Clifford Chance (CC) is shutting up shop in Budapest, with the firm's Hungarian partners set to spin off into Lakatos Koves & Partners.

The move, which was announced today (30 June) will see the Budapest office become a standalone practice by the end of July after being bought out by existing office managing partner Peter Lakatos. All lawyers and staff in the region will transfer over to the new practice.

CC and Lakatos have agreed a best friends arrangement, which will see the firms refer work to each other, as well as allowing the spin-off continued access to CC's training academy and knowledge management systems.

The news comes as CC shifts its focus to areas most important to its major international clients, while Lakatos will now have greater flexibility to develop the firm locally and promote new partners.

CC global managing partner David Childs commented: "We believe that a standalone CC operation is no longer needed in Hungary and that we will be best able to meet the needs of our strategic clients through this 'best friends' arrangement. Our clients will continue to enjoy the same level of service and expertise they have come to expect, and I am sure that Lakatos Koves & Partners will retain its position at the forefront of the Budapest legal market."

Budapest head of corporate and M&A Richard Lock said: "This is a joint initiative. CC has been reviewing how it views the world and does not see a need for a standalone office in Budapest. We are very upbeat about it and feel that this is the best way forward. The Hungarian economy is troubled at present but we still have quite a lot of work despite this. We have recently seen a definite uptick in M&A and we also see more regulation work coming out of the economic crisis."

Earlier this year Freshfields Bruckhaus Deringer decided to close its office in Bratislava, its only Central and Eastern European (CEE) office outside of Vienna and Moscow, while last year magic circle rival Linklaters decided to split from four of its offices in the CEE – retaining offices in Warsaw and Moscow.

Meanwhile, CC has established a southeast Asian dispute resolution practice with hire of Nish Shetty from Singapore's Wong Partnership.

Wong was formerly a joint venture partner of CC, before the magic circle firm terminated its alliance earlier this year in anticipation of impending market liberalisation.

Shetty will focus on arbitration and dispute resolution, while also strengthening the firm's restructuring and insolvency capabilities in the region. In addition, Shetty's work, which has an Indian focus, will be used to build on the firm's recent best friends agreement with Indian law firm AZB & Partners.

CC's regional managing partner for Asia, Peter Charlton, said: "With the reorientation of world markets, you cannot have a credible international offering without a robust Asian practice, with strength in all the critical areas for our clients."