Writing for the Korea Times, staff reporter Park Si-soo provides the background to the changes coming to the Korean legal market in September this year..
He writes ……South Korea’s legal services market will see a meaningful change in September ㅡ a partial opening to countries that have signed a free trade agreement (FTA) with Seoul. This marks the first opening since 1905 when the nation introduced its modern legal system. The United States and some other Asian countries have signed an FTA with Seoul.
and then in the next sentence says…Experts say the first step in the three-stage process for full opening by 2016 will have no major impact on the market.
So .. what’s happening Change without change ?
Here’s the article in full
http://www.koreatimes.co.kr/www/news/nation/2009/05/117_45253.html
Initially, foreign firms are only permitted to operate legal consultancy businesses, while hiring or partnering with Korean attorneys to represent clients in Korean court will remain forbidden.
However, when the process reaches the third stage, or “full liberalization,” local law firms will go through an unprecedented upheaval that will pit them against super-powered overseas law firms.
The liberalization will let foreign law firms have the same legal status as domestic players, permitting them to establish joint ventures with domestic law firms, and hire or partner with Korean lawyers.
Many small and mid-sized firms here are expected to collapse at this point in time. The country’s leading players such as Kim & Chang, Bae, Kim & Lee, and Lee & Ko are no exception ㅡ unless they brace for the “big bang” in earnest, experts say.
But lawyer Kim Pyung-woo, president of the Korean Bar Association, said it’s not a seed of misfortune as many claim, but a great “opportunity.”
In an exclusive interview with The Korea Times last week at the association’s headquarters in Seoul, Kim said, “The opening will definitely bring immeasurable impact to the domestic legal services industry, forcing many in this field to close their businesses. But, it will also motivate Korean firms to develop overseas markets in a desperate effort to survive.
“We cannot help losing part of our market to internationally competitive law firms mainly from the United States and the United Kingdom. They are superior to domestic players in overall aspects including manpower, experience, and capability. But we have what they don’t have: geographical closeness to China’s burgeoning legal services market and a shared cultural background with clients there.”
The 64-year-old former judge said having a shared culture with clients is a great advantage when representing them in court or preparing for trials.
“For lawyers, building trust with clients is as important as having ample legal knowledge. As such, Korean lawyers sharing a cultural background with Chinese nationals will have easier access to Chinese clients than western lawyers,” he said. “In addition, Korean lawyers’ legal knowledge has not fallen behind the newcomers.”
Enlarging the scale of firms will be one of the key strategies for better competition with overseas rivals, he said.
“Scale is important. Although each lawyer’s capabilities and skills are, of course, considered key assets in attracting clients and achieving good results, it’s not a surefire ticket to survival in a liberalized market.”
Indeed, a slew of merger and acquisition (M&A) deals between small- and mid-sized law firms have been made in recent years in preparation for the business climate change.
Except for a couple of market leaders including Kim & Chang, with some 300 attorneys and leading the market, many South Korean law firms have extended their scale and realm of business through M&As.
Internationally, however, it’s an undisputable fact that they are still “fragile.”
According to the Dong-A Ilbo, a mass-circulated daily here, the Korean legal services market was estimated to be worth two trillion won ($1.61 billion) last year, with the top six firms accounting for nearly half of that. The leading players have 1,241 lawyers as of late last year, nearly 14 percent of all attorneys in service.
But the entire market volume and their manpower is still much smaller than that of an international law firm based in the United States or European countries.
For example, the nation’s No. 1 law firm, Kim & Chang, recorded about 460 billion won in profit last year to lead the market by a wide margin. Bae, Kim & Lee ranked second with 130 billion won in profit, followed by Yulchon and Lee & Ko with nearly 100 billion won each in profit.
Yoon, Yang, Kim, Shin & Yu, and Shin & Kim followed them back-to-back with 95 billion won last year, according to the newspaper.
But Clifford Chance, one of the world’s leading law firms based in the United Kingdom, has more than 4,000 attorneys worldwide, and generated nearly $1.875 billion in profit in 2006 alone.
“Polishing up capabilities and skill is the only way (for survival) in the end,” Kim said, suggesting that Korean lawyers improve their fluency in foreign languages such as English and their knowledge of Anglo-American law.
He said the once-prevailing Continental law from Germany is on the wane, and American law is coming to the fore as most international contracts are based on it.
