Local lawyers brace for influx of foreign firmsAs foreign law firms prepare to enter the Korean market after the implementation of the Korus FTA, local law firms are bracing for a shift in the balance of legal power.
Top-tier international firms could begin operating in Seoul as early as June. According to the Ministry of Justice, nine U.S. firms have already filed preliminary applications to practice in Korea.
Paul Hastings, Ropes & Gray, Sheppard Mullin, Cleary Gottlieb, Cohen & Gresser, Squire Sanders and the Law Offices of Park & Associates were the first seven to file applications, each of which was completed on the first day the Ministry of Justice accepted the requests.
Covington & Burling and McDermott Will & Emery later joined the pool of applicants.
Foreign firms will initially be limited in their activities in Korea. For two years, until March 14, 2014, U.S. firms will only be able to provide legal advice on U.S. law.
In the second, transitional stage that lasts until March 14, 2017, the U.S. firms will be able to partner with Korean firms to jointly handle domestic cases.
After the five-year phase-in, firms will be able to operate at full capacity, forming joint ventures with Korean partners and hiring Korean lawyers.
The process is similar for European Union-based law firms, which will end their transitional period on July 1, 2016. Only one firm, Clifford Chance, has filed an application from the EU.
Kim Jong-han, a partner of Los Angeles-based Paul Hastings working in its Hong Kong office, will head the Seoul firm when it opens. He said he expects the transition to be smooth.
“Nothing will change from what we’ve been doing in Hong Kong,” Kim said. “We just won’t have to travel as far. We’ll only be involved in work in providing U.S. legal services especially for complex U.S. litigations.”
Korean law firms say they are not too concerned about what might happen after the influx of foreign law firms. Many are quick to point out that when Japan opened up its legal market in 1987, not all firms based overseas lasted.
Nonetheless, law firms are apprehensive about the competition becoming stiffer and a potential loss of business.
Generally, smaller local law firms will not be impacted by the new legal scene, since foreign firms will mostly represent large corporations dealing with complex cases outside of Korea.
The ones that will be impacted, however, are the top law firms that monopolize cases with big business in Korea. Kim & Chang, Lee & Ko and Shin & Kim are among the firms that have enjoyed a dominant share of the corporate legal market.
“We already provide all the services in one place,” said an attorney at a top Korean law firm who spoke on the condition of anonymity.
“For the next five years, operational measures of the foreign firms will be limited and won’t be much of a competition. Our attitude is to see how the branches in Korea will do in one or two years. But if they take away too much business, we won’t be very happy.”
Son Do-il, vice president of international affairs at the Korean Bar Association, said the entry of foreign firms will benefit the Korean legal system as a whole.
“Our position always has been to support the idea of the opening of the Korean legal market,” Son said. “Until now, it’s not that foreign law firms didn’t come and do business in Korea. They did - in hotel rooms.
“Now they can open a legitimate office here and follow Korean regulations. Meanwhile, Korean law firms can also further develop from the competition.”
By Sarah Kim [firstname.lastname@example.org]
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