically trainees work.
A fifth of the lawyers are hopeful and think that every practice will survive the crisis. 42% of respondents thinks that 10% of the firms will cease; 23% believe that there will be a 20% of firms vanishing; and 12% forecasts a 30% cease-rate. But as a respondent summarized this shortly: „It is not the coronavirus that causes the disappearance of a praxis – for those who are considering of giving up the praxis, this is just going to be another reason.” Another lawyer said that: „The lawyers that do not have any income mostly represent private individuals. Concerning litigation, uncertainty is normal. The real estate market obviously waits. Right now, people only inquire through the phone, they do not want to spend money on lawyers. This is it, but obviously we will be needed eventually, so I am optimistic.”
Trainee lawyers are not so optimistic, one in four thinks that many of them will lose their jobs in the next few months. Besides, one in four believes that their salary will be reduced; 10% believe that this reduction will be for the long term.
„This is likely to be the case. In the last few years, there was a lawyer shortage in the market, firms were competing for the trainees offering great salaries,” – explains Máté Bende. „It is worth checking out the jobs portal – a few months ago 20-30 law firms were looking for trainees, nowadays you cannot see more than 4-5 advertisements. There will be a lot of trainees in the market again, this is going to push down their salary – and it is going to be the firms who will select among the trainees. Some people will have to give up on a lawyer career.”
Is there a need for governmental help?
More than three quarters of the lawyers surveyed believe that there is a need for some kind of governmental measure in the sector. Primarily, they would be satisfied with a reduction of contributions, or the complete release of these or perhaps seeing an extension to the sector of the measures helping the contractors who are in the „KATA” system. Plenty of people wrote that they expected more from their bar association, stronger enforcement of claims, and generally, easily available membership fee discount (or the remittal of the fee for a couple of months). If the lawyers are not working, they still have hundreds of thousands of expenses: rental fees, bar association fees, liability insurance and also maintaining the infrastructure of their practices.
It is mainly the sole practitioners who want governmental help, 4 out of 5 would like to see these measures implemented. As the size of the firm grows, the need for help decreases, but even half of the lawyers who work in an international firm remarked that help is needed. It is mostly the medium-size firms that do not see a need for help, as in 58% of respondents report.
The future – what are they foreseeing?
17% of the trainees believe that from now on, it will be a basic requirement to work in home-offices. As one of them says: „ The expansion of home-office and electronic administration will enhance a career change among those who were not familiar with electronic services and remote working until now.” Another opinion is: „I have been working in a home-office since March, and it is great that I can manage almost everything from home. These are my trainee-period’s best weeks. This situation has proven that there is no need to rush into the office in the morning, and stay there even on a Friday night. As long as I am available all time, write every submission on time and provide legal advice, I can do it all from home.”
More people are hopeful about remote working, but there has been more criticism dedicated to the court system; mainly because of the deadlines, the difficulty of administration; though the widest criticism was for Skype-type trials. It not only put lawyers in a difficult situation, but the hearings of the witnesses and other parties concerned was problematic in the last weeks.
But to end up with a positive note: „We have put in a lot of time and attention right now for everyone to think over what it is that they want to evolve and specialize in. I encourage everyone with self-education and objectives to use this time to think it thoroughly. I believe that now it is important time to have a good strategy, or to have a strategy ready for the next 2 years.” – says a lawyer. Another adds: „We need the website, the marketing, and with these, there will be no problem.”
About the Author
With 10 years of legal communication experience, Mate Bende started his legal consultancy firm, Pro/Lawyer Consulting in 2015, with the intention of, helping lawyers and the legal industry reach their business goals. Until today he worked with more than 50 law firms and several legal networks in the CEE region.. His main focus is on PR based business development solutions which include branding, online presence for law firms, social media trainings and legal ranking consultancy as well. In 2016 and 2017 Pro/Lawyer won a Hungarian B2B communications award, both times with a campaign in the legal business sphere. From 2018, the firm is a member of the Nextlaw Global Public Affairs Network, powered by Dentons.