South Korean law firms in expansion mode following legal market liberalization
By H. Park, Eunice Kang and EunYoung Chough in Seoul
12 August 2011
Major South Korean law firms are actively pursuing expansion overseas as counterparts from the European Union seek to set up practices in Korea, legal sources told mergermarket.
This follows the ratification of the Korea-EU free trade agreement (FTA) in July 2011, allowing law firms based in Europe to set up operations in Korea, and provide outbound services to Korean clients in close proximity.
The free trade pact between Korea and the EU, whose bilateral trade reached over USD 92bn last year, marks the opening of Korea’s legal services market for the first time to law firms from Europe. Also, a pending FTA with the US awaits law firms from there to enter Korea, sources said.
Seoul-based top tier law firms such as Kim & Chang, Lee & Ko, Yulchon, Jipyong & Jisung, Bae, Kim & Lee and Shin & Kim are looking to fortify their overseas practices, especially for Korean clients eyeing global expansion.
“We all need to beef up operations, not just small ones, but big ones too,” said Jeffrey Jones, a lawyer at Kim & Chang, the country’s biggest law firm. “The fact that they [EU firms] are here regularly changes the legal landscape. It’s going to make law firms here run faster and competitive.”
Lee & Ko is eyeing China, Southeast Asia, Central Asia, Japan, the Middle East and Russia for growth through regional partnerships, partner Yong Suk Yoon said in a statement.
Yulchon will expand via strategic ties with local firms in emerging markets where a lot of Korean companies are presently doing business and are in need of specialized cross-border services, partner Sai Ree Yun said.
Jipyong & Jisung will strengthen its existing overseas network especially in Southeast Asia by promoting its brand, and would consider strategic ties, joint ventures or mergers potentially with UK and US firms that have not yet made inroads into Asian markets, managing partner Young-Tae Yang said.
Bae, Kim & Lee is looking at every opportunity to further expand overseas, partner Hee-Gang Shin said in a statement.
Also, Shin & Kim is in the process of setting up an office in Germany to provide services to both Korean and EU companies, while expanding in China, Southeast Asia and South America potentially via alliances, Managing Partner Doo-Sik Kim said in a statement.
Global firms eye Korea’s outbound deals
Although Korea will not see immediate fundamental changes following the market liberalization through FTAs, the level of competition between Korean and foreign firms will increase in the long-run once the latter are allowed to hire local lawyers and practice Korean law in five years, sources said.
Allen & Overy, Clifford Chance, DLA Piper, Freshfields Bruckhaus Deringer and Linklaters were among global firms keen on Korean expansion, they said.
DLA Piper, the world’s biggest law firm in terms of number of lawyers, would be interested in setting up an office in Korea, as it has a solid network with Korean clients, partner JC Lee told this news service. He noted the fact that Korea is among the G-20 economies, and is Asia’s fourth largest, as other reasons for the firm’s possible market entry.
The law firm, which has offices in over 30 countries, will continue to focus on providing outbound services in segments such as M&A, IPOs, capital markets, shipping, litigation and infrastructure and real estate projects for Korean clients, Lee added.
Although it has not yet set a timeline, it will monitor the country’s regulatory framework concerning the legal market, he said, while not ruling out the possibility of growing in Korea through inorganic means in the future.
A spokesperson for Clifford Chance said in an email statement, “We wish to expand our work with Korean clients and establish a presence in the country as and when regulations allow.”
The Korean legal market will fully open to law firms from Europe by 2016 when they can hire Korean lawyers or launch JVs, according to sources. In the initial stages of market liberalization, firms consisting of lawyers with EU law licenses can set up offices and provide services, however, they can only advise on EU-related legal issues. They can then later collaborate with Korean lawyers on both Korean and EU legal issues.
The size of the Korean legal market is around USD 3bn as of 2010, according legal sources.