Clifford Chance (CC) has been delaying a merger with an Austrian law firm following the change in political climate in the country.
High level sources at the firm in Europe have said that the furore over the presence of Joerg Haider's right-wing Freedom Party in the new coalition government has been affecting its plans to open there.
Another CC source in Europe said he was already aware of one CC client that had pulled out of a deal in Austria due to the political climate there.
"Political events [in Austria] are making us think. Some clients are put off by those events and this will affect timing," he said.
But the CC source added that in the long run an Austrian office would happen, probably through the acquisition of a local firm.
Austrian firm Cerha Hempel & Spiegelfield was expected to merge with CC, as it was previously part of the Puender Group of European firms before CC's merger with Puender Volhard Weber & Axster.
Cerha has given CC until March to make a decision, although sources from Austria claim that CC has been sounding out other practices about a possible merger in recent months.